Confidential Informant 59-05071 v. United States

In the United States Court of Federal Claims

No. 11-153C

(Filed Under Seal: April 13, 2015 | Reissued: April 22, 2015)*

)

CONFIDENTIAL INFORMANT )

59-05071, )

) Discovery; Attorney-Client Privilege;

Plaintiff, ) Crime-Fraud Exception; Request for

) Production; RCFC 26(b)(1); Sanctions;

v. ) RCFC 37(a)(5).

)

THE UNITED STATES OF AMERICA, )

)

Defendant. )

)

)

Thomas Scott Tufts, Tufts Law Firm, PLLC, Maitland, FL, for plaintiff

Jonathan Reid Prouty, United States Department of Justice, Civil Division,

Commercial Litigation Branch, Washington, D.C., for defendant. With him on

the briefs were Jessica R. Toplin, Trial Attorney, Patricia M. McCarthy, Assistant

Director, Bryant G. Snee, Acting Director, and Stuart F. Delery, Assistant

Attorney General

OPINION AND ORDER

KAPLAN, Judge.

Currently before the Court is plaintiff’s motion to compel discovery and for sanctions

pursuant to Rules of the Court of Federal Claims (“RCFC”) 37(a)(5). In its 1 motion, the plaintiff

in this case, Confidential Informant 59-05071, challenges the assertion of the attorney-client

privilege by the United States (“the government” or “defendant”) in response to plaintiff’s

requests for production of certain documents. In addition, plaintiff seeks to compel the

production of additional documents that plaintiff alleges are discoverable under RCFC 26(b)(1).

Plaintiff also seeks an award of the costs of the depositions it conducted of certain current and

* This Opinion was originally issued under seal, and the parties were given the opportunity to

request redactions. In light of the plaintiff’s suggested redactions, filed on April 20, 2015, the

Opinion is now reissued with redactions indicated by brackets.

1

In the interest of protecting plaintiff’s identity, the Court will refer to the plaintiff throughout

this opinion by use of the pronoun “it.”

former government employees, arguing that it will need to re-depose those individuals in light of

the government’s delayed production of documents following the court’s December 11, 2012

order granting in part and denying in part plaintiff’s first motion to compel. Plaintiff also seeks

an award of attorney fees. For the reasons stated below, the Court GRANTS IN PART and

DENIES IN PART plaintiff’s current motion to compel and GRANTS IN PART and DENIES

IN PART plaintiff’s motion for sanctions.

BACKGROUND

I. Plaintiff’s Claims

The background of this case is discussed in the earlier decisions and orders of the Court.

See Confidential Informant 59-05071 v. United States, No. 11-153C, at 2-4 (Fed. Cl. Nov. 22,

2011) (filed under seal), ECF No. 16 [hereinafter “Opinion on MTD”]; Confidential Informant

59-05071 v. United States, 108 Fed. Cl. 121, 128-29 (2012). To briefly summarize, in plaintiff’s

Second Amended Complaint (filed by leave of court on April 22, 2013), plaintiff alleges that in

February 2002, it entered into a written Reward Agreement with the Internal Revenue Service

(IRS) in which plaintiff agreed to provide information regarding the underpayment of taxes by

certain third-party taxpayers for tax years [. . .] through [. . .]. Mot. to File Second Am. Compl.

Ex. 1 ¶¶ 5-7, April 9, 2013, ECF No. 76 [hereinafter “Second Am. Compl”]; see generally

Second Am. Compl. Ex. A [hereinafter “Reward Agreement” or “agreement”]. Under the

agreement, the IRS committed to protect against disclosure of plaintiff’s identity, Reward

Agreement ¶ 5, and—subject to certain conditions—pay plaintiff a percentage of any taxes

collected as a result of the information plaintiff supplied. Id. ¶¶ 6-8. Consistent with the

agreement, on March 28, 2002 and then again in early 2005, plaintiff provided the IRS with

information about alleged underreporting of federal tax liabilities [. . .] and a [. . .], which

plaintiff alleged totaled more than $100,000,000. Second Am. Compl. ¶¶ 8, 12.

The Reward Agreement was modified by the mutual consent of the parties sometime in

the spring of 2005. Second Am. Compl. ¶¶ 14-18; see also Second Am. Compl. Ex. B. The

amendment extended by five years the time period for which plaintiff would offer information to

the IRS; added a provision stating that plaintiff would wear a body wire if the need arose; and

replaced the IRS official designated to receive information from plaintiff with Special Agents

Casimir P. Tyska and Crystal Ashley. Second Am. Compl. Ex. B at 1. 2

On or about May 3, 2005, the IRS requested that plaintiff and plaintiff’s counsel meet

with the criminal investigation division of the IRS and provide proof of plaintiff’s identity.

Second Am. Compl. ¶ 19. A week later, plaintiff provided the IRS with “new information

concerning an additional [. . .] in the United States engaging in [. . .] cash skimming.” Id. ¶ 21.

2

Although it is unclear whether any IRS official ever actually signed the proposed amendment,

the government has acknowledged that its terms were agreed to by both parties. Def.’s Resp. to

Pl.’s Mot. Compel 3 (citing Def.’s App. 50), March 10, 2014, ECF No. 99. [hereinafter “Def.’s

Resp.”].

2

Plaintiff contends that on or between May 3, 2005 and December 31, 2005, it had

“multiple” telephone conversations with Agent Tyska, as well as one or two in-person meetings,

without its counsel present. Id. ¶ 22. Plaintiff claims that on these occasions “Agent Tyska

made repeated statements and representations aimed at swaying, influencing, and manipulating

[plaintiff].” Id. ¶ 23. Specifically, plaintiff claims that Agent Tyska (allegedly at the direction of

his superiors at the IRS) told plaintiff: (1) that plaintiff’s counsel was incompetent and that the

protections contained in the Reward Agreement counsel negotiated were similar to those already

required by the IRS rules and regulations; (2) that the Reward Agreement tied Agent Tyska’s

hands; (3) that plaintiff should sign an IRS Form 211 (Application for Award for Original

Information); (4) that plaintiff should execute a new amendment to the Reward Agreement; (5)

that special agents were investigating the taxpayers plaintiff had identified; and (6) “that Special

Agent Tyska could not proceed unless an Amendment is executed.” Id. ¶ 25. Plaintiff further

alleges “[o]n information and belie[f]” that “the directions given by at least one higher ranking

individual with the IRS were that Special Agent Tyska was to do nothing proactive, that the

reward agreement, as amended, was ‘null and void,’ and that he was to get [plaintiff] to act

within the constraints of a Form 211.” Id. ¶ 24.

The purpose of a Form 211 (the document plaintiff alleges that Agent Tyska demanded

that plaintiff execute) is to request a monetary reward from the IRS under 26 U.S.C. § 7623

(2006). See Capelouto v. United States, 99 Fed. Cl. 682, 690 (2011). The current version of

section 7623 provides, in relevant part, that if an individual provides information to the IRS that

results in the detection of a tax underpayment or the prosecution of a tax law violation, that

person “shall . . . receive as an award at least 15 percent but not more than 30 percent of the

collected proceeds . . . resulting from the action . . . or from any settlement in response to such

action.” 26 U.S.C. § 7623(b)(1). At the time that plaintiff provided information to the IRS,

however, the provision of an award under section 7623 was entirely discretionary. See Colman

v. United States, 96 Fed. Cl. 633, 638-39 (2011). 3

According to plaintiff, in a November 28, 2005 email to Agent Tyska, plaintiff stated that

it did not wish to sign and submit a Standard Form 211 in lieu of the existing Reward

Agreement. Id. ¶ 43. Plaintiff further claims that in this email plaintiff asked Agent Tyska to

3

Because the pre-2006 version of the statute made an award payment entirely discretionary, this

court had repeatedly held that § 7623 was not a money-mandating statute for purposes of

establishing Tucker Act jurisdiction. Id. at 638 (citing Dacosta v. United States, 82 Fed. Cl. 549,

556 (2008); Conner v. United States, 76 Fed. Cl. 86, 87 (2007); Destefano v. United States, 52

Fed. Cl. 291, 293 (2002); Confidential Informant v. United States, 46 Fed. Cl. 1, 6 (2000)). In

the Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, § 406, 120 Stat. 2922, 2958-

60 (2006), Congress added a new subsection (b) to § 7623, which created a non-discretionary

award reviewable in the U.S. Tax Court, but only where the tax, penalties, interest additions, and

additional amounts in dispute exceed $2,000,000. Id. at 2958-59. The new non-discretionary

award only applies to information provided to the IRS after the date of enactment of the Act. Id.

at 2960. Under the new statutory scheme, rewards for amounts in dispute under $2,000,000 are

governed by § 7623(a).

3

clarify why he viewed the information and documents that plaintiff had provided as “too old” to

be usable for investigative purposes. Id. ¶ 44. On January 3, 2006, plaintiff contends, it “sent a

letter to Special Agent Tyska indicating that Plaintiff was resisting Defendant’s effort to force

Plaintiff to renegotiate the previously bargained for benefits set forth in the Reward Agreement,

as amended.” Id. ¶ 52. On February 1, 2006, plaintiff alleges that it inquired about whether

plaintiff’s January 3, 2006 email had been received “and again sought assurances that Defendant

was going to pursue the case.” Id. ¶ 53. Further, plaintiff contends that it “again sought

assurances from Defendant, by and through Special Agent Tyska, on May 22, 2006, via e-mail

and by certified mail, on June 9, 2006,” but that “Defendant did not provide any of the requested

assurances.” Id. ¶ 56, 57.

In December 2010, plaintiff “made a formal demand on . . . Defendant to duly render an

accounting with respect to the information and documentation submitted.” Id. ¶ 34. However,

defendant, “acting by and through the Whistleblower Office, indicated that it had no record of

having ever received the file.” Id. ¶ 35.

Plaintiff filed its initial complaint setting forth three causes of action in March 2011.

Plaintiff has since twice amended its complaint. In Count I of plaintiff’s second amended

complaint (entitled “Anticipatory Repudiation”), plaintiff alleges that after it fully performed its

obligations under the Reward Agreement, the IRS repudiated the agreement when, acting

through Special Agent Tyska, it attempted to coerce the plaintiff to execute a new agreement and

agree to submit a Form 211 by threatening that if plaintiff refused to do so the IRS would

“refus[e] to proceed and perform . . . under the Reward Agreement.” Second Am. Compl. ¶ 40.

Further, plaintiff alleges, the IRS also engaged in anticipatory repudiation when it failed to

provide plaintiff with “assurances” that the information it had supplied was not stale and that IRS

intended to go ahead with an investigation based on the information. Id. ¶ 57.

Count II is a claim for damages for breach of the duty of good faith and fair dealing. Id.

¶¶ 59-64. Plaintiff alleges that the IRS acted in bad faith by making “repeated statements and

representations to induce [the plaintiff] to proceed without counsel and to wrongfully attempt to

abrogate the Reward Agreement, after having obtained the Plaintiff’s identity.” Id. ¶¶ 63.

Finally, in Count III, plaintiff seeks an accounting from the government and the payment of

moneys potentially due to plaintiff under the agreement. Id. ¶¶ 65-69.

II. The Denial of the Government’s Motion to Dismiss

The government previously moved to dismiss plaintiff’s first complaint for failure to state

a claim upon which relief can be granted. Def.’s Mot. to Dismiss, June 8, 2011, ECF No. 7. It

contended that the Reward Agreement did not obligate the IRS to conduct an investigation based

on the information plaintiff provided; accordingly, even assuming the truth of plaintiff’s

allegations that the IRS had threatened not to investigate unless plaintiff agreed to modify the

agreement, plaintiff failed to state a claim for anticipatory repudiation. Id. at 6.

The judge previously assigned to this case rejected the government’s argument. While

the court agreed that the Reward Agreement did not obligate the government to investigate, it

observed that the agreement’s “plain language” did require the IRS “to protect plaintiff’s identity

4

from disclosure and to pay plaintiff a percentage of the money recovered from the investigation

of the Taxpayers identified by plaintiff.” Opinion on MTD at 13 (citations omitted). The court

noted that when ruling on a motion to dismiss for failure to state a claim, the court should

employ a liberal construction of the complaint. Id. at 5. Applying that standard, the court

concluded that plaintiff’s complaint, which alleged that Agent Tyska had threatened that “[t]he

IRS would refuse to proceed and perform as required under the Reward Agreement could be

interpreted as a refusal to perform—that is, to withhold a reward payment to plaintiff.” Id. at 15

(citations omitted).

The court also rejected the government’s motion to dismiss Count II of the complaint,

alleging a violation of the duty of good faith and fair dealing. It concluded that plaintiff’s

allegation—that Agent Tyska sought to “force a renegotiation” of plaintiff’s bargained for

benefits after plaintiff had fully performed under the Reward Agreement by threatening that the

IRS would not provide any reward payment under the agreement—was sufficient to support a

claim for breach of the covenant of good faith and fair dealing. Opinion on MTD at 20-21

(citing McDonald’s Corp. v. Barnes., No. 92-36552, 1993 WL 358556, at *4 (9th Cir. Sept. 14,

1993)).

The Court declined to address Count III of plaintiff’s claims, only noting that “[t]he

Reward Agreement contemplates the possibility that plaintiff may, in appropriate circumstances,

seek an accounting.” Id. at 22.

III. Prior Discovery Disputes

The motion to compel that is currently before the court is the second one plaintiff has

filed in this case. In its first motion to compel, filed on October 25, 2012, plaintiff sought,

among other things, the production of documents which the government had withheld on the

basis of a variety of privileges. The court partially granted and partially denied plaintiff’s motion

to compel as reflected in its decision of December 11, 2012. See generally 108 Fed. Cl. 121. It

concluded that certain portions of the government’s privilege log were inadequate; that the

government had wrongfully invoked the deliberative process privilege for some of the

documents; that section 6103 of the Internal Revenue Code did not preclude IRS from providing

the plaintiff with information about a 2007 undercover operation that had been undertaken based

on plaintiff’s disclosures; and that the government should search for certain additional

documents that the plaintiff had requested. Id. In addition, citing RCFC 37(a)(5)(C), which

allows the court to apportion the reasonable expenses for a motion to compel that is granted in

part and denied in part, the court gave the plaintiff until January 9, 2013 to request such

apportionment. See id. at 150.

After the court issued its opinion on plaintiff’s motion to compel, the government

informed the court that it possessed additional documents within the scope of the court’s order

that it had previously asserted were not available. Def.’s Status Report 1, 4-6, Dec. 19, 2012,

ECF No. 62. In particular, the government advised the court that when it initially responded to

plaintiff’s document requests, it had not conducted any searches of the computers of former

employees because counsel had understood that the IRS routinely deleted any electronically

stored information (“ESI”) from former employees’ computers upon their departure from the

5

IRS. Id. at 1, 5. The government also revealed that it had in its possession audio recordings of

certain undercover operations that were within the scope of the plaintiff’s original request that it

had not timely produced. Id. at 4.

In an order issued on January 7, 2013, the court directed the government to obtain and

review these records for production to plaintiff’s counsel. Order at 1, ECF No. 68. In addition,

the court ordered the defendant to produce to plaintiff’s counsel, “from time to time as they

become available, . . . records responsive to plaintiff’s production requests that it obtains and

reviews.” Id. The court further suspended all previous deadlines in the case, including the

deadline for plaintiff to submit its request for apportionment of reasonable expenses incurred in

connection with its motion to compel. Id.

From March to September 2013, the government produced ESI generated by the IRS

discovery office. See Def.’s Status Reports, March 21, 2013, ECF No. 71; June 7, 2013, ECF

No. 84; July 16, 2013, ECF No. 86; Sept. 5, 2013, ECF No. 88. According to the government, it

directed the e-discovery office to perform searches of the electronically stored information of

former employees that was in the possession of the IRS as well as electronically stored

information of current employees whose computers it had previously directed the e-discovery

office to search. Def.’s Status Report 1, March 21, 2013, ECF No. 71. Using search terms that it

had supplied to plaintiff’s counsel, see Def.’s App. 110, the government searched records of

custodians that plaintiff had identified prior to December 2012 as well as additional custodians

and places that plaintiff subsequently identified. Def.’s Status Report, Sept. 5, 2013; Def.’s App.

109.

In addition, during the period between December 2012 and July 2013, the government

provided revised privilege logs to plaintiff. It also produced transcripts of audio recordings

related to the 2007 undercover operation as plaintiff had requested. Def.’s Status Report 3, Feb.

19, 2013, ECF No. 69. Because the recordings were of undercover agents who still used their

aliases for other undercover work, id., the government imposed an audible “bleep” over portions

of the audio files in which the aliases were stated and then provided the files to plaintiff on

March 20, 2013. Def.’s Status Report 2-3, Mar. 21, 2013, ECF No. 71; Def.’s Resp. 10.

In the meantime, while this production of documents was proceeding, the plaintiff

continued to express concerns about the government’s compliance. On March 27, 2013, the

plaintiff filed a “Notice of Filing” in which it alleged that the government had allowed spoliation

of evidence by failing to place a litigation hold on potentially relevant documents as early as

May of 2005. Pl.’s Objections to Def.’s Mar. 21, 2013 Status Report 3-8, Mar. 27, 2013, ECF

No. 74. Plaintiff also objected to, among other things, the pace of the government’s production

of documents, id. at 1-2, 11-14, and the scope of the search the government was conducting. Id.

at 3, 5.

In a May 7, 2013 Order, the court rejected the plaintiff’s spoliation argument, noting that

the plaintiff “failed to persuade the court that defendant’s duty to preserve documents in this

case arose prior to December 2010, when plaintiff’s counsel sent a letter to the IRS

Whistleblower Office.” Order at 3, ECF No. 82. It also rejected the plaintiff’s other claims that

the government’s document production efforts were inadequate. Id. at 4. The court observed

6

that the plaintiff “does not appear to take issue with the key word searches described by

defendant’s Response [to the Notice of Filing] but instead with the availability of recoverable

documents.” Id. In that regard, while the court did not disagree that the government’s response

had been delayed, it noted that “the United States has acknowledged its mistake of stating that

documents of certain IRS employees had been destroyed when they, in fact, had not, and the

United States appears to be acting in good faith in now producing the documents necessary to

evaluate plaintiff’s claims.” Id.

On June 19, 2013, in a joint status report, the parties notified the court that, in the

government’s view, it had completed production of all documents the plaintiff had requested.

Def.’s Status Report 1, ECF No. 86. The report further recited that plaintiff’s counsel wished to

have additional time to “review the documents produced, to propound appropriate follow-up

requests to the Government, and to determine what further objections he may have to the

Government’s means of document production or remedies that he may seek.” Id. at 2. The

parties therefore requested that the proceedings in this case be continued until September 5,

2013, at which point the government would submit a status report informing the court of any

agreed-upon way forward. Id. On the other hand, if the parties disagreed, then each would file

their own status reports setting forth their respective positions. Id.

Unfortunately, the parties were unable to agree on a way forward and each filed its own

separate status report on September 5, 2013. The government stated that it had provided to

counsel for plaintiff “all documents referenced in prior status reports, as well as their

accompanying privilege logs.” Def.’s Status Report 1, ECF No. 88. “The final production,” the

government represented, was made on September 4, 2013 and “included documents that had not

been previously produced due to technical problems, but all those documents with technical

problems that we have been able to resolve have been provided and all those with technical

problems that cannot be resolved have been identified, and that information conveyed to counsel

for [plaintiff].” Id. The government reiterated that, in its view, “it has fully complied with its

discovery obligations; that additional, extensive discovery sought by [plaintiff] is tangential to

the issues presented by this case and would be unduly burdensome; and that admissions made by

[plaintiff] make this case ripe for summary judgment.” Id. at 2.

The plaintiff, on the other hand, stated that it was “concerned that the same discovery

problems previously arising are rearing their head again as the Defendant appears determined to

‘wall off’ areas of inquiry.” Pl.’s Status Report, ECF No. 89. Therefore, the plaintiff proposed

that it would file a second motion to compel, possibly coupled with a motion for sanctions under

RCFC 37(a)(5)(A). Id.

IV. Plaintiff’s Second Motion to Compel

The case was reassigned to the undersigned on November 25, 2013. On January 8, 2014,

following a status conference, the Court issued an order setting a schedule for the briefing of

plaintiff’s motion to compel additional discovery and for sanctions. ECF No. 95. In accordance

with that Order, plaintiff filed its motion on February 8, 2014. Mot. to Compel, ECF No. 98

[hereinafter “Pl.’s Mot.”]. The Court held oral argument on the motions on January 27, 2015.

7

DISCUSSION

I. Preliminary Observations

Plaintiff has filed lengthy memoranda, along with voluminous declarations and exhibits

in support of its second motion to compel and for sanctions. See Pl.’s Mot., ECF No. 98; Tufts

Decl. of Correspondences, Feb. 7, 2014, ECF No. 97; Tufts Decl. of Deposition Costs, Feb. 7,

2014, ECF No. 96; Tufts Decl. in Supp. of Reply, March 24, 2014, ECF No. 100; Confidential

Informant Decl., March 24, 2014, ECF No. 101. Portions of its memoranda and declarations re-

plow old ground. 4 More significantly, notwithstanding the length and detail supplied in

plaintiffs’ filings, the Court has had some difficulty discerning from its written submissions (and

from plaintiff’s oral argument on January 27, 2015) exactly which additional documents (or

categories of documents) plaintiff is still seeking to have produced by the government, and how

any such documents are either relevant to its claims, or likely to lead to relevant evidence.

In that regard, and admittedly without the benefit of briefing on the merits, the Court

remains uncertain as to the exact nature of plaintiff’s current claims. Plaintiff has never

contended, for example, that the IRS did in fact recover back taxes based on the information

plaintiff provided, and the government has produced several declarations from IRS officials that

it did not. Further, plaintiff does not appear to be making the claim that the judge previously

assigned to this case concluded might fairly be read from its complaint: that when the IRS

allegedly threatened to “proceed” or “perform” on the Reward Agreement with plaintiff, the IRS

was threatening not to either not protect plaintiff’s identity or not pay plaintiff any reward even if

back taxes were recovered. Opinion on MTD at 15. Rather—despite counsel’s somewhat

ambiguous assertions to the contrary at the oral argument—it now seems clear that plaintiff’s

allegation is that the IRS threatened that it would not conduct or complete any investigation

based on the information that plaintiff provided, unless plaintiff agreed to modify the reward

provisions of the Reward Agreement. 5 This, of course, is precisely the claim that the previous

judge already found insufficient to support a cause of action for anticipatory repudiation. 6

4

For example, among plaintiff’s arguments is a request that this Court revisit certain attorney

client privilege determinations made by the prior judge, on the grounds that the recent production

of documents by the government has revealed that the documents found privileged were more

important than previously understood. Pl.’s Mot. 5 n.6, 8, 11-13.

5

At oral argument, the Court repeatedly asked counsel for plaintiff to clarify the nature of the

IRS actions that plaintiff was alleging constituted an anticipatory repudiation of the Reward

Agreement. Counsel agreed that a threat by IRS officials not to investigate would not constitute

an anticipatory repudiation of the contract. Or. Arg. Tr. 7:15-8:7, 11:21-12:5. And while he

asserted that “the threat of nonperformance was much larger than that” (id. at 8:11-12) he never

articulated to the Court’s satisfaction the components of this allegedly “much larger” threat of

nonperformance.

6

To be sure, in plaintiff’s second amended complaint (which was filed subsequent to the prior

judge’s denial of the government’s motion to dismiss), plaintiff also appears to be alleging that

8

The basis for plaintiff’s allegation that the government violated the implied duty of good

faith and fair dealing in its interactions with the plaintiff is also murky. “Every contract imposes

upon each party a duty of good faith and fair dealing in its performance and enforcement.”

Metcalf Constr. v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014) (quoting Restatement

(Second) of Contracts § 205 (1981)). “The covenant [of good faith and fair dealing] imposes

obligations on both contracting parties that include the duty not to interfere with the other party’s

performance and not to act so as to destroy the reasonable expectations of the other party

regarding the fruits of the contract.” Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed.

Cir. 2005). “Both the duty not to hinder and the duty to cooperate are aspects of the implied duty

of good faith and fair dealing.” Precision Pine & Timber, Inc. v. United States, 596 F.3d 817,

820 n.1 (Fed. Cir. 2010).

In general, “what th[e] duty entails depends in part on what [the] contract promises (or

disclaims).” Precision Pine, 596 F.3d at 830. Thus, the “implied duty of good faith and fair

dealing cannot expand a party’s contractual duties beyond those in the express contract or create

duties inconsistent with the contract’s provisions.” Metcalf Constr., 742 F.3d at 991 (quoting

Precision Pine, 596 F.3d at 831). In short, as the Federal Circuit has observed, “[t]he implied

duty of good faith and fair dealing is limited by the original bargain,” as it “prevents a party’s

acts or omissions that, though not proscribed by the contract expressly, are inconsistent with the

contract’s purpose and deprive the other party of the contemplated value.” Metcalf Constr., 742

F.3d at 991.

In the second amended complaint, the plaintiff recites that the duty of good faith and fair

dealing requires that the government “avoid the taking of any actions that may unreasonably

delay or hinder any contractual performance,” ¶ 62, but the complaint fails to specify what

actions plaintiff alleges the government took to delay or hinder either its own contract

performance or plaintiff’s. Instead, plaintiff alleges that the government “acted with bad faith

insofar as it made repeated statements and representations to induce Plaintiff to proceed without

counsel and to wrongfully attempt to abrogate the Reward Agreement, after having obtained the

Plaintiff’s identity,” and that “[u]p to and including the time of Defendant’s repudiation and

refusal, Plaintiff was ready, willing, and able to continue performance of the Reward

Agreement.” Second Am. Compl. ¶¶ 63-64.

Again reading the allegations in the complaint liberally, the prior judge assigned to this

case concluded that plaintiff’s complaint stated a claim that the government violated the duty of

good faith and fair dealing by alleging that—after plaintiff had fully performed under the

the IRS repudiated the contract by failing to respond to plaintiff’s requests for “reassurances” of

IRS’ intent to perform under the contract. Second Am. Compl. ¶¶ 44, 50, 53, 56; Oral Arg. Tr.

10:18-11:4. But with respect to this new claim as well, it appears that the reassurances sought

related to whether the IRS intended to use the information that plaintiff provided to investigate

the taxpayers plaintiff identified, not whether IRS intended to pay him any reward money that

might become due or protect plaintiff’s identity.

9

contract—the IRS sought to force a renegotiation of the contract terms by threatening not to pay

plaintiff any reward money that might become due under the agreement unless plaintiff agreed to

modify the agreement. Opinion on MTD at 20-21. But as with its anticipatory repudiation

claim, it now appears clear that the plaintiff is not alleging that the IRS threatened not to pay

plaintiff any reward money; rather, plaintiff is alleging that the IRS threatened not to pursue the

return of any back taxes based on the information plaintiff provided unless plaintiff agreed to a

modification of the terms of the agreement. 7

The merits of plaintiff’s claims, of course, are not currently before the Court.

Nonetheless, in exercising its discretion whether and to what extent to direct further discovery,

the Court must take into consideration whether the additional proposed discovery is relevant to

the plaintiff’s claims (or at least reasonably calculated to lead to relevant evidence) within the

meaning of Rule 26(b). The lack of clarity in plaintiff’s presentation of its claims has not been

helpful to that endeavor.

At the same time, the Court also recognizes that—as the government itself has

acknowledged—the IRS’s initial document production efforts left much to be desired. In

addition, the Court believes that plaintiff was prejudiced to some extent by the shortcomings of

the government’s efforts. In particular, plaintiff was hampered in its ability to conduct effective

depositions of several of the individuals it has identified as key actors in this matter by the

government’s failure to produce documents in a timely fashion.

II. Plaintiff’s Motion to Compel

With the above considerations in mind, the Court turns to plaintiff’s motion to compel

and for sanctions. For ease of reference, the Court breaks its discussion into three categories:

(1) plaintiff’s challenges to the defendant’s assertion of attorney-client privilege in connection

with both the pre-December 2012 production and the most recent production; (2) plaintiff’s

7

At the oral argument on plaintiff’s motion to compel, the Court attempted to secure greater

clarity from plaintiff’s counsel regarding the basis for his claim of a violation of the duty of good

faith and fair dealing. The Court’s attempts were less than successful. See Oral Arg. Tr. 11-19.

Counsel variously asserted that proof of the following facts would support such a claim: (1) that

the IRS failed to communicate with plaintiff, id at 11:5-12 (citing Conway v. United States, 56

Fed. Cl. 572 (2003)); (2) that “behind the scenes” at the IRS between 2006 and 2008 its

personnel were discussing how to modify the Reward Agreement to retain more discretion for

the agency, id. at 14:24-15:9; (3) that after plaintiff declined to modify the agreement, the agency

“put him in the dark” and their “conduct shifted to how do we then deal with this situation,” id.

at 15:10-17; (4) that IRS personnel were working on drafts of a modified agreement starting in

February 2006, but they never communicated the proposed modifications to the plaintiff , id. at

15:23-25); (5) that the IRS engaged in conduct that was aimed at dissuading plaintiff from

having counsel, id. at 18:9-11; and (6) that IRS officials talked amongst themselves about

“scrap[ping]” the Reward Agreement. Id. at 22:24-23:12.

10

request that the government undertake additional document searches; and (3) plaintiff’s request

for sanctions against the government in the form of an award of costs.

A. Attorney-Client Privilege

Plaintiff does not challenge the sufficiency of the privilege logs the government has

supplied since the court granted in part plaintiff’s first motion to compel. Instead, plaintiff

challenges the government’s assertion of attorney-client privilege with respect to a number of the

documents identified in the logs, including some documents for which the previous judge

assigned to this case had already found the privilege properly invoked. Pl.’s Mot. 14-21.

Plaintiff argues that the privilege is either inapplicable or that it should be pierced based on either

the crime/fraud exception or on plaintiff’s allegedly “compelling need” for the privileged

material. Id. at 21, 39-40.

“The attorney-client privilege protects the confidentiality of communications between

attorney and client made for the purpose of obtaining legal advice.” Genentech, Inc. v. United

States Int’l Trade Comm’n, 122 F.3d 1409, 1415 (Fed. Cir. 1997). This protection encompasses

“the attorney’s thought processes and legal recommendations.” Id. (quoting Zenith Radio Corp.

v. United States, 764 F.2d 1577, 1580 (Fed. Cir. 1985)). Whether the attorney-client privilege

applies depends on the facts and circumstances of a particular case. Upjohn Co. v. United States,

449 U.S. 383, 396 (1981); In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 805 (Fed. Cir.

2000).

Plaintiff’s challenges to the government’s assertion of privilege fall into three buckets.

First, plaintiff argues that several documents that were redacted to delete references to advice

provided by counsel are not protected because neither the sender nor the recipient of the

documents is an attorney. Pl.’s Mot. 15. The Court has examined these documents in camera

and concludes that plaintiff’s argument is without merit because, although the sender and

recipient are not attorneys, the redacted portions of the documents contain passages that

communicate the advice of counsel. The forwarding of documents containing counsel’s advice

by non-attorneys in an organization does not strip the advice contained within them of its

privileged nature. United States v. Jicarilla Apache Nation, 131 S. Ct. 2313, 2320-21 (2011).

See, e.g., In re County of Erie, 473 F.3d 413, 419 (2d Cir. 2007) (“At least in civil litigation

between a government agency and private litigants, the government’s claim to the protections of

the attorney-client privilege is on a par with the claim of an individual or a corporate entity.”);

Bank Brussels Lambert v. Credit Lyonnaise (Suisse) S.A., 160 F.R.D. 437, 442 (S.D.N.Y. 1995)

(observing that the attorney-client privilege “protects from disclosure communications among

corporate employees that reflect advice rendered by counsel to the corporation”).

Plaintiff’s second contention is that it has established a “compelling need” for all

communications among IRS officials that occurred after June 2005, because, according to

plaintiff, the documents that the government has recently produced show that Agent Tyska

started to act in “bad faith” at the direction of his superiors, including UPM Paul Serletti, in June

2005. Pl.’s Mot. 14-15, 17-21. “Compelling need” may serve as a basis for overcoming the

deliberative process privilege, Marriott Int’l Resorts, L.P. v. United States, 437 F.3d 1302, 1307

(Fed. Cir. 2006), and sufficient need may also serve as a basis for overcoming the work product

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privilege. Upjohn Co., 449 U.S. at 397-98 (quoting Hickman v. Taylor, 329 U.S. 495, 510-11

(1947)). But the Court is unaware of any support for the creation of an exception to attorney-

client privilege based on the importance of a privileged communication to the party seeking its

disclosure (and plaintiff has not cited any). For that reason, plaintiff’s arguments seeking to

pierce the privilege based on the perceived importance of the documents to its case (including

those arguments which would require the Court to revisit privilege determinations made by the

prior judge), are unavailing.

Plaintiff’s final argument is that “certain materials described in the privilege log, even as

amended, are not properly withheld as privileged” because they “were produced in the

furtherance of [the alleged] misconduct.” Pl.’s Mot. 39 (emphasis in original); see also id. at 6

n.7, 13, 17-21 (observing that certain documents identified in the government’s privilege log

were created during a period of time when “fundamental misconduct” occurred). To the extent

that this argument is intended to invoke the “crime-fraud” exception to attorney-client privilege,

the argument is devoid of merit.

It is well established that the attorney-client privilege does not extend to

“communications made for the purpose of getting advice for the commission of a fraud or

crime.” United States v. Zolin, 491 U.S. 554, 563 (1989) (internal quotation marks and citations

omitted). In order to invoke this “crime-fraud” exception the party challenging the assertion of

attorney-client privilege must “make a prima facie showing that the communication [at issue]

was made ‘in furtherance of’ a crime or fraud.” Spalding Sports, 203 F.3d at 807 (citations

omitted).

No such prima facie showing has been made in this case. There is no allegation of crime

or fraud at all with respect to the government’s relationship with the plaintiff; rather, the claim is

one for breach of contract. To be sure, the Federal Circuit has indicated in a non-precedential

decision that the crime-fraud exception may be broad enough to encompass documents that are

“incident” to alleged “fundamental misconduct.” In re United States, 321 F. App’x. 953, 956

(Fed. Cir. 2009) (per curiam) (unpublished) (internal quotation marks omitted); see, e.g.,

Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1289 (Fed. Cir. 2011) (en banc)

(stating that in a patent case, “[a] finding of inequitable conduct may . . . prove the crime or fraud

exception to the attorney-client privilege”). But even then, to pierce the privilege, the very act of

making the privileged communication must constitute an element of the misconduct alleged; it is

not enough that it is relevant to showing the misconduct. Cf. In re United States, 321 F. App’x.

at 956 (affirming the decision by the United States Court of Federal Claims that certain

otherwise privileged documents should be produced because the documents were the very ex

parte contacts that constituted the breach of contract).

In this case, plaintiff’s argument is that the documents for which privilege is claimed

were created during a window of time when plaintiff alleges that IRS personnel (including

several attorneys) were conspiring to force the plaintiff to agree to a modification of the Reward

Agreement. Pl.’s Mot. 13, 17-21. Plaintiff further alleges (as best as the Court can understand)

that the documents generated during this period would be highly relevant to its inquiry into this

“fundamental misconduct.” Id. Such claims do not suffice to satisfy the plaintiff’s prima facie

burden under the crime-fraud exception because they do not allege that the communications

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themselves constituted the “misconduct,” as was the case in In re United States. Accordingly,

the Court rejects the plaintiff’s argument that the crime-fraud exception defeats the government’s

assertions of attorney-client privilege in this case.

B. Plaintiff’s Request for Additional Documents

Plaintiff has moved to compel the production of additional documentation falling within

five categories: (1) documents secured from searches of an additional 65 individuals, whose

names plaintiff secured from an organizational chart for the IRS’ Criminal Division during the

years 2005-2008, Pl.’s Mot. 23-24; (2) copies of any IRS analyses of the [. . .], as well as the

[. . .], id. at 28-29, [. . .]; (3) three documents referenced in an audio recording involving an

undercover operation triggered by the plaintiff’s disclosures to the IRS, id. at 23; (4) the “green

card” or “letter of deactivation” prepared by Agent Tyska in reference to the plaintiff, id. at 24;

and (5) documents concerning an alleged investigation of a [. . .]. Id. 8-11. Each of these

requests is addressed below.

1. Searches of the Files of Additional IRS Employees

At the hearing on plaintiff’s motion, the Court sought clarification from plaintiff

regarding its request for the production of documents in the possession of the sixty-five

individuals counsel identified by referring to an IRS organizational chart. See Pl.’s Mot. 23-24.

Based on counsel’s explanations, Oral Arg. Tr. 30-33, 35-36, 50-53, the court understands that

plaintiff seeks access to additional records in order to determine whether other individuals at

higher levels of the chain of command in IRS’s Criminal Investigation Division may have been

involved in what plaintiff alleges was a bad faith effort by Paul Serletti to “scrap” the IRS’

Agreement with plaintiff. Oral Arg. Tr. 28. The government, for its part, contends that it has

“searched the appropriate files and found no evidence that the proposed agreement ever went any

further than UPM Serletti.” Def.’s Resp. 25, 33 (contending that “the ‘paper trail’ regarding

upper-level IRS management involvement in the desire to seek modification of the agreement

from [plaintiff] has been exhausted”).

The Court has no reason to doubt the government’s representations regarding the

likelihood that additional searches will yield documents suggesting the involvement of other IRS

employees and officials in the behind-the-scenes discussions regarding the potential modification

of the Reward Agreement. And the Court is not unsympathetic to the government’s contentions

that the nexus between the additional searches plaintiff seeks and the allegations in plaintiff’s

complaint seems tenuous. Nonetheless, the Court believes it would be appropriate to indulge the

plaintiff’s requests for a few additional searches, particularly in light of the missteps by the

government earlier in this case.

To that end, at the hearing in this case, the Court suggested that counsel for plaintiff

consider whether his request could be narrowed by identifying for additional searches three key

personnel on the list he supplied. Oral Arg. Tr. 53. Counsel agreed that it would be possible to

do so, and the Court concludes that such compromise is a reasonable one. Accordingly,

plaintiff’s motion to compel the searches of the records of additional IRS employees for

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information related to its claims is GRANTED IN PART. Plaintiff may specify the names of

three additional IRS employees for whom the government shall conduct document searches.

2. Franchisee Tax Returns

Plaintiff has requested information regarding an IRS analysis of certain [. . .] returns

which it believes was referenced in a close out memorandum written in connection with the

ending of a 2007 undercover operation. Pl.’s Mot. 22. See Def.’s App. 13-17. That

memorandum stated as follows:

Federal income tax returns were ordered and analyzed prior to the undercover

operation. At this time, additional [. . .] are being requested to further analyze and

corroborate allegations that the individual [. . .] may be underreporting gross

receipts.

Def.’s App. 17. Specifically, plaintiff requests the analysis of the “additional returns.” Pl.’s

Mot. 22-23. According to the Declaration of James Cortier, the Special Agent who wrote the

memorandum, he did not intend to suggest in this passage that he had in fact ordered copies of

the [. . .] of the [. . .] and that, in fact, he did not do so. Def.’s App. 10 ¶ 5. He further stated that

he was involved in no further investigations of any [. . .] based on the information plaintiff

provided and that there was no reason to believe such investigations were pursued by others in

his office. Id. at ¶¶ 3, 6. Therefore, there does not appear to be additional documentation to be

produced that would be responsive to plaintiff’s request. Plaintiff’s motion to compel production

of such documents is therefore DENIED.

3. Documents Referenced in the Audio Recordings

The plaintiff, as noted above, seeks the production of three documents that plaintiff states

were referenced in the audio recording of the undercover operation. Pl.’s Mot. 23. Plaintiff

identifies these documents as a “form requested from one of the principals for one of the targeted

groups”; a “[. . .] provided to one of the undercover agents”; and the undercover agent’s

“translation of [. . .] telephone conversations the undercover agent had with a [. . .] as provided to

her supervisors.” Id. The government represents that it has conducted a search of the hard files

and computers of the relevant agents and spoken to the agents and that it has not uncovered such

documents. Def.’s Resp. 28. The Court has no basis for disbelieving that representation.

Therefore, the Court DENIES plaintiff’s motion to compel production of these documents.

4. “Green Card” or “Letter of Deactivation”

Plaintiff has requested that the government supply copies of a “letter of deactivation” that

is referenced in an internal memorandum that Special Agent Tyska prepared in connection with

the closure of plaintiff’s file. Pl.’s Mot. 24. Although the letter is referenced in a memorandum,

and although the memorandum indicates that the letter was mailed to the plaintiff, Def.’s App.

22, plaintiff never received such letter. Def.’s Resp. 27. In addition, the government asserts that

neither its search of Special Agent Tyska’s files, nor its search through the files of the other

custodians using the relevant key words, uncovered such a letter. Def.’s Resp. 27. In light of

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those representations, the plaintiff’s request to compel production of the deactivation letter is

DENIED.

5. The Second [. . .]

Plaintiff requests additional discovery based on a newly-provided three-page document

(titled “[. . .]”) that counsel claims alerted plaintiff for the first time that the IRS had conducted

an investigation of a “[. . .].” Pl.’s Mot. 8-11, Pl.’s Mot. Ex. D. Plaintiff requests that the

defendant search for information concerning any investigations pursued by the IRS as to [. . .].

Pl.’s Mot. 8.

In its response, the government represents that it “has not hidden the information related

to the mention of [. . .] from [plaintiff]” because it provided to plaintiff a shorter version of the

three-page summary in May 2012. Def.’s Mot. 23 (citing Def.’s App. 110). Furthermore, the

government states that its searches “turned up no ‘hits’ on [. . .] that have not already been

provided.” Id. According to the declarations of Special Agents Tyska and Cortier, because

[. . .], the investigation of that [. . .] would have required the special agent “to go through certain

protocols to obtain its tax information,” and both agents specified that they would have

remembered if they “had gone through such protocols.” Def.’s App. 5, ¶ 4 (Declaration of

Special Agent Tyska); see also Def.’s App. 11, ¶ 7 (Declaration of Special Agent Cortier). The

Court has no basis for disbelieving the government’s representations that it did not purposefully

withhold information of its investigation of the [. . .] and that it has provided all documents

relating to [. . .]. Therefore, the Court DENIES plaintiff’s request for more searches related to

the second [. . .].

C. Motion for Sanctions

In its December 11, 2012 Order, the judge previously assigned to this case gave the

plaintiff an opportunity to file a motion under RCFC 37(a)(5)(C) requesting an apportionment of

the reasonable expenses plaintiff incurred in bringing the first motion to compel because the

motion was granted in part and denied in part. See 108 Fed. Cl. at 150. Prior to the deadline the

court set for requesting such an apportionment, it suspended all deadlines in the case in order to

allow the government to continue its rolling production of electronically stored information.

Order at 1, Jan. 1, 2013, ECF No. 68.

In its current motion to compel and for sanctions, plaintiff cites RCFC 37(a)(5)(A). Pl.’s

Mot. 25. Rule 37(a)(5)(A) governs in cases where a motion to compel is either granted in full or

where the discovery sought in the motion is provided after the motion is filed. In such cases,

“the court must, after giving an opportunity to be heard, require the party or deponent whose

conduct necessitated the motion . . . to pay the movant’s reasonable expenses incurred in making

the motion, including attorney’s fees,” unless “the movant filed the motion before attempting in

good faith to obtain the disclosure or discovery without court action;” or “the opposing party’s

nondisclosure, response, or objection was substantially justified;” or “other circumstances make

an award of expenses unjust.” RCFC 37(a)(5)(A) (emphasis added). In contrast, under RCFC

37(a)(5)(C), governing cases where a motion to compel is granted in part and denied in part, the

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award of expenses is discretionary; thus the rule provides that the court “may, after giving an

opportunity to be heard, apportion the reasonable expenses for the motion.” (emphasis added).

The Court believes that the applicable rule here is, as the prior judge instructed, RCFC

37(a)(5)(C). While it is true that the government began supplying some additional documents to

plaintiff after plaintiff filed its motion to compel, but before the court ruled on it, the continued

production of those documents was mandated by the court’s order. See 108 Fed. Cl. at 127 n.2.

Along with its opening brief in support of its motion to compel, the plaintiff submitted an

affidavit of costs for $15,124.61 in connection with the depositions of Paul Serletti, the two

undercover agents, Marsha Griffith, Ashley Crystal, James Cortier, AngeloTroncoso, and

Casimir Tyska. Tuft’s Aff. of Costs, Feb. 7, 2014, ECF No. 96. This affidavit was supported by

an itemized list of the expenses incurred, along with copies of receipts. Id. at Ex. A. Plaintiff

argues that all of these expenses should be reimbursed because it will be required to incur the

same expenses again to retake these depositions in light of the documents the government

produced both after the motion to compel was filed and after the court issued its ruling granting

the motion in part. Pl.’s Mot. 28-38.

In its response, the government agrees that “a party should be made whole for any costs it

reasonably incurred re-taking depositions that must be re-taken as a result of inadequate

discovery responses.” Def.’s Resp. 34. It argues, however, that plaintiff has not sufficiently

“linked the costs in its Affidavit of Costs to the discovery problems alleged.” Id. And in any

case, the government contends, the documents produced after the court’s December 2012 order

were “in large part, documents that had already been provided in 2012 but were being produced

again in 2013 in order to ensure completeness . . . . What is important is the number of new and

material documents provided to [plaintiff] in 2013.” Def.’s Resp. 34 n.24.

The Court concludes that some award of costs to plaintiff is appropriate based on the

government’s failure to timely produce records belonging to the male undercover agent and to

former IRS employees. Thus, plaintiff has made a sufficient showing that its ability to

effectively depose the two undercover agents was prejudiced by the government’s failure to

produce relevant documents contained in the male undercover agent’s computer files prior to that

deposition. Further, based on the representations made in counsel’s declaration attached to

plaintiff’s reply brief, it appears to the Court that counsel’s ability to effectively question Paul

Serletti, as well as his supervisor, Marsha Griffith, and Special Agent Tyska, may have been

hampered by the lack of certain emails and attachments which were subsequently produced by

the government.

On the other hand, the plaintiff has failed to identify any basis for concluding that

counsel’s ability to effectively depose Ashley Crystal, James Cortier, or Angelo Troncoso would

have been enhanced in any material way had plaintiff had in its possession the documents that

have since been produced by the government. Accordingly, the Court will award the plaintiff

$12,517.75, representing the expenses counsel has identified he incurred to travel to the

depositions of the two undercovery agents and of Mr. Tyska, Ms. Griffith and Mr. Serletti.

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Plaintiff did not request an award of attorney fees in its original motion for sanctions.

Instead, in a lengthy affidavit submitted along with plaintiff’s reply brief, counsel asserted that

he had spent some 209 hours on the case between August 2012 and December 31, 2012, of

which 20.6 hours were spent preparing the first motion to compel filed in October 2012. Tufts

Decl. 38, March 24, 2014, ECF No. 100. Because the plaintiff did not clearly raise counsel’s

attorney fee claim in plaintiff’s opening brief, the Court gave the government leave to file a

surreply to address the allegations in the declaration accompanying plaintiff’s reply brief. Order

at 1, Apr. 11, 2014, ECF 106. In its surreply, the government opposes an award of attorney fees

to plaintiff, arguing that the fee request was waived because it was not raised in the plaintiff’s

opening brief and/or that plaintiff is not entitled to an award of fees because plaintiff failed to

submit adequate documentation that demonstrates that the fee request is reasonable. Def.’s

Surreply 1, Apr. 17, 2014, ECF No. 107.

Attorney fees for sanctions pursuant to RCFC 37 or the identical provision of the Federal

Rules of Civil Procedure must be “reasonable.” RCFC 37(a)(5)(C) (referencing “reasonable

expenses”); RCFC 37(b)(2)(C) (same); Tollet v. City of Kemah, 285 F.3d 357, 367-68 (5th Cir.

2002); Martin v. Brown, 63 F.3d 1252, 1263 (3d Cir. 1995). The burden of proving

reasonableness lies with the moving party. Kister v. District of Columbia, 229 F.R.D. 326, 329

(D.D.C. 2005). In order for the Court to evaluate what costs and expenses are reasonable, it must

be provided with sufficiently detailed time records to evaluate whether the costs claimed are

appropriate. Role Models Am., Inc. v. Brownlee, 353 F.3d 962, 971 (D.C. Cir. 2004) (Equal

Access to Justice Act matter). Fees are not permissible for work that is “excessive, redundant, or

otherwise unnecessary.” Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).

It is clear that plaintiff’s existing submission is insufficient to support an award of fees.

The request for fees is not supported by any billing statements at all. See generally Tufts Decl.,

Mar. 24, 2014, ECF No. 100. At the hearing in this case, the Court indicated that it would

consider giving plaintiff a second opportunity to submit additional documentation to support its

claim for 20.6 hours of attorney time spent on preparing the first motion to compel. Oral Arg.

Tr. 70. Upon further reflection, however, the Court is of the view that, under the circumstances

of this case, an award of attorney fees to the plaintiff is unwarranted.

Thus, for the reasons set forth above, the Court has determined that the plaintiff’s second

motion to compel is largely without merit. Were the Court to direct an award of attorney fees to

plaintiff based on its partial success in connection with the first motion to compel, fairness would

require the court to give the government an opportunity under Rule 37(a)(5)(C) to seek an

apportionment of reasonable expenses for the work it has performed in connection with its

response to the second largely meritless motion to compel. In the Court’s view, however, further

rounds of briefing devoted to debating past discovery disputes would be counter-productive and

would unduly delay the resolution of this case on its merits. Therefore, the Court concludes that

both parties should bear their own costs in connection with the second motion to compel and that

the plaintiff’s recovery of costs with respect to the first motion shall be limited to the expenses it

incurred with respect to those depositions identified above that counsel states that he will need to

re-convene.

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CONCLUSION

On the basis of the foregoing, plaintiff’s motion to compel and for sanctions is

GRANTED IN PART and DENIED IN PART. The government shall reimburse the plaintiff a

total of $12,517.75 for expenses related to the depositions of the two undercover agents, Ms.

Griffith, Mr. Serletti, and Mr. Tyska.

Further, within one week of the date of this Order, the plaintiff shall identify for the

government no more than three additional IRS officials for whom it requests production of

documents (if it has not already done so). The plaintiff may also depose those officials to the

extent that any documents produced indicate that such depositions would provide relevant

information within the meaning of Rule 26(b). In addition, plaintiff may reconvene the

depositions of the two undercover agents, Ms. Griffith, Paul Serletti, and Agent Tyska for

purposes of addressing matters raised in the document production that occurred subsequent to the

time of their original depositions.

Discovery in this matter shall be completed by August 7, 2015. In the interim, the parties

shall file a joint status report with the Court every 30 days beginning on May 15, 2015. In

addition, the parties shall file a joint status report within 30 days after the close of discovery,

suggesting a schedule for further proceedings in this matter.

The parties are strongly encouraged to resolve any discovery disputes going forward

without the Court’s intervention.

The Clerk of the Clerk is directed to enter judgment accordingly.

IT IS SO ORDERED.

s/ Elaine D. Kaplan

ELAINE D. KAPLAN

Judge

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