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Chen v. Republic Restaurant Corp.

March 26, 2008

FEN Z. CHEN, ET AL., PLAINTIFFS,
v.
REPUBLIC RESTAURANT CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Ronald L. Ellis, United States Magistrate Judge

OPINION & ORDER

I. INTRODUCTION

Plaintiffs Fen Z. Chen, Jin L. Dong, De Q. Lian, Dian Lin, Gong Y. Wang, Zhu K. Yong, Ji D. You, and Cong D. Zehng have brought an action for damages arising out of their employment as take-out food delivery personnel for Republic Restaurant Corporation, Republic GC, LLC, Me'Kong Delta, Inc., Huy Chi Le, Linh Hue Le, Liang Jin Lin, and Jane and John Doe for federal minimum wage and overtime violations under the Federal Labor Standards Act ("FLSA"); New York State minimum wage, overtime and "spread of hours" violations; equipment purchase and maintenance violations under the FLSA; and New York State unlawful deductions.

Before the Court are Defendants' request for Plaintiffs' tax returns and Plaintiffs' request to compel certain documents and interrogatories from Defendants. Defendants' request for Plaintiffs' tax returns is DENIED for lack of both relevance and compelling need. Plaintiffs' request to compel Document Request Number 2 is DENIED as overly broad. Plaintiffs' request to compel Document Request Number 22 and answers to Interrogatories number 7 and 11 is GRANTED.

II. BACKGROUND

Plaintiffs are take-out deliverers for Republic Restaurant. The central dispute in this case concerns the number of hours worked by the Plaintiffs from April 2001 to the present. Defendants began using a sign-in sheet to keep track of take-out delivery employees' hours after April 2007. (Defs. Feb. 20 Letter to the Court at 1.) The sign-in sheets show that Plaintiffs currently work forty-five to fifty hours per week. Id. Plaintiffs claim, however, that their working hours were dramatically reduced after Defendants began using the sign-in procedure and maintain they worked around sixty-two hours per week before the procedure was put in place.

Id.; (Plfs. Feb. 21 Letter to the Court.) Defendants contend that their business has remained steady over the relevant time period and therefore the sign-in sheet hours are a reasonable estimation of the hours worked by Plaintiffs before the sign-in procedure began.

III. DISCUSSION

The current dispute arises from Defendants' request for Plaintiffs' tax returns. (Defs. Feb. 20 Letter to the Court.) Plaintiffs argue that tax returns are not relevant and that they have a Fifth Amendment right to refuse to testify about their tax returns in deposition. (Plfs. Feb. 21 Letter to the Court.) Plaintiffs also seek discovery of their own, and move to compel Defendants to produce certain documents and answer certain interrogatories. Id.

A. Tax Returns

Rule 26(c) authorizes courts, for good cause, to "make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including . . . that certain matters not be inquired into, or that the scope of the disclosure or discovery be limited to certain matters . . . " Fed.R.Civ.P. 26(c). "[T]he burden is upon the party seeking non-disclosure or a protective order to show good cause." Dove v. Atlantic Capital Corp., 963 F.2d 15, 19 (2d Cir.1992) (citations omitted).

Although tax returns are not privileged documents, Court's are reluctant to order their discovery in part because of the "private nature of the sensitive information contained therein, and in part from the public interest in encouraging the filing by taxpayers of complete and accurate returns." See Smith v. Bader, 83 F.R.D. 437, 438 (S.D.N.Y. 1979) (citing Mitsui & Co. Inc. v. Puerto Rico Water Resources Authority, 79 F.R.D. 72, 80 (D.P.R.1978); Payne v. Howard, 75 F.R.D. 465, 470 (D.D.C.1977); Wiesenberger v. W. E. Hutton & Co., 35 F.R.D. 556, 557 (S.D.N.Y.1964)). In order to reconcile privacy concerns with liberal pretrial discovery, a two prong inquiry must be used when determining whether a party's tax returns should be produced for discovery. Cooper v. Hallgarten & Co., 34 F.R.D. 482, 484 (S.D.N.Y.1964). Tax documents should not be provided for discovery purposes unless 1) they appear relevant to the subject matter of the action, and 2) that there is a compelling need for the documents because the information contained therein is not otherwise readily obtainable. Smith v. Bader, 83 F.R.D. 437 (S.D.N.Y. 1979) (citing Cooper v. Hallgarten & Co., 34 F.R.D. 482, 484 (S.D.N.Y.1964)); See also Ellis v. City of New York, 243 F.R.D. 109, 111-112 (S.D.N.Y. 2007). For the following reasons, Defendants' request for Plaintiffs' tax returns is DENIED.

1. Relevance

Defendants argue that the tax returns are relevant for a number of reasons. First, they claim that the tips Plaintiffs reported on their tax returns will show whether business volume has remained constant and, by extension, whether ...


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