The Justice Department wants to convince a federal appeals court in Washington that the accounting firm Deloitte should be forced to give up tax documents stemming from auditing services provided to Dow Chemical Company.
Judge Richard Leon of the U.S. District Court for the District of Columbia ruled against Justice in June 2009, saying that the requested documents are confidential. The government is seeking the documents amid a civil tax refund case in federal district court in Louisiana that was brought by Dow's majority-owned partnership, the Chemtech Partnership.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit—Chief Judge David Sentelle and Judges Thomas Griffith and Janice Rogers Brown make up the panel—is scheduled to hear oral argument Feb. 26.
Justice attorneys want to review two categories of documents pursuant to a September 2007 subpoena—three documents that Deloitte (formerly Deloitte & Touche) is withholding based on privilege asserted by Dow, and documents maintained by a Deloitte affiliate in Zurich, Switzerland.
The three documents Justice wants include a 2005 tax opinion from McKee Nelson (the firm later merged with Bingham McCutchen) and a 1998 memo written by a Dow in-house attorney and an in-house accountant.
More after the jump.
Last year, Leon ruled that the documents in the first category, which were prepared in anticipation of future tax litigation involving Chemtech, are generally protected by attorney work product. Click here for the order.
Leon said the government also failed to show that Deloitte USA has the legal right or authority to obtain documents from Deloitte in Switzerland. The judge noted in his opinion that Deloitte Switzerland refused to provide the requested documents to Deloitte USA absent an order from a Swiss Court.
“The U.S. firm doesn't have control of the Deloitte Swiss firm,” Sidley Austin partner Michael Warden, representing Deloitte, said at a court hearing in Washington in December 2008. Warden said the two firms are “very different” and separate legal entities.
In D.C. Circuit court papers, Justice lawyers say a document loses work-product protection when it is provided to a third-party’s potential adversary. Deloitte, Justice attorneys said in court papers, is an independent auditor that serves as a “public watchdog who has certain disclosure obligations to the (Securities and Exchange Commission) and whose loyalties ultimately run to the investing public.”
Justice Department attorney Judith Hagley of the Tax Division will argue the case for the government.
Dow disclosed documents to Deloitte with the expectation that Deloitte would maintain their confidentiality, Bingham McCutchen partner Hartman Blanchard, Jr., representing Dow, said in court papers in the D.C. Circuit.
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