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The University of Phoenix, Inc. v. Indiana Department of State Revenue

Tax Court of Indiana

February 16, 2017

THE UNIVERSITY OF PHOENIX, INC., Petitioner,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent.

          ATTORNEYS FOR PETITIONER: RANDAL J. KALTENMARK ZIAADDIN MOLLABASHY BARNES & THORNBURG LLP Indianapolis, IN THEODORE R. BOTS JENNY A. AUSTIN BAKER & MCKENZIE LLP Chicago, IL SCOTT L. BRANDMAN BAKER & MCKENZIE LLP New York, NY

          ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR. ATTORNEY GENERAL OF INDIANA JESSICA R. GASTINEAU WINSTON LIN PARVINDER K. NIJJAR DEPUTY ATTORNEYS GENERAL Indianapolis, IN

          ORDER ON PETITIONER AND RESPONDENT'S REQUESTS FOR EXPENSES PURSUANT TO INDIANA TRIAL RULE 37(A)(4)

          Martha Blood Wentworth Judge

         After having successfully defended against and prosecuted discovery enforcement motions either in whole or in part, both the University of Phoenix, Inc. and the Indiana Department of State Revenue claim that an award of expenses pursuant to

          Indiana Trial Rule 37(A)(4) is warranted. The Court agrees.

         BACKGROUND [1]

         The events giving rise to the filing of the Department's first discovery enforcement motion may be traced back to October 13, 2016: the day the University issued a non-party subpoena to the former Commissioner of the Indiana Department of State Revenue directing him to appear for a deposition. Shortly thereafter, the Department moved for a protective order explaining that information on Section 14 of House Bill 1349, the September 2014 Tax Competitiveness and Simplification Report, and a presentation on the Report (collectively, the "deposition topics") was not relevant and was most likely obtainable from "lesser-ranking officials[.]" (See Pet'r Br. Supp. Award Expenses Pursuant To Ind. Trial Rule 37(A)(4) For Its Resp. To Resp't Mots. For Protective Order & Mot. To Compel ("Pet'r Br."), Ex. E at 2-5 ¶¶ 3-21.) On October 27, 2016, the Court denied the Department's motion for protective order, quashed the subpoena, and advised the parties that the University could depose the former Commissioner at a later date. (See Pet'r Br., Ex. A.)

         In the meantime, the University deposed the Department's three Trial Rule 30(B)(6) witnesses who provided scant information on the deposition topics. As a result, the University issued a second subpoena to the former Commissioner on November 1, 2016. Just over a week later, the Department filed its second motion for a protective order that, in addition to restating its prior arguments, explained that the University "had unfettered access to [the Department's] three extremely qualified [30(B)(6)] witnesses" to discuss the "irrelevant" deposition topics, and therefore, the Court should end the University's "fishing expedition." (See Pet'r Br., Ex. D ¶ 7.) On November 28, 2016, the Court denied the Department's second motion for protective order. University of Phoenix, Inc. v. Indiana Dep't of State Revenue, 64 N.E.3d 1271, 1274 (Ind. Tax Ct. 2016).

         By that time, however, the University had filed its own discovery enforcement motion that sought to compel the Department to produce documents regarding the deposition topics and to designate a proper 30(B)(6) witness. The Court subsequently granted in part and denied in part the University's motion to compel. University of Phoenix, Inc. v. Indiana Dep't of State Revenue, Cause No. 49T10-1411-TA-00065, 2017 WL 475839, at *6 (Ind. Tax Ct. Feb. 6, 2017).

         On January 17, 2017, the Court conducted an evidentiary hearing on the parties' requests for expenses as required by Trial Rule 37(A)(4). The University submitted two affidavits that provided its expenses totaled $159, 446.40. (See generally Pet'r Br., Exs. C, F.) In turn, the Department's affidavit stated that its expenses totaled $12, 900.00. (See generally Resp't Aff. Supp. Award Expenses.) Additional facts will be supplied as necessary.

         LAW

         Indiana Trial Rule 37(A)(4) states that when a court grants or denies a discovery enforcement motion, it shall require the party whose conduct necessitated the motion

or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in obtaining the order, including attorney's fees, unless the court finds that the opposition to[ or the making of] the motion was substantially justified or that other circumstances make an award of expenses unjust.

         Ind. Trial Rule 37(A)(4). Accordingly, when discovery enforcement motions, like those at issue here, are granted or denied, a presumption arises that the Court will order the reimbursement of the prevailing party's reasonable expenses. Popovich v. IndianaDep't of State Revenue, 50 N.E.3d 407, 411 (Ind. Tax Ct. 2016). "The award of expenses is mandatory unless the losing party either demonstrates that he was substantially justified in making or opposing the motion or shows that other circumstances make an award of expenses unjust." Id. (citation omitted). "A person is 'substantially justified' in seeking to compel or in resisting discovery, for purposes of avoiding the sanctions provided by Trial Rule 37(A)(4), if reasonable persons could conclude that ...


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