Experts & Work Product — Materials Provided to Reporting Expert by Anyone Other than Counsel or Client Are Unprotected
United States v. Veolia Environnement N.A. Operations, Inc., 2013 U.S. Dist. LEXIS 153245 (D. Del. Oct. 25, 2013):
II. Materials Relied On By Experts
The parties dispute whether certain materials pertaining to the creation of the appraisal reports by XRoads and Duff & Phelps must be disclosed by the Taxpayer to the IRS.
It is undisputed that XRoads and Duff & Phelps are testifying experts who must provide a written report, as required by Rule 26(a)(2)(B). (D.I. 11 at 7; D.I. 12 at 2)
The government contends that the Taxpayer has failed to disclose the "facts, data, and assumptions that were provided, by anyone, to, and were considered or relied on by, [the Taxpayer's] valuation firms in forming the opinions to be expressed in the appraisal reports." (D.I. 11 at 5) (emphasis added) The Taxpayer, by contrast, states the requirement somewhat differently, maintaining that it has already provided the government with "all factual information it provided" to XRoads and Duff & Phelps, including "copies of its communications . . . to the extent the communications relate to" compensation for the two firms, as well as facts, data, or assumptions provided to and considered by the two firms in forming their opinions. (D.I. 8 at 8-9) (emphasis added) It appears from the Court's review of the documents submitted in camera that the parties' dispute is over the meaning of Rule 26(b)(4)(C), as it appears that the Taxpayer has withheld documents containing communications of facts or data to XRoads provided by entities other than the Taxpayer. (See, e.g., Priv. Log Doc. 297 (containing email chain between XRoads and non-testifying expert Aon); see also D.I. 12 at 2-3)
On this issue the Court agrees with the government. Rule 26(b)(4)(C) only protects "communications between the party's attorney" and that party's testifying expert (i.e., a Rule 26(a)(2) expert). Communications of "facts or data . . . that the expert considered in forming the opinions to be expressed" that were provided to the expert by sources other than "the party's attorney" are not protected by Rule 26(b)(4)(C). Nor, here, has the Taxpayer identified any other source of protection from disclosure of such "facts or data."
The Court's conclusion is supported by other courts to have considered the issue,
see Fialkowski v. Perry, 2012 WL 2527020, at *4 (E.D. Pa. June 29, 2012) (stating that disclosure requirements for testifying experts "were meant to trump all claims of privilege, mandating production of all information furnished to the testifying expert for consideration in the formulation of [the expert's] opinions, regardless of privilege"), as well as the 2010 advisory committee notes ("[T]he intention is that 'facts or data' be interpreted broadly to require disclosure of any material considered by the expert, from whatever source, that contains factual ingredients. . . . The protection is limited to communications between an expert witness required to provide a report under Rule 26(a)(2)(B) and the attorney for the party on whose behalf the witness will be testifying . . . .") (emphasis added). It is also the logical result: as one of the exceptions to protection from disclosure of attorney-expert communications is communications that "identify facts or data that the party's attorney provided and that the expert considered in forming the opinions to be expressed," Fed. R. Civ. P. 26(b)(4)(C)(ii), there is no reason that communications from someone other than the party's attorney that likewise identify such "facts or data" should be protected from disclosure.
Therefore, the Court concludes that the Taxpayer must produce, in response to the summonses, any materials containing facts or data considered by XRoads or Duff & Phelps in forming the opinions expressed in their reports -- even if such facts or data were provided by Aon or anyone else or any entity other than the Taxpayer and the Taxpayer's attorneys -- unless the Taxpayer can demonstrate some basis for non-disclosure.
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