Compagnone v. MJ Licensing Company
- Ona Wang
- 1:18-cv-06227-OTW
- U.S. District Court · Southern District of New York
- 4
In Compagnone v. MJ Licensing, Judge Wang granted defendants’ motion to compel Ralph Compagnone’s 2012–2018 tax returns.
Ralph Compagnone must provide his 2012–2018 tax returns or signed authorizations for defendants to obtain them; defendants may receive the returns subject to a protective order.
What happened
In Compagnone v. MJ Licensing Co., Ralph Compagnone sued defendants under the Fair Labor Standards Act and New York Labor Law concerning his work for them from 2012 through 2018. Defendants renewed their request for his tax returns after the court had previously ordered him to provide W-2 forms and 1099 forms instead.
The court found the tax returns relevant because Compagnone claimed he had set aside another business, worked long hours, and received little or no income from defendants, while defendants argued he was not their employee and continued operating his own business. The court also found a compelling need for the returns because the previously ordered documents had not been produced and the parties gave conflicting accounts about Compagnone’s income.
Judge Ona T. Wang granted defendants’ request for the tax returns. If Compagnone did not possess or control them, he had to provide signed authorizations allowing defendants to request them from the Internal Revenue Service; privacy concerns could be addressed through a protective order.
The detailed version
- Compagnone v. MJ Licensing Company · No. 1:18-cv-06227-OTW
- Ona Wang
- Dec. 12, 2019
Background
Ralph Compagnone brought claims against defendants under the Fair Labor Standards Act and New York State Labor Law concerning his work for defendants from 2012 through 2018. The opinion states that Compagnone claimed he was required to provide his full-time and best efforts to defendants, set aside a prior business to do so, worked at times more than 75 hours per week, was not paid wages, and received less than $1,000 in income from his work for defendants. Defendants maintained that Compagnone was not their employee and had continuously operated his own business during the relevant period.
The court considered defendants’ renewed motion to compel discovery of Compagnone’s federal income tax returns for 2012 through 2018. The court had previously denied a request for the tax returns and ordered Compagnone to produce his W-2 forms and 1099 forms for the relevant period.
Analysis
The court applied a two-part test for compelling tax returns in discovery. First, the returns had to be relevant to the case. Second, defendants had to show a compelling need because the information was not otherwise readily available.
The court found the returns relevant to determining Compagnone’s sources of income. Compagnone did not dispute that his income sources during the period were relevant. Defendants’ position that Compagnone continued operating his own business also made his income information relevant to the parties’ dispute about whether he was defendants’ employee.
The court also found a compelling need. Compagnone had not produced the W-2 forms and 1099 forms previously ordered. His counsel had stated that he had no W-2s or 1099 forms showing personal income for the relevant years and later stated that he had no earned income during that period. Counsel also stated that payments from MHW, described in the opinion as a distribution arm of a defendant, were below the reporting threshold for a 1099 form. Defendants then identified yearly payments, including payments in three years that exceeded the stated 1099 reporting threshold. The court found that this information was inconsistent with the earlier representation and that at least those documents should have been produced.
The court rejected the argument that the information could be obtained during Compagnone’s deposition. If the tax returns identified other income sources, defendants were entitled to question Compagnone about them and therefore needed the returns before the deposition.
Ruling
Judge Ona T. Wang granted defendants’ request for Compagnone’s tax returns for 2012 through 2018. If Compagnone did not have possession, custody, or control of the returns, he had to provide signed authorizations so defendants could seek them from the Internal Revenue Service. The court stated that privacy concerns could be addressed through a protective order. If the parties could not agree on one, the standard form on the Southern District of New York’s website would govern. The parties were also ordered to submit their next joint status letter by January 14, 2020.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.