United States v. Buff

Background

The United States alleges that Carolyn Buff failed to report financial interests in certain foreign bank accounts for 2006, 2007, and 2008, violating the Bank Secrecy Act. The United States seeks unpaid civil penalties and additional amounts that accrued after assessment. The opinion states that the complaint initially sought $64,292.06 in penalties, plus interest and additional penalties.

Buff had previously moved to dismiss or, alternatively, for summary judgment, arguing that she had not been properly served abroad. Those requests were recommended for denial, adopted over her objections, and followed by an appeal that was dismissed. The present order concerns discovery rather than the underlying liability allegations.

Deposition and the Hague Convention

The parties’ discovery plan stated that Buff would not voluntarily provide discovery and that the United States would need to seek party discovery under Chapter I of the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. The court had extended the discovery period in light of the expected use of that Convention’s procedures.

Buff moved between France and Belgium during the discovery dispute. Belgium was not a signatory to the Convention, while France and the United States were signatories. The United States initially sought to compel Buff’s deposition without using the Convention’s procedures, but the court previously directed the United States to comply with those procedures while Buff was residing in France.

The court then considered whether France would treat this tax-related matter as falling within the Convention’s coverage of “civil or commercial matters.” It relied on France’s response to a 2008 questionnaire, which did not identify taxation as a covered category. The court concluded that French authorities would not consider a tax matter subject to the Convention.

Comity analysis

Because the court concluded that the Convention did not apply to this tax matter, it applied the four-factor analysis used when United States discovery rules may conflict with foreign law. The factors are: the competing national interests, the hardship to the person from whom discovery is sought, the importance of the requested information, and the resisting party’s good faith.

The court found that the first factor favored the United States because the United States had an interest in enforcing its discovery rules and in pursuing its tax laws. It found France’s interest minimal, including because the court described Buff as a dual citizen of the United States and France and stated that France’s blocking statute was rarely enforced.

The second factor also favored compelling the deposition. The court rejected Buff’s concerns about service because earlier courts had found service proper. It also rejected her lack of knowledge about how to answer deposition questions as a hardship and noted that the deposition could occur remotely. The court further found little risk of prosecution under the French blocking statute.

The third factor weighed in favor of a deposition, though less strongly. The United States said it wanted the deposition primarily to learn what defenses Buff intended to raise at summary judgment or trial. The court found that information convenient but not crucial, while concluding that the Federal Rules of Civil Procedure entitled the United States to depose its opposing party.

The fourth factor favored the United States because the court concluded that Buff’s continued resistance was no longer in good faith. The court stated that Buff had not identified a good-faith reason for refusing either to consent under the Convention or to sit for the deposition outside the Convention’s procedures.

Rulings

The court held that all four factors favored compelling Buff’s deposition. It therefore ordered the deposition under the authority of the United States judiciary, without requiring the United States to proceed through the Hague Convention. The United States’ motion to compel was granted.

The court also stated that Buff had already consented, for purposes of France’s Convention reservations, when she signed the parties’ initial discovery plan. The court noted that the record was limited concerning what the parties discussed when the plan was prepared, but concluded that the parties intended to proceed under the Convention.

The court further stated that if Buff refused to sit for the deposition, she would have waived the right to raise defenses at the summary-judgment stage. It planned to discuss an extension of discovery and invited the United States to seek a separate order from the District Judge limiting Buff’s defenses if the deposition was not completed. The opinion does not state that such a later limiting order had already been entered.

Motion to seal

Buff separately asked the court to seal, retroactively and prospectively, documents containing confidential tax information and asked the court to require the United States to seek removal of that information from internet search engines.

The court concluded that the statutory confidentiality rules for tax information allow disclosure in a federal judicial proceeding concerning a taxpayer’s civil liability or tax administration. It found that this case fell within that exception. The court stated that Buff remained entitled to the redactions required by Federal Rule of Civil Procedure 5.2(a) and Local ECF Rule 21.3, but it did not issue a separate order requiring those redactions because the United States represented that they had been made. Buff’s motion to seal was denied.