Matthew Stein v. Skatteforvaltningen

Background

Matthew Stein and Jerome Lhote brought one claim against Skatteforvaltningen, also called SKAT, alleging that SKAT breached a May 2019 settlement agreement. The alleged breach concerned Section 8(f), which required SKAT, promptly after the agreement was signed, to make written representations to the Danish Public Prosecutor for Serious Economic and International Crime, known as SØIK and now renamed the National Special Crime Unit. The opinion states that the settlement arose from claims connected to a fraudulent scheme involving allegedly improper Danish tax refunds.

SKAT filed counterclaims against Stein, Lhote, and Luke McGee for allegedly failing to pay amounts owed under the settlement agreement. The opinion also states that SØIK commenced criminal proceedings against McGee, Stein, and Lhote, and that those proceedings remained pending when the order was issued.

McGee’s request

McGee filed a letter motion asking the court to authorize a formal evidence request under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. He sought three broad categories of written communications between SKAT and SØIK from March 2019 through June 2021: communications about the settlement agreement, including confidentiality and Section 8(f); communications about the obligations or performance of Stein, Lhote, and McGee; and communications about negotiating the settlement agreement.

McGee also sought 58 specific documents that had previously been made available, apparently by SØIK, for use in the Danish criminal case. He requested authentication of numerous documents allegedly made available by SØIK to Stein and Lhote, as well as authentication of additional documents produced in response to his requests.

Reasons for denial

The court denied the request in full. First, it relied on its earlier order denying discovery requests by McGee, Stein, and Lhote against SKAT. That earlier order found that their document demands went far beyond the scope of the claim pleaded in this case. The court explained that it generally should not authorize an evidence request to a foreign entity when it would not approve the same discovery in a domestic setting. The court also noted that McGee’s proposed request sought communications about the settlement’s confidentiality provision even though the court had already ruled that provision was not at issue in the case. The court stated that a Hague Convention request could not be used as a substitute for asking the court to reconsider its earlier discovery ruling.

Second, the court expressed concern that McGee’s requests could be intended to obtain evidence for the Danish criminal case that might not be available through Danish criminal procedures. The court viewed this as raising international-comity concerns, meaning concerns about respecting another country’s legal system and governmental authority.

The court also found that McGee had not shown that the requested evidence from SØIK was necessary or appropriate. According to the order, whether SKAT complied with Section 8(f) could be proved through SKAT’s own communications with SØIK, because Section 8(f) concerned what SKAT was required to communicate. The court further found that the request would likely cause substantial delay, while fact discovery was scheduled to close on May 1, 2024, and another deadline was set for December 10, 2024.

Finally, the court found that McGee had not explained why documents previously provided to Stein and Lhote required authentication, why he was pursuing authentication of those documents, or why the documents were relevant. The court refused to impose those authentication demands on a foreign governmental entity without a showing of relevance.

Disposition

The court denied McGee’s requests in full and requested that the Clerk of Court terminate the motion pending at ECF No. 100. The order addressed the proposed foreign evidence request and did not resolve the parties’ underlying contract claims.