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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 1 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
BEFORE THE HEARING EXAMINER OF THE CITY OF RENTON
RE: TracFone Wireless, Inc. Administrative Appeal
TRACFONE’S MOTION TO COMPEL PRODUCTION OF AUDIT FILE ORAL ARGUMENT REQUESTED
INTRODUCTION
This motion addresses the fact that at this late date in the proceedings, the City has
failed to provide TracFone with the entire audit file record. Despite a year of repeated
requests, Tax Recovery Services, LLC (“TRS”), the contingent fee auditor who performed
the audit, has failed to produce all of its records regarding the audit, including emails, an
issue exacerbated by the fact that TRS has altered the content of portions of the record it has
produced. TracFone is seeking an order compelling the prompt production of unaltered
documents (subject to redacting the identity of other TRS clients) and to clarify when and
what changes were made to the various versions of the audit schedules.
This is important because there are numerous instances in which TRS’s monthly
updates and other communications to Renton cite or purport to quote emails and other
communications that TRS has admitted in depositions either don’t exist (never existed) or
were mischaracterized by TRS.
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 2 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
STATEMENT OF FACTS
In June 2013, TRS made a pitch to the City to perform a utility tax audit of TracFone.
In 2014, the City sent TracFone a letter informing TracFone that the City had authorized TRS
to conduct a telephone utility tax audit of TracFone. Edwards Decl., Exs. 5 and 8.1
Other than a single phone call on or about December 17, 2014, all communications
between TRS and TracFone were by email.2 T. Crisp. Dep. Tr., p. 260. (Edwards Decl. Ex.
102).
TRS prepared draft audit schedules as part of its work. Although the schedules were
saved in Excel format, TRS does not have Microsoft Office software and prepared the
schedules using a free software product they downloaded from the internet called LibreOffice
that they “saved as Excel files.” T. Crisp Dep. Tr., p. 38, lines 8-22. Those LibreOffice
spreadsheets were the only place they recorded their work. T. Crisp Dep. Tr., p. 43, lines 2-
15 (“it’s not our practice to write things down and transfer them again … we would write
them on that file straight from our research to our … LibreOffice spreadsheet. It would just
go directly on there. And if we wanted to double-check, we would open that spreadsheet and
compare it to some new information, whether it was from Renton or another site, to make
sure it was accurate. There would be no – no scratch pad there.”). Edwards Decl., Ex. 102.
Unfortunately, when one uses Excel to open a LibreOffice spreadsheet that has been
“saved in Excel” format, it generates a warning: “We found a problem with some content in
[filename] Do you want us to try to recover as much as we can? If you trust the source of
1 In Ex. 63, TRS reports that it told TracFone on June 21, 2013, that TRS had asked Renton to send TracFone a
letter stating that TRS had been contracted to conduct an audit, Tamara Crisp testified “perhaps we really never
sent that email and we just thought we had.” T. Crisp. Dep. Tr., p. 248, lines 6-19. (emphasis added). Edwards
Decl., Ex. 102.
2 Although TRS reported to the City that TRS had initially contacted TracFone by email on June 6, 2013 to
notify TracFone about the Renton audit, (Edwards Decl., Ex. 6) Tamara Crisp has testified “we have no email
dated June 6th that talks about this. We hadn’t even gotten permission for the City till, like the 13th … it must
have been a phone call … if it was an email, its been lost.” T. Crisp, Dep. Tr., p. 33, lines 1-15. (Edwards
Decl., Ex. 102).
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 3 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
this workbook, click Yes.” If one proceeds to open the document, the cells appear blank or
depict a zero. See Edwards Decl. Ex. 12 at Bates 000639 (a printout of the file
“ExcelPrelimRenton TracFone.xls” opened in Excel and depicting all zeros for the calculated
tax liability. Yet the very same “Excel” file will display the content when opened using
LibreOffice instead of Excel. T. Crisp. Dep. Tr., p. 114, lines 6-14 (discussing the now
visible content of the same file opened using LibreOffice).
To make matters worse, TRS did not maintain a segregated TracFone Renton audit
file. Tamara Crisp testified that, except for “a separate folder we put the zip code data in … I
don’t think we have any – audit specific folders.” T. Crisp Dep. Tr., p. 286, lines 19-24. She
further clarified that TRS does not actually maintain files for any of its audits, instead “we
use our search engine to find things.” Id., p. 287, lines 2-3.
This is a problem because TRS has produced multiple copies of the spreadsheets it
created that have exactly the same name but different content. For example, TRS has
produced copies of a spreadsheet titled “ExcelPrelim3Renton Tracfone.xls” with at least
three different total amounts shown to be due. Crisp Dep. Tr., p. 129, lines 8-24. While Ms.
Crisp suggested that the more than $120,000 difference in the total amount shown on those
three documents was likely limited to the additional interest resulting from TRS’s delay in
issuing the assessment Id.3, copies of the spreadsheet titled “ExcelPrelimRenton
TracFone.xls” produced on November 5, 2020 and December 18, 2021, show different tax
amounts calculated.
At Tamara Crisp’s first day of deposition, November 17, 2020, TracFone requested
“a copy of every single different version” of the spreadsheets “regardless of whether or not
you think you have previously provided them. The City’s counsel said “We’ll provide that.”
3 TRS’s work on the audit was completed by August 8, 2017. Edwards Decl., Ex. 17. Nevertheless, at TRS’ recommendation, the City held the completed until February 2019, when it was issued unchanged except for the assertion of additional interest that had accrued during the delay. Edwards Decl. Exs. 18, 21-23, 25-26, 32-33, and 35-36.
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 4 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
T. Crisp Decl., p. 131, lines 17-25. Because each copy produced has a different “created by”
date, all of which are after this appeal was filed, it is impossible to determine when the
various documents were altered and what drives differences between identically named
documents.
1. The initial request for and commitment to providing the audit file.
Both prior to and at the initial scheduling conference that took place on February 18,
2020, counsel for TracFone indicated that it would be requesting production of the City’s
audit file. Counsel for the City agreed that this was a reasonable request and the scheduling
order reflects the fact that the audit file would be produced. In its discovery plan submitted to
the Hearing Examiner, the City stated:
TracFone has requested and the City has agreed to produce, the audit file for
TracFone maintained by Taxpayer Recovery Services, LL for the City. The
City expects to provide the audit file as soon as possible.
Respondent City of Renton’s Proposed Discovery Plan dated January 20, 2020 at 2.
The standard practice of auditors conducting a tax audit on behalf of a governmental
entity is to maintain an audit file for each taxpayer that includes the following documents:
• Correspondence to and from the taxpayer;
• Correspondence and notes of pertinent contacts with any third parties who the
auditor speaks with in connection with performing the audit;
• All notes of work performed in connection with the audit in a timeline; and
• All schedules, spread sheets including drafts and working papers prepared in
connection with the audit.
This practice was confirmed by Nate Malone, the City’s tax manager, who directs the
city’s audit staff. See Malone deposition, Exhibit 4 to the Degginger Decl. at 20-21. As the
City represented in its discovery plan, most of the audit file for this matter was to be
documents in the possession of TRS.
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 5 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
Following entry of the Initial Scheduling Order, TracFone made repeated requests
regarding the status of obtaining the audit file. The emergence of the COVID-19 pandemic
understandably caused some delay in securing the file. TracFone received an initial
production of documents on or about May 4, 2020. Edwards Decl. Ex. 111. None of the
documents were Bates stamped. It was unclear if the document were from the City’s files or
TRS’ files.
Following a conference among counsel, on June 30, 2020, TracFone received a
follow up production that attempted to organize the documents into categories: 1. Monthly
Status Reports (MS Word), which were copies of 60 monthly updates from TRS to the City;
2. Monthly Status Reports (Excel) which actually were pdf images of TracFone’s retail sales
by zip code for the audit period; and 3. Miscellaneous, containing only 12 documents.
Edwards Decl., Ex. 112. The documents produced June 30, 2020 were all PDF images and
were Bates stamped from 000001 to 000529.
The June 30, 2020 production was missing many of TRS’s monthly updated, included
no emails, and other deficiencies that were discussed with counsel. A “Second Batch” of
documents was produced July 31, 2020. This “Second Batch” bore Bates numbers 000531
through 001091 and, among other things, included 100 emails between the City and TRS, an
additional 21 TRS monthly updates, monthly city utility tax returns filed by TracFone during
the audit period, and 27 “miscellaneous” documents.
On September 21, 2020, the City produced a “third batch” of audit records, a 24-page
PDF image of a Word document into which portions of emails between TRS and TracFone
had been copies with various unidentified alterations, bearing Bates numbers 001094-00117.
This was the first production of any communications between TRS and TracFone.
2. Absence of the complete audit file prejudiced deposition preparation.
As TracFone began to prepare for depositions, it became evident that TRS had not
produce all documents that should have been part of the audit file. Multiple calls with
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 6 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
counsel for the City resulted in additional productions from the City and TRS. Specifically,
TracFone was seeking all of the email correspondence between TRS and TracFone because
communications between the two described by TRS in its monthly reports to the City were
not supported by emails produced by TRS. Edwards Decl., Ex. 102.
On December 10, 2020, just prior to the second sitting of Ms. Crip’s deposition on
December 18, 2020, TracFone received a 165-page Word document that purportedly
contained copies of the text of all of the emails between TRS and TracFone. Edwards Decl.,
Ex. 63. As established during Tamara Crisp’s deposition, the document omitted any
indication of whether there was an attachment or what the attachment was. Of greater
concern was the fact that, instead of redacting portions of emails that referenced other TRS
audits, TRS had deleted text simply leaving brackets and had also altered text, sometimes
putting brackets around the changed text, but, it was also established that the text of some
emails had been altered or deleted without any brackets to inform the reader of the
alterations. T. Crisp Dep. Tr. pp 238-246. Edwards Decl. Ex. 102
These continuing deficiencies were discussed with counsel for the City in a call on
January 8, 2021. A joint call with counsel for the City, TracFone and Ms. Crisp was set for
January 12, 2021 but at the last minute Ms. Crisp elected not to participate. At Ms. Crisp’s
insistence, counsel for TracFone provide written instructions for her to provide all of the
unproduced emails and an explanation of the alteration of names and dates of the schedules.
The email stated:
We were disappointed that you did not participate in the call that Kari Sand set up yesterday. Please copy Scott and Kari on any response.
1. As discussed at your second deposition, you need to produce complete copies of all
correspondence to and from TracFone. Despite having the better part of a year to
accomplish this, you have not done so. The way to correct this deficiency and preserve
confidentiality of your other clients is to convert each email to an individual PDF and
redact only the names of other TRS clients (or other words that would disclose the
identity – as opposed to the existence of – any other TRS client).
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 7 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
It is not permissible to alter any words in the emails. Period. Making changes such as
altering the word “cities” to read “city” is not a “redaction” and is not permissible.
2. Schedules. You have produced in multiple batches of electronic copies of schedules that have the same name but different content. For example you have produced multiple files titled “ExcelPrelim3Renton Tracfone.xls” that assert different amounts of interest due. After the second day of your deposition, you produced files with the titles “ExcelPrelim3Renton TracFoneA.xls” and ExcelPrelim3Renton TracFone (higher interest)AA.xls” which appear to have the same content, including the same interest amount, as some of the prior produced files without any A or AA in the document name. It is unclear when documents were renamed and how many different versions of draft schedules were prepared. We need you to specify when each version was created by date.
We need you to provide the documents in the form specified above no later than
Monday January 18th. We are running out of both time and patience.
Edwards Decl., Ex. 114. (emphasis added). Counsel for the City stated that they would be
produced by the January 20th. While, TracFone finally received documents from TRS, on
January 22, they consisted of 102 pages of documents that never had been previously
produced. None of the emails that had been partially copied (and altered) into Ex. 63 were
produced. Nor has TRS specified when the various versions of the schedules produced were
actually created, they all show a “created date” of their date of production.
Nearly a year has passed, with multiple productions by both the City and TRS and
still TracFone does not have all of the audit file, and as discussed above, a significant portion
of what has been produced is inaccurate and unreliable.
III. ARGUMENT
A. TracFone is Entitled to Receive the Entire Audit File Before The Hearing—An Order Requiring the City to Have TRS Produce All of the Remaining Requested Documents Must be Issued Immediately.
It is fundamental that an appellant is entitled to be provided the record supporting the
decision that is being reviewed. The City apparently agreed with this proposition when it
committed to securing the TRS audit file for this matter as well as producing the City’s own
documents that were part of the file. TracFone has been diligent in seeking the documents
and in identifying deficiencies in the productions from TRS.
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 8 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
Clearly, TRS’ file and recordkeeping practices are not in conformance with standard
protocols. That fact has prejudiced TracFone by preventing examination on potentially
relevant documents in deposition. This needs to be remedied before Tracfone has to respond
to dispositive motions and well before preparation for hearing.
IV. CONCLUSION
For the reasons set forth above, TracFone requests that the Hearing Examiner order
should issue an order directing production of the documents set forth in TracFone’s January
13th email recited above within three days from the date of the order. Alternatively,
representatives of TRS should be precluded from submitting declarations in support of any
dispositive motions brought by the City and from testifying at the hearing.
DATED: January 29, 2021.
LANE POWELL PC
By Scott M. Edwards, WSBA No. 26455 edwardss@lanepowell.com Grant S. Degginger, WSBA No. 15261 deggingerg@lanepowell.com Attorneys for TracFone Wireless, Inc.
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125110.0002/8345675.2
APPELLANT’S MOTION TO COMPEL
PRODUCTION OF AUDIT FILE - 9 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
CERTIFICATE OF SERVICE
I hereby certify under penalty of perjury of the laws of the State of Washington and the
United States that, on the date listed below, I caused to be served a copy of the attached
document to the following persons via electronic mail:
Kari L. Sand Ogden Murphy Wallace P.L.L.C. 901 Fifth Avenue, Suite 3500 Seattle, WA 98164 ksand@omwlaw.com Cynthia Moya Renton City Clerk 1055 So. Grady Way Renton, WA 98057 cmoya@rentonwa.gov olbrechtslaw@gmail.com
Executed on the 29th day of January, 2021, at Seattle, Washington.
s/ Norma Tsuboi Norma Tsuboi, Legal Assistant