CHARLES J. PARKINSON VS. DIAMOND CHEMICAL COMPANY, INC. (L-1341-18, UNION COUNTY AND STATEWIDE)
A-2639-20
| N.J. Super. Ct. App. Div. | Oct 27, 2021Background
- Parkinson worked as Diamond Chemical's plant manager (2008–2017) and sued for age and disability discrimination under the LAD after his termination; he sought compensatory and punitive damages.
- Defendants counterclaimed, alleging Parkinson caused substantial financial losses and breached post-employment obligations.
- Parkinson served a discovery demand for Diamond Chemical’s and Harold Diamond’s tax returns and the company’s financial statements for 2016–2019.
- The trial court ordered production of Diamond Chemical’s corporate tax returns and financial records (later adding 2019), finding a compelling need and stating Ullmann’s heightened standard applied only to individuals.
- Diamond Chemical refused production and appealed, arguing the court misapplied the law, shifted the burden, issued inadequate findings, and failed to perform in camera review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ullmann’s heightened standard applies to corporate/business tax returns | Business returns deserve less confidentiality; Ullmann applies only to individuals | Business returns receive same statutory confidentiality and should be protected by Ullmann | Ullmann applies equally to corporate/business tax returns; no jurisdiction adopts the contrary rule |
| Burden and sufficiency of trial-court findings under Ullmann | Court correctly found compelling need and ordered production | Court shifted burden to defendant and issued conclusory rulings without required analysis | Trial court’s oral rulings were too terse and failed to analyze relevance, alternative sources, and substantial purpose; vacated and remanded for amplified findings |
| Discoverability of non-tax financial statements | Records likely relevant to prove performance and rebut counterclaims | Financial records are commercially sensitive; Herman balancing applies; disclosure premature (esp. before punitive-damage phase) | Ordinary discovery standards and Herman balancing govern non-tax financials; in camera review and balancing needed; punitive-damage financial disclosure remains a separate concern |
| Need for in camera review and scope of disclosure (full vs. partial/redacted) | Plaintiff sought full production | Defendant sought in camera review and redactions; protective order | Court must perform in camera review before ordering disclosure; consider partial disclosure/redactions and may appoint special master or technical adviser; remand for that process |
Key Cases Cited
- Ullmann v. Hartford Fire Ins. Co., 87 N.J. Super. 409 (App. Div. 1965) (articulates heightened standard for compelling disclosure of tax returns)
- Herman v. Sunshine Chemical Specialties, Inc., 133 N.J. 329 (1993) (balancing test for discovery of internal corporate financial records)
- Premier Physician Network, LLC v. Maro, 468 N.J. Super. 182 (App. Div. 2021) (applied Ullmann and reviewed trial court’s exercise of discretion on tax-return disclosure)
- Payne v. Howard, 75 F.R.D. 465 (D.D.C. 1977) (discusses federal tax-return confidentiality and limited judicial disclosure)
- In re Brewer Leasing, Inc., 255 S.W.3d 708 (Tex. App. 2008) (rejected a rule treating corporate returns as less protected than individual returns)