Delphi Corp. v. United States
2011 U.S. Dist. LEXIS 43579
| S.D.N.Y. | 2011Background
- Delphi seeks a tax refund under FICA for ratification bonuses paid to union members in 1999 and 2003.
- Dispute centers on whether these bonuses are wages under FICA and subject to tax.
- Delphi seeks IRS Revenue Ruling 2004-109 documents and post-ruling materials related to the ruling’s retroactive application.
- Ruling 2004-109 held ratification bonuses are wages if tied to establishing or maintaining the employer-employee relationship, retroactively for some taxpayers.
- Ford and GM filed similar refund claims; ruling issued after Delphi’s first claim, affecting similar taxpayers.
- Delphi moves to compel production of two categories of documents, asserting the government’s deliberative process privilege.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of the deliberative process privilege. | Privilege should bar disclosure where process is central to policy formation. | Privilege protects pre-decisional, deliberative communications; applicable here. | Privilege applies; five-factor balancing governs disclosure. |
| Scope of the five-factor balancing test for privilege applicability. | Delphi argues the privilege is categorically inapplicable when intent of decisionmakers is at issue. | Courts apply the five-factor test; context does not require categorical inapplicability. | Court applies five-factor balancing to determine applicability. |
| Must Category 2 documents be produced. | Some Category 2 documents post-date the 2004 ruling and should be produced; Ford/GM discussions support disclosure. | Most Category 2 documents remain privileged; exceptions found in Ford/GM were limited. | Seven Category 2 documents not privileged; remaining Category 2 documents need not be produced. |
| Should there be in camera review of the documents. | Delphi seeks in camera review due to alleged conclusory privilege logs. | Privilege log is sufficiently descriptive; in camera review unnecessary. | No in camera review required. |
Key Cases Cited
- NLRB v. Sears, Roebuck & Co., 421 U.S. 132 (1975) (deliberative process privilege purpose and scope)
- Grand Cent. P'ship v. Cuomo, 166 F.3d 473 (2d Cir.1999) (pre-decisional and deliberative documents in policy formation)
- AMP Inc. v. United States, 185 F.3d 1333 (Fed. Cir.1999) (relevance of rulings to deference and self-serving context)
- United States v. Mead Corp., 533 U.S. 218 (Supreme Court 2001) (deference level post-Mead for agency interpretations)
- Skidmore v. Swift & Co., 323 U.S. 134 (Supreme Court 1944) (deference based on persuasiveness of reasoning)