Dоnald G. Page appeals from a nonfinal discovery order in Donald F. Konle's personal injury action against Page and his insurer. 1 Page contends that the trial court erred by refusing to order the production of Konle's complete income tаx returns for the years 1986 through 1994. Previously, Konle had provided Page with Schedule C showing his business income. However, he refused to produce the balance of the returns. Page argues that his discovery request was appropriate because Konle claimed lost earnings and loss of earning capacity.
After conducting an in camera review of Konle's complete returns, the trial court determined that, other than Schedule C, the remaining portions of the returns were not relevant to Kоnle's damage claims. We agree with the trial court's ruling, and we affirm the discovery order.
*392 BACKGROUND
On November 23, 1992, Konle was a passenger in an automobile which was struck by a vehicle driven by Page. As a result, Konle, an attorney, filed this action against both Page and the operator of the vehicle in which Konle was a passenger. 2 Konle sought damages for his injuries as well as lost earnings and loss of earning capacity. In response to Page's request for • information in support of Konle's earning loss claims, Konle provided Page with copies of Schedule C from his tax returns for the years 1986 through 1994, documenting his business income. However, Konle refused Page's further request for a complete copy of his tax returns for the same years.
Page filed a mоtion to compel Konle to produce the complete returns. Konle resisted the motion, but offered to submit the returns to the trial court for in camera review and a ruling. The trial court accepted this proposal. Following the in cаmera review, the court issued a written decision denying Page's motion to compel. The court wrote in relevant part:
The court has concluded the in camera review of Donald Konle's tax returns for the years 1986 through 1994. The court finds that the income listed on the Schedule C's, which defendants' cоunsel have already been provided, represents the only earned income for the plaintiff. The court finds there is no income derived from the operation of any advertising agency. The court concludes that other sources of income (interest, dividends, etc.) are not relevant to the claim of lost earnings in this case. Other sources of income for Mr. and Mrs. Konle do *393 not make more or less probable the loss of earnings Mr. Konle is seeking.
Page appeals.
DISCUSSION
Discovery of Income Tax Returns
We review a trial court's discovery ruling under the misuse of discretion standard of review.
Van Straten v. Milwaukee Journal Newspaper-Publisher,
Page rests his argument on § 804.01(2)(a), STATS., and related case law. The statute provides in relevant pаrt:
Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action,... including ... books, documents, or other tangible things_It is not ground for objection that the information sought will be inadmissible at the trial if the infоrmation sought appears reasonably calculated to lead to the discovery of admissible evidence.
Id.
Page also cites to case law holding that Wisconsin's discovery procedures are to be liberally applied so thаt the issues for trial may be narrowed, settlement promoted, and litigants fully informed about the facts which may come out at trial.
State ex rel. Dudek v. Circuit Court,
Page contends that the incоme tax returns are information which, under the statute, "[appear] reasonably calculated to lead to the discovery of admissible evidence." See § 804.01(2)(a), STATS. Their production, Page contends, will promote all of the factors which support a liberal application of the discovery procedures. Page argues that the trial court's "relevancy" analysis improperly applied an evidentiary test reserved for trial during the discovery phase of these proceedings.
Given the liberal rules which apply in a discovery setting, Page's argument appears persuasive. However, Konle correctly notes that because income tax returns contain confidential and sensitive information which oftentimes will prove irrelevant to a plaintiffs claim, such materials have received special consideration in the law of discovery. No reported Wisconsin case has considered whether complete income tax returns are discovеrable in a personal injury case involving a claim for lost earnings or a loss of earning capacity. We therefore look to the law of other forums for assistance.
Most courts have held that only those portions of tax. returns which deal with earned income are relevant to, and discoverable in, a personal injury case.
3
Where a plaintiff asserts a loss of earnings or a
*395
loss of earning capacity claim, the courts have concluded that discovery of the plaintiffs federal income tax returns is permitted only insоfar as those returns are relevant and material to the issues of the case.
See Hawkins v. Potter,
In the
Novogroski
case, cited above, an attorney sought both past and future loss of earnings in a personal injury action.
Novogroski,
The Novogroski court was primarily concerned with the privatе nature of tax returns:
[I]t is clearly evident that liberality of construction in the context of this case which results in providing a movant with information which is nowise essential to a just determination of the cause in which the motion is made is an unwarranted invasion of the privacy of the party upon whom the motion to produce has been served.
Id. (emphasis added).
The Supreme Court of Texas best summarized the balance which must be struck between protection of the plaintiffs privacy and the defendant's need for relevant information to preparе a defense:
The protection of privacy is of fundamental — indeed, of constitutional— *397 importance. Subjecting federal income tax returns of our citizens to discovery is sustainable only because the pursuit of justice between litigants outweighs protection of their privacy. But sacrifice of the latter should be kept to the minimum, and this requires scrupulous limitation of discovery to information furthering justice between the parties which, in turn, can only be information of relevancy and materiаlity to the matters in controversy.
It is self-evident that the maximum protection of privacy is unattainable if trial courts do not exercise their discretion to safeguard from discovery those portions of income tax returns which are irrelevant and immаterial....
Maresca,
We are persuaded by the reasoning of the Rhode Island and Texas decisions. Income tax returns contain confidential and sensitive information. Taxpayers reasonably expect a zone of privacy with regard to such materials. Because tax returns will often contain *398 material which is wholly irrelevant to the taxpayer's claim, we conclude that an in camera examination by the trial court is the best and proper procedure through which to filter such discovery demands. This procedure will require the court to balance the privacy interests of the plaintiff in that material which is irrelevant to the claim against the defendant's interest in obtaining information which legitimately might lead to admissible evidence. Although not armed with our decision, that is precisely what the trial court did in this case. 6
Collateral Source
Although our above holding disposes of the matter, we choose to address Konle's alternative argument that the collateral source doctrine also bars discovery of the income tax returns. We disagree.
In Wisconsin, the " 'collateral source' rule provides that a personal injury claimant's recovery is not to be reduced by the amount of compensation received from other sources,
i.e.,
sources 'collateral' to the defendant."
*399
Lambert v. Wrensch,
Konle's other sources of incоme, including investments and dividends, by definition, are not collateral sources. Konle did not receive this income as compensation for the damages he sustained as a result of the accident, whether from a defendant or otherwise. In other words, the other sources of income at issue are completely unrelated to the accident which is the basis of this action. Therefore, Konle's reliance on the collateral source doctrine as a means of preventing the discovery of his complete tax returns is inappropriate.
CONCLUSION
We affirm the trial court's discovery ruling. We remand for further proceedings on Konle's claim.
By the Court. — Order affirmed and cause remanded.
Notes
We previously accepted this case on petition for leave to apрeal the trial court's nonfinal discovery order.
Konle also named the drivers' insurers as additional defendants.
This basic rule has been applied to cases outside the personal injury realm as well.
See McKinnon v. Smock,
The plaintiff argued that contributions to charities, income from investments and the like were matters as to which the defendant could not establish "good cause" for disclosure of the complete returns under the discovery rules.
Novogroski v. O'Brien,
New York has fashioned a rule which appеars to support Page's position in cases involving claimants who, like Konle, are self-employed. Because such situations present the opportunity to falsify employment records and in order to accommodate the defendant's need for accurate information, New York has held that a defendant is entitled to the production of a self-employed plaintiff’s complete income tax returns.
Lane v. D'Angelos,
Page also argues that Konle's complete tax returns are necessary to determine if there were reasоns or motives other than the accident for Konle to reduce his legal practice, thus explaining the drop in his income. We find it unnecessary to address this argument since we hold that only those portions of income tax returns which are relevant to the loss of earnings claim are discoverable regardless of the purpose for which the returns are sought.
Although Page does not ask that we do so, we have reviewed the disputed returns in this case, and we state our agreement with the trial court's conclusion that those portions not revealed to Page are indeed not relevant to Konle's loss of earnings claim.