Free Objection to Exhibit List - District Court of Federal Claims - federal

Case 1:05-cv-00956-CCM

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

) ) ) Plaintiffs-Counterdefendants ) ) vs. ) ) THE UNITED STATES, ) ) Defendant-Counterplaintiffs. ) __________________________________________ ROBERT B. DEINER and MICHELLE S. DEINER, ) ) ) Plaintiffs-Counterdefendants ) ) vs. ) ) THE UNITED STATES, ) ) Defendant-Counterplaintiff. ) __________________________________________ HOTELS.COM, INC. AND SUBSIDIARIES ) (f/k/a HOTEL RESERVATIONS NETWORK, ) INC. ) ) Plaintiff ) ) v. ) ) THE UNITED STATES, ) ) Defendant )

DAVID S. LITMAN and MALIA A. LITMAN,

No. 05-956 T

No. 05-971 T

No. 06-285 T (Christine O. C. Miller)

THE UNITED STATES' OBJECTIONS TO THE LITMANS' AND DIENERS' PROPOSED WITNESSES AND EXHIBITS

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The United States objects to the proposed trial exhibits and witnesses of plaintiffs David and Malia Litman and Robert and Michelle Diener as follows. I. OBJECTIONS TO EXHIBITS

The United States' objections to the admission of trial exhibits proposed by the Litmans and Dieners, in their filing of February 26, 2007, are indicated on the spreadsheet attached as Exhibit A. A reference to the applicable Federal Rule of Evidence and a brief statement of the objection is indicated for the exhibits to which the United States has an objection. II. OBJECTIONS TO WITNESSES

The United States objects to the Litmans' and Dieners' proposal to call Susan Weiss as a witness at trial. Ms. Weiss is the IRS agent who handled the audits of the Litmans, Dieners and Hotels.com. According to their witness list filed on February 26, 2007, the Litmans and Dieners wish to examine Ms. Weiss about the audit of the Litmans and Dieners, the IRS's alleged "valuation" of the HRN restricted stock, and statements made by Hotels.com during its audit concerning the issuance date of the stock and its value. This is a de novo proceeding, in which the thoughts and opinions of the IRS are irrelevant. See, e.g., Flamingo Fishing Corp. v. United States, 31 Fed. Cl. 655 (1994). Accordingly, to the extent the Litmans and Dieners seek to elicit testimony about Ms. Weiss's, or the IRS's, view of the value of the HRN stock, her testimony is irrelevant and inadmissible. She is not an expert on valuation, and did not value the stock. Additionally, to the extent the Litmans and Dieners seek to elicit testimony about purported admissions about the HRN stock made by Hotels.com during its audit, such testimony would be redundant and a waste of time, as well as

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impermissibly going behind the notice of deficiency.1 See, FRE 403. Hotels.com admits in its Complaint that the stock was issued on February 24, 2000, the date the Litmans and Dieners wish to also establish through Ms. Weiss's testimony. And, the Litmans and Dieners can establish through other witnesses (e.g. Eric Degraw and Mel Robinson), and Hotels.com's own tax returns, the fact that Hotels.com's position during the audit, and in prior years, was that the stock was appropriately valued at about $10 per share, pursuant to the Deloitte & Touche valuation. (Hotels.com's position has now changed, of course.) To the extent Ms. Weiss' testimony is necessary to rebut any claims by the Litmans and Dieners that the burden of proof should be shifted under § 7491 of the Code, Ms. Weiss' testimony may be relevant on that narrow point. The United States believes that that will likely not be necessary, however, because determining the appropriate value of the HRN restricted stock will not depend on the burden of proof. On all other issues for which the Litmans' and Dieners seek Ms. Weiss's testimony, the United States objects. The United States does not object to any other witnesses proposed by the Litmans and Dieners.

Because the Litmans and Dieners appear to seek testimony only about Hotels.com's statements about the HRN restricted stock, and Hotels.com is a party to this case, the confidentiality rules of § 6103 of the Code do not appear to be a concern. 3
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Respectfully Submitted,

s/ Cory A. Johnson Cory A. Johnson Attorney of Record U.S. Department of Justice Tax Division Court of Federal Claims Section P.O. Box 26 Ben Franklin Station Washington D.C. 20044 202-307-3046 Eileen J. O'Connor Assistant Attorney General Steven I. Frahm Assistant Chief, Court of Federal Claims Section s/ Steven I. Frahm Of Counsel Attorney for The United States

Dated: April 2, 2007

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