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34
1 taxable income, or total tax due, was that altered in any
2 way, to your knowledge, because of the complete
3 liquidation of Browning-Ferris Industries, Inc.?
4
A.
There's no tax gain or loss realized on the 332
5 liquidation.
6
Q.
On Page 10 through, I guess, 14, of Exhibit 26,
7 we have a statement regarding complete liquidation of
8
Chestnut Equipment Leasing Corp.
Is that another
9 subsidiary that was altered during the tax year ended
10 December 31, 2004?
11
MR. KARTER:
Object to form.
12 BY MR. BASSIN:
13 14
Q.
Let me rephrase that.
Do you know what happened to Chestnut Equipment
is Leasing Corp. during 2004 from a corporate law
16 perspective?
17
18
A.
Q.
From a corporate law perspective?
Yeah.
No.
On Page 13 of Exhibit 26, we have a certificate
19 20 21
A.
Q.
of dissolution for Chestnut Equipment Leasing Corp.
Any
22 knowledge about that entity and what happened?
23
A.
From a tax perspective, the fact that this was
24 attached to the 2004 return tells me that for tax purposes
25 it was liquidated under 332.
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1
Q.
Now, on Page 13, does that show that you are a
2 vice president of the corporation, of Chestnut?
3
A. Q.
It does.
4
I notice that this is a certificate of
5 dissolution, and it says, paragraph four, "The corporation
6
elects to dissolve."
Any knowledge as to why that company
7 elected to dissolve for State law purposes?
8 9
A.
Q.
No.
Let's go on to Page 15 through 17.
Is this a
10 comparable statement regarding complete liquidation that 11 was attached to the Allied 2004 tax return for an entity
12 called City Garbage, Inc.?
13 14
A.
Q.
Repeat the question again.
Is this a statement regarding complete
is liquidation that was attached to the Allied 2004 tax
16 return for an entity called City Garbage, Inc.?
17
A. Q.
That's what the statement shows, yes.
18
Is that a comparable statement to the one that
19 was submitted for BFI, Inc.?
20
A.
Both are liquidations under Section 332.
21 Q. Do you know what happened to City Garbage, Inc.
22 during 2004?
23
A.
Q.
What do you mean by what happened?
24 25
What happened from a corporate law standpoint?
A.
And I can tell you from a tax point of view how
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1 it was handled; but from a corporate law, I'm not an
2 attorney.
3
Q.
Well, from an operational standpoint, did City
4 Garbage, Inc. continue to operate after 2004?
5 6
A.
Q.
I don't know.
Well, let's go back.
Did Chestnut Equipment
7 Leasing Corp. continue to operate after 2004?
8
A.
Q.
I don't know.
9
And you're an officer, you're listed as an
10 officer for City Garbage, Inc.?
11
12
A.
Q.
Correct.
Let's go on to Pages 19 through 21.
Do you know
13 what Hollister Landfill, Inc. was?
14
A.
Q.
Other than a corporation?
is
16 17
Yes.
No.
And we have a 332-6 liquidation comparable to
A.
Q.
18 what happened to BFI, Inc. for tax reporting purposes?
19 20
A. Q.
Correct.
Do you know if Hollister Landfill, Inc. had any
21 operations after December 31, 2004?
22
A.
Let me correct a prior statement.
wi th regard
23 to whether this entity had any operation, the entities for
24 tax purposes were liquidated, so Hollister Landfill, Inc.
25 was liquidated, City Garbage, Inc. was liquidated, and
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1
then Chestnut was liquidated.
Where those assets and
2 liabilities went, where those operations went is what I'm 3 not sure of, but the corporations were liquidated for tax
4 purposes.
S
Q. A.
Q.
Do you know if these were converted to LLCs?
I don't know.
6 7 8
Last one of these.
Pages 22 through 24, Omaha
Hauling Company, Inc.
A.
do you know anything about that
9 entity, about Omaha Hauling Company, Inc.?
10
Again, other than it's a statement in the tax
11 return and it's a corporation, or it was.
12
Q.
Do you know if it had operations after
13 December 31, 2004?
14 15 16
A.
Q.
The Inc. would not have.
Do you know if it was converted to an LLC?
I don't know.
A.
Q.
17
18
In Exhibit 26 we have a series of State-issued
Have you seen anything that
certificates of dissolution.
19 constitutes a certificate of dissolution for
20 Browning-Ferris Industries, Inc.?
21
A.
Have I seen anything in this package you've
22 given me?
23
Q.
Right.
There is nothing in the package that is titled
24
A.
25 Certificate of Dissolution.
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1
Q.
Have you seen a certificate of dissolution for
2 BFI, Inc.?
3
A.
Q.
Not that I can recall.
4 5
We're shifting gears a little bit here.
After the BFI/Allied merger, were there issues
6 that arose between the Internal Revenue Service and BFI
7 for premerger years?
8 9
A.
Q.
Maybe clarify your question a little bit for me.
Was there an audit for premerger years?
10
A.
Q.
Yes.
From the company standpoint, who handled the
11
12 audi t?
13 14 15
A.
Q.
Which years are you referring to?
Premerger years.
It would have varied, depending on the year
A.
16 you're talking about.
17
18
Q.
Okay.
Well, can you explain who handled what?
A.
To the extent that there was involvement with
19 the IRS premerger, we were not involved with BFI at that
20 time at all, so it would all have been -- the relationship
21 would have been between the IRS and the BFI employees.
22
23
Q.
But I think you said at a certain point, it was
the
most of the senior BFI tax department employees had
24 left the scene.
25 A. Uh-huh.
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1
Q.
Was there an audi t for premerger years ongoing
2 after those people had left the scene?
3
A.
Q. A.
Yes.
And who handled that from the taxpayer side?
Since BFI was now a member of the Allied group,
4
5
6 it was coordinated through Allied.
7
Q.
The next document I would like you to look at is
8 No. 27.
9
(Deposition Exhibit No. 27 was marked for
10 identification.)
11 BY MR. BASSIN:
12 Q. Have you seen that document before?
13 A. Yes.
14
Q.
Can you tell me what it is?
15
A.
It's a Form 1139 for carrying back a net
16 operating loss.
17
Q.
Does that net operating loss have anything to do
18 with the contingent liability transaction that is part of 19 the substantive dispute in this case?
20 21
A.
Q.
Wha t do you mean, has anything to do wi th?
Well, is the loss that is being carried back at
22 least in part the product of the contingent liability 23 transaction?
24
A.
There were capital gains in the 7-99 year for
25 BFI, which were offset by capital loss, some of which came
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1 from the contingent liability transaction.
2
Q.
What about was there capital loss that was then
3 carried back to the tax years ended September 30, 1997 and
4 September 30, 1998?
5 6
A.
Q.
Capital loss?
Yes.
It was a net operating loss that was carried
7
A.
8 back.
9
Q.
Okay.
And that's attributable to the contingent
10 liability transaction?
11
A.
No, there are many items that make up that
12 145.9 million of net operating loss.
13
Q.
Was the contingent liability transaction one of
14 the items that made up the $145.9 million of net operating
15 loss?
16
A.
There was capital loss from the ERMI transaction
17 claimed in coming up with the 14S.9 million.
18
Q.
And this Form 1139 is filed to obtain a
19 tentative refund attributable to those losses?
20
A.
Q.
Carried back to prior years, yes.
21
22
23 24
2S
Now, who were the signatories on this document?
The officer is G. Thomas Rochford.
A.
Q. A.
Q.
Who is G. Thomas Rochford?
He was the treasurer at the time.
Of?
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A.
Q.
1
2
Of Allied.
And I can't read the Arthur Andersen preparer
3 name.
4 5 6 7
A. Q.
Lawrence Focazio.
Was he associated with Allied or --
A.
Q.
He was a manager wi th Arthur Andersen.
I see.
Okay.
I would like you next to look at
8 Exhibit 28.
9
(Deposition Exhibit No. 28 was marked for
10 identification.)
11 BY MR. BASSIN:
12 13
Q.
Tell me what Exhibit 28 is.
Form 1120X, amended U.S. Corp. income tax
A.
14 return.
l5
16
17
Q.
Do you know who the signatory is?
A. Q.
No.
Do you know what the subj ect matter of this
18 refund claim is?
19 20
A.
Q.
No.
Do you recall a premerger issue that had risen
21 for Browning-Ferris Industries, Inc. involving a Competent
22 Authority proceeding?
23 24
A.
Q.
Yes.
Can you explain what that was?
Premerger BFI had a net - - let's see.
25
A.
A logo,
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1 an overhead fee that they charged their various
2 subsidiaries.
3
Q.
What's a logo?
4
5
A.
Q.
Just for the right to use the name.
I see.
6
A.
And that amount that was charged to the Canadian
7 subsidiary was challenged by the Canadian tax auditors as
8 being too high; and when you have an issue like that that
9 involves the U.S. and Canada, it goes to what's called
10 Competent Authority.
11
Q.
Do you know when that Competent Authority
12 proceeding was resolved?
13
A.
I'm thinking.
14 It would have been resolved when we finished the
15 9-96 through 7-99 audit.
16 17
Q.
When did that happen?
A.
When we paid the 22 million or so of tax related
18 to the 9-96 through 7-99 year, which would have been
19 May' 05ish.
20
Q.
Let me help you pin that down.
21
22
23 24
A.
Q.
Sure.
Let's go to the next document.
We're up to 29.
(Deposition Exhibit No. 29 was marked for
25 identification.)
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1 BY MR. BASSIN:
2
Q.
Does Exhibit 29 help you pin down the date on
3 which the '96 to '99 audit was brought to a close?
4
5 6
A.
Q.
Yes.
Okay.
And when was it brought to a close?
A.
This letter is dated April 25th, 2005, which
7 reflects the payments that were made for two of those
8 premerger years.
9
Q.
Does this help you pin down when it was that the
10 controversy for those premerger years, at least as regards
11 the portion that you were resolving with the Internal
12 Revenue Service Appeals Office, was resolved?
13
A.
The Competent Authority adjustments were, in
14 fact, reflected in the net amount owed here of the
is 22. S million.
16
Q.
Well, maybe you can help me here.
I don't recall.
Was there a
17 notice of deficiency issued?
18
A.
Q.
19
Was there some document that came from the
20 Internal Revenue Service after that - - at the close of
21 this Competent Authority process and the dealings you had
22 with Mr. Mastracchio that said, okay, we're done, here's
23 what the IRS thinks BFI, Inc. owes?
24
A.
Whether it was a notice of deficiency or
2S something else, we obviously got something from the
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1 service that indicated these were the amounts due for
2 those respective tax years.
3
Q.
I note in the first full paragraph of
4 Exhibit 29, there's a reference to an attached Form 3610,
5 which, unfortunately, wasn't attached to what was
6 produced. Do you know what a Form 3610 is?
7 A. I don't.
8 Q. Do you know if any effort was made to find that
9 Form 3610?
10 11
A.
I don't know.
MR. BASSIN:
Can we ask the plaintiff to go back
12 to the files and see if the copy that they had and that
13 they produced had the referenced attached Form 3610?
14
MR. KARTER:
You want to see the attachment to
is this document?
16 17
MR. BASSIN: MR. KARTER:
Right.
Well, we'll check to see if they
18 can locate that attachment.
19
MR. BASSIN:
Okay.
Thank you.
20 BY MR. BASSIN:
21 Q. Were you dealing with Mr. Mastracchio?
22 A. Yes.
23 Q. Did you have counsel who had a power of attorney
24 to deal with Mr. Mastracchio?
25
A.
Yes.
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1 2
Q.
Do you know if Allied - - excuse me.
Do you know if there was a revised power of
3 attorney prepared as of roughly January 1, 2005 to reflect
4 the change from BFI, Inc. to BFI, LLC?
5
A.
Restate your question, or just say it again,
6 please.
7
Q.
Do you know if there was a new power of attorney
8 prepared as of January 1, 200 S to re f lect the change from
9 BFI, Inc. to BFI, LLC?
10 11
A.
Q.
No, I don't know of one.
Do you know if there was a Form 870-AD executed
12 in connection with the dealings with the Appeals Office?
13
14
A.
Q.
I don't recall.
I'm just trying to figure out how we all ended
Do you know?
is
16 17
up where we're at.
A.
Q.
I don't recall, no.
Do you recall any other open disputes that BFI
18 had with the Internal Revenue Service after January 1,
19 2005, other than the ERMI transaction?
20 21
A.
Q.
State the question again, please.
Do you recall any other open disputes that BFI
22 had with the Internal Revenue Service after January 1,
23 2005 other than the ERMI transaction?
24 25
A.
Q.
Are you referring to premerger years?
Correct.
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A.
1
2
Yes, it was only ERMI that was open.
Let me correct it.
At i-i-OS?
3 Q. Right.
4 A. We were still dealing with the Competent
5 Authority issue.
6 7
8
Q.
Okay.
Let's shift gears a little bit.
Let's go back into the big binder, and let's go
to Tab 5.
A.
Tell me what that document is.
Form 1120X, amended U. S. corporation income tax
9
10 return for Browning- Ferris Industries, Inc. and
11 subsidiaries.
12
13 14
Q.
And that's your signature?
It is.
A.
Q.
And that refund claim is for September 30, 1997
is fiscal year?
16 17
A.
Q.
Correct.
Exhibit 6 is a comparable amended return for the
18 year ending September 30, 1998?
19 20
A.
Q.
Correct.
That's your signature?
It is.
21
22
A.
Q.
And Exhibit 7, that's a comparable return for
23 the year ending July 30, 1999?
24
A.
Q.
Correct.
And your signature?
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25
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1
2
A.
Q.
It is.
And these documents were submitted to the
3 Internal Revenue Service, Exhibits 5, 6 and 7?
4
5
A.
Q.
Yes.
And were they submitted on or about the date of
6 your signature?
7 8
A.
Q.
On or about.
Until August 200S -- or excuse me, until August
9 2006, had any question arisen regarding whether or not
10 those claims were -- these documents, Exhibits,S, 6 and
11 7, were adequate to satisfy the statutory claim for refund
12 requirement as regards the ERMI transaction?
13
14
A.
Q.
Simplify the question for me.
Until August 2006, had any question arisen
15 regarding whether or not the claims identified as
16 Exhibits 5, 6 and 7 were adequate to satisfy the statutory
17 claim for refund requirement with regard to the ERMI
18 transaction issue?
19 20
A.
Q.
That didn't sound any simpler.
I took a couple of the qualifications out.
21
If you want to look at it, you can look at the
22 screen and read it.
23
A.
Let me answer it this way:
Prior to August
24 2006, had there been any question about whether the claims
2S were valid claims?
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1
2 3
Q.
Correct.
No.
MR. KARTER:
A.
Well put.
Can you
4 BY MR. BASSIN:
5
Q.
Let's look at Exhibit 8 in the binder.
6 tell me what Exhibit 8 is?
7
A.
It's a letter from Winston & Strawn addressed to
8 Dominic Mastracchio.
9
Q.
What role did Winston & Strawn have at the time
10 that it wrote this letter?
11
12 13
A.
Q.
They were our counsel.
For the BFI premerger years?
A.
Q.
Yes.
In the first sentence of the second paragraph,
14
15 it says that the claimant respectfully requests that the
16 Service immediately rej ect this claim.
17
Did the Service actually do that, immediately
18 reject?
19
A.
I know they rejected it shortly.
I don't know
20 if that's immediately or not, but it wasn't very long.
21
22 23
Q.
I would like you to look at Exhibit 16, and I'm
excuse me.
particularly interested in
Exhibit 18.
Let's go to
I would like you to look at Page 40 and 41 of
24 that document, and I'm particularly interested in the 25 first sentence -- or the first paragraph on Page 41; and
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1 this document is Allied's 10-K for the year ended
2
December 31, 2005.
And the question is, the first
3 paragraph on Page 41 of Exhibit 18, does that refer to the
4 litigation that is now pending in the Court of Federal
S Claims?
6 7
8
A.
Q.
Yes.
In the binders we also have additional refund
Is it fair to say that there
claims at Tabs 9 through 14.
9 has been no action by or on behalf of the Internal Revenue
10 Service with respect to any of those claims?
11 12
A.
Q.
What are you thinking of?
Well, has Allied heard or - - has Allied or BFI
13 heard anything from the Internal Revenue Service that
14 specifically relates to these claims?
15 16 17 18
A. Q. A.
Q.
To the refund claims, no.
These are the August 2006 refund claims?
Correct.
Let's switch gears a little bit here.
Le t 's go
19 back to Exhibit 29, and while we're here, let's also pull 20 out Exhibit 19.
21
In Exhibit 19, on Page 3, under Topic d)
we
22 have a series of quotations that we're asking for the
23 factual basis for each of these assertions, and we're
24
going to work our way through those now.
I think the
25 first one dealing with payments being made in '97 and '98
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so
1 is where we're going to start.
2
Is there any connection between those payments
3 that are referenced in Paragraph d) 1) of the notice of
4 deposition and Exhibit 29?
5 6
A.
Q.
Repeat the question?
Is there any connection between the payments
7 referenced in Paragraph d) 1) and Exhibit 29?
8
A.
Q.
They are the same amounts.
9
Is Exhibit 29 the document showing that the
10 payments referenced in Paragraph d) 1) were made?
11
12
A.
Q.
Yes.
In Exhibi t 29, on Page 3 there's a new name for
13 me, AWIN Management, Inc. as the entity whose account this
14
check was drawn on.
A.
Q.
What is AWIN Management, Inc.?
15
It's the cash management company for Allied.
16
Can you explain what a cash management company
17 is?
18
A.
All cash transactions, checks being written,
19 come out of AWIN Management.
20 21
22 23
Q.
For Allied and the former BFI subsidiaries?
Allied and all of its subsidiaries.
A.
Q.
There's a handwritten notation on the third page
of Exhibit 29 at the top, or at the top of the check.
Can
24 you read that?
2S
A.
The check itself?
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1
2 3 4
Q.
Yeah.
A.
Q.
Yes.
Do you want me to read it out loud?
A.
Please. "9-30-97 tax year, Browning-Ferris Industries,
Do
S Inc., FEIN 74-1673682."
6 7 8 9
Q.
you know whose handwriting you know whose
that is?
A.
Q.
No.
Do
signatures those are?
A.
Q. A.
Yes.
Whose
10
are they?
one
11
12
First
is
James Gray,
chief accounting
officer at Allied.
Bottom one is Thomas P. Martin,
13 treasurer.
14
Q.
That's obvious.
is
17 18
A.
Q.
At the time, did BFI, Inc. or BFI, LLC have its
16 own checking account?
Not that I'm aware of.
Let's go to Paragraph d) 2)
It's a statement
19 that on or about May S, 2005, BFI, Inc. attempted to file
20 refund claims for the consolidated taxable years 1997 and
21 1998 of the BFI Group.
22 Are those refund claims the documents identified
23 as Tabs S -- Exhibits 5 and 6?
24 25
A.
Q.
Yes.
Now, were Exhibits Sand 6 actually submitted to
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S2
1 the Internal Revenue Service?
2
3
A.
Q.
My understanding, yes.
Any reason to believe that they weren't?
4
5
A.
Q.
No.
The reference to "attempted to file," does that
6 mean anything else - - well, do you know what the
7 quotation, quote, attempted to file, unquote, is intended
8 to mean?
9
A.
I would think that it has something to do with
10 the fact that Browning- Ferris Industries, Inc. did not
11
exist at the time the refund claims were filed.
Tha t ' s
12 why the word "attempted."
13
Q.
Any other reason for the use of the word
14 "attempted"?
15
A.
Q.
No.
The IRS accepted those claims as documents that
16
17 were submitted by BFI?
18
A.
Yes.
To my understanding, yes.
If they had, we wouldn't be here.
19
They didn't accept the refunds.
Q.
20 21
22
Of course.
MR. KARTER: MR. BASSIN:
They can still change their mind.
Oh, well, that's a good idea.
23 BY MR. BASSIN:
24
Q.
The next statement we wanted to talk about is
25 Paragraph d)3), where we say, "As a result of that
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1 conversion, BFI, Inc. liquidated for tax purposes into
2 BWNA in a transaction that qualified under Section 332 of
3 the Code."
4
MR. KARTER:
Just for clarification, I think
5 it's AWNA.
6
MR. BASSIN:
My apologies.
Ai 81 C.
7 BY MR. BASSIN:
8 Q. Are we talking about a liquidation that happened
9 as a matter of fact, or as a matter of law?
10
MR. KARTER:
Object to form.
I don't understand
11 the question.
12 BY MR. BASSIN:
13
Q.
Other than converting from BFI, Inc. into BFI,
14 LLC under Delaware law, was anything done to effect a
15 liquidation of BFI, Inc.?
16
17
A.
Q.
Repeat it for me, please.
Other than converting BFI, Inc. into BFI, LLC
18 under Delaware law, are you aware of anything that was
19 done to effect a liquidation of BFI, Inc.?
20
A.
The conversion of BFI, Inc. into a single member
21 LLC constituted a liquidation under Section 332 for tax
22 purposes.
23
Q.
But my question is a little bit different.
24
Are you aware of any action that anyone took,
2S other than filing the conversion documents?
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1
2
A.
Q.
No.
Let's look at Paragraph d) 4) .
IlBFI, Ine.ls
3 existence as a common parent of the BFI Group had ended on
4 December 31, 2004."
S
Now, did BFI, Inc. cease to exist as of that
6 da t e?
7
MR. KARTER:
Object to form.
I mean you i re
8 asking a legal question.
9 BY MR. BASSIN:
10
Q.
Okay.
Let me ask you differently.
11
Did BFI, Inc. do anything other than convert to
12 an LLC as of December 31, 2004 that supports this
13 statement?
14
A.
Q.
To my knowledge, the conversion occurred.
Did anything else occur?
Not to my knowledge.
is
16
17
A.
Q.
Was there any transfer of assets that occurred
18 for financial accounting purposes?
19
A.
What do you mean by financial accounting
20 purposes?
21
Q.
If I were to study the accounting books and
22 records of the combined Allied/BFI Group that are
23 maintained for financial accounting purposes, would I find
24 any evidence of this conversion?
25
A.
The legal entity associated with the operations
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1 of BFI would be shown in the books as BFI, LLC.
2
3
Q.
As opposed to BFI, Inc.?
A.
Q.
That's correct.
And that's the only change that you're aware
4
S
of?
A.
Q.
6 7
Yes.
Did the BFI Group actually take any action in
8 December 31, 2004 to reflect the change of existence of
9 BFI, Inc.?
10
A.
Q.
You have to be more specific.
Take any action?
11
Is there some document that I can see dated on
12 or around December 31, 2004 to reflect something that BFI
13 Group did?
14
MR. KARTER:
I have to obj ect to the form.
I
15 can't make out what it is that you're asking.
16 BY MR. BASSIN:
17
Q.
Is there some document that we can look at that
18 shows some action taken by the BFI Group as of
19 December 31, 2004 to recognize the ending of BFI, Inc. 's
20 existence?
21
22
MR. KARTER:
I guess my problem with your
Are you
question is, you say "taken by the group."
23 encompassing in your question, for example, the 332
24 liquidation notice or the various documents that the prior
25 deponent referred to?
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1 BY MR. BASSIN:
2
3
Q.
Okay.
What I'm wondering is, there are a
hundred entities that -- is it fair to say there were
about a hundred-plus entities that were part of the BFI
Consolidated Group?
4 5 6
A. I don't think there were - - I don't think there
7 were over a hundred, no.
8
Q.
Well, over 50?
9
A.
Q.
Probably, yes.
Did any of them do anything on or around
10
11 December 31, 2004 in response to the conversion of BFI,
12 Inc. into BFI, LLC?
13 14
A.
Q.
Did the corporations do anything?
Correct.
I'm having difficulty following where we're
is
17
A.
16 going here.
Q.
Is there any document executed by any of those
18 50-plus members of the BFI Group, other than BFI, Inc. or
19 BFI, LLC, on or around December 31, 2004 to reflect the
20 conversion of BFI, Inc. into BFI, LLC?
21
A.
In my role as VP of tax, I did not see anything
22 like that.
23
Q.
Thank you.
In your role - - let's go to the last
24
point, d) S) .
"In August of 2006, in the course of its own
2S due diligence, current counsel for Allied discovered the
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1 error and advised Allied to file corrected claims."
2 Are you the designee to talk about that point?
3
A. Q. A.
Yes.
Okay.
Can you tell me what happened?
4
5 6 7
There was a meeting early in August of this year
with counsel.
We were looking at a corporate organization
chart.
Counsel noticed that the organization chart,
8 instead of showing BFI, Inc., showed BFI, LLC, and that 9 was the genesis of what's happened since.
10
Q.
Why were you looking at an organization chart?
I can't remember exactly why.
11
12 13
A.
Q.
What advice were you given?
MR. KARTER:
Just hold on a second.
I'm going
14 to let him respond to that in the context of this specific
is
16
allegation only.
Obviously, beyond that, you're intruding
But that's been a
on privileged communications.
17 representation that's been made by me in court and in our 18 brief, so to the extent that he can respond with respect
19
to this particular allegation, I'll permit it.
Beyond
20 that, I'LL direct him not to answer.
21
MR. BASSIN:
Okay.
And our position is that
22 there is some form of subject matter waiver that has
23 occurred here.
24
MR. KARTER:
Well, as long as it's on the same
25 subj ect
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1
2
MR. BASSIN: MR. KARTER:
Right.
- - he's permi t ted to answer the
Okay.
3 question.
4
MR. BASSIN:
5 BY MR. BASSIN:
6 Q. Can you explain what advice Allied was given?
7
A.
That the filed refund claims were defective, in
8 that they showed BFI, Inc. as the taxpayer, and we needed
9 to designate a new agent and file revised refund claims.
10
Q.
What was your reaction when you received that
11 advice?
12
13
A.
Q.
I don't know that I had a strong reaction.
Wasn't asking for a strong reaction.
What was
14 your reaction?
15
A.
Well, let me rephrase that.
To the extent that
16 we could have filed refund claims that were invalid and
17 we're talking about the amount of money that we're talking
18
about, then, of course, yes, I was concerned.
So it would
19 be a strong reaction and what do we need to fix the
20 problem.
21
Q.
Were you discussing the Coltec decision with
22 counsel at roughly that time?
23 A. Discussions had been had on Coltec around that
24 time, yes.
25
Q.
The Appellate decision, as opposed to the Trial
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1 Court decision?
2 A. Yes.
3 Q. Was there any discussion as to what options
4 Allied might have if it filed additional refund claims or
5 new refund claims?
6
MR. KARTER:
Objection to form.
7 BY MR. BASSIN:
8 Q. Was there any discussion between you and counsel
9 regarding options that filing new refund claims might
10 create for Allied or for BFI?
11
MR. KARTER:
Now we're really going beyond the
12 scope of what this allegation or what this factual 13 statement says. The question is one of fact, and what
14 asks is - - or what it refers to is the circumstances
it
15 surrounding the discovery of the error, okay; and you've
16 asked questions about that and I permitted him to answer
17
those.
But getting into discussions of legal strategies
18 and whatnot, that intrudes on privilege which has not been
19 waived, and I'm not going to permit him to answer those
20 questions.
21
Now, I will say this:
We have said - - and you
22 can read it in the transcript in court, and it should come
23
as no surprise
that we are all of a like view on this
24 side of the table that Coltec was an erroneously decided
25 case; and obviously we've represented that to the Court.
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1
But as for strategic discussions we had or
2 implications of how that case might be analyzed or
3 whatever, that is so far over the line, beyond what is
4 reflected here, that I'm going to recommend and advise him
5 not to re spond.
6
MR. BASSIN:
And the distinction that you're
7 trying to draw between how the error was found and then 8 questions that go beyond that would be fine if the
9
statement was ended "at discovered the error."
But then
10 you go on and say, "and advised Allied to file corrected
11 refund claims," and what I'm trying to get at is the
12 entirety of the advice that was provided to Allied in the
13 context of what to do with corrected refund claims.
14
MR. KARTER:
I think he just testified to that.
he was advised that new
15
He said he was advised to file
16 refund claims should be filed to cure the defect, and
17 that's what was done.
18
MR. BASSIN:
Now, the question - - my question
19 was, did that conversation go beyond go file corrected
20 refund claims?
21
MR. KARTER:
We had a conversation, obviously.
22 That conversation, beyond the scope of what's referenced
23
here, is a privileged attorney-client conversation.
Ask
24 your specific question, and I'll let you know whether I
25 find it objectionable.
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1 BY MR. BASSIN:
2 Q. As part of the discussion regarding what Allied
3 should do based upon the discovery of the error in the
4 original refund claims, did the advice that Allied
5 received also include discussion of the implications of 6 filing new refund claims for the effect of the Coltec
7 decision?
8 9
MR. KARTER:
Well, if you could rearticulate the
question.
If you're asking about whether the Col tec
10 decision is somehow behind all this; is that your
11 question?
12
MR. BASSIN:
No.
My question to the witness is,
13 was there any connection -- off the record.
14 (An off-the-record discussion ensued.)
is BY MR. BASSIN:
16
Q.
My question to the witness is, was there any
17 connection between the discussion of the need to file
18 corrected refund claims and the implications of the Coltec
19 decision upon the likelihood of success in the litigation?
20 21 22
MR. KARTER:
I mean that' sa poorly worded
I mean it's a
question, if you don't mind me saying.
compound question.
Let's see if we can put it in a way
23 that he can answer.
24
If you're asking whether the Coltec -- the
25 outcome in the Federal Circuit regarding Coltec was what
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1 drove the decision to file corrected claims to cure the
2 defect, he can answer that question, if that is your
3 question.
4 5
MR. BASSIN:
articulation here.
Well, you helped me with the Let me see.
6 BY MR. BASSIN:
7
Q.
Was the outcome of the Federal Circuit decision
8 in Coltec discussed in the context of whether corrected
9 refund claims should be filed?
10 11
MR. KARTER:
You can answer that question.
Repea tit again.
THE WITNESS:
12 BY MR. BASSIN:
13
Q.
Was the outcome of the Federal Circuit's
14 decision in Coltec discussed in the context of whether
15 corrected refund claims should be filed?
16 17
MR. KARTER:
Let me just clarify before I agree You are, I think, asking the same
to allow him to answer.
18 question that I just posed, which is whether the Coltec
19 decision was what bore on the decision to file corrected
20 claims to cure the jurisdictional defect.
21
MR. BASSIN:
There is a distinction between your
22 question and my question.
23 BY MR. BASSIN:
24
Q.
My question is, was Coltec discussed in the
25 context of Allied's decision to file corrected refund
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