Georgia’s liberal discovery rules apply to parties and nonparties alike and require only that information sought be relevant (or at least reasonably calculated to lead to the discovery of admissible evidence) and nonprivileged.(1) In divorce cases, those liberal rules enable spouses to seek sensitive financial documents and information from opposing spouses and nonparties.(2) Limitations apply though, and protections against unwarranted discovery remain available to those who object to the public disclosure of their confidential information. This article explores those limitations and protections.
A person or entity’s tax returns and other financial information are not privileged.(3) Nonetheless, privacy interests do apply to them.(4) Financial data may even constitute protectible “trade secrets,” if the data “is not commonly known by or available to the public and [it]: (A) Derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”(5)
When faced with a request to produce sensitive financial information in a divorce action, a person/entity often will respond by requesting entry of a confidentiality agreement or order which restricts the disclosure and use of the requested data. No statute, rule of court, or published appellate decision addresses the specific parameters of such an agreement or order, to this author’s knowledge. Even so, most if not all confidentiality agreements/orders in divorce actions have certain common features. At minimum, they restrict the use of confidential financial information to the divorce action in which the information is produced. They also limit the persons to whom produced financial data may be disclosed, to a lessor or greater degree depending on the level of sensitivity of the particular financial data and the extent of the producer’s concerns regarding disclosure. Usually, confidentiality agreements/orders will permit disclosure to the parties, their attorneys, their experts, and to witnesses at depositions and trial. In more extreme situations, they may preclude the parties themselves from reviewing the confidential materials. Last but not least, they typically will preclude the filing of confidential materials as matters of public record, commonly by requiring the filing of confidential materials under seal.
In the absence of an agreed-upon confidentiality agreement/order, producing parties or nonparties who contend that discovery requests unduly invade their privacy may seek suitable protective orders insuring confidentiality in the use of their sensitive information following disclosure.(6) Georgia law grants trial courts wide discretion in entering protective orders permitting, preventing, or placing conditions on discovery which appears oppressive, unreasonable, unduly burdensome or expensive, harassing, harsh, insulting, annoying, embarrassing, incriminating, or directed to wholly irrelevant and immaterial or privileged matters or as to a matter concerning which full information is already at hand.(7) By statute, a court faced with a request for a protective order may order one or more of the following: “[t]hat the discovery not be had; [t]hat the discovery may be had only on specified terms and conditions, including a designation of the time or place; [t]hat the discovery may be had only by a method of discovery other than that selected by the party seeking discovery; [t]hat certain matters not be inquired into or that the scope of the discovery be limited to certain matters; [t]hat discovery be conducted with no one present except persons designated by the court; [t]hat a deposition, after being sealed, be opened only by order of the court; [t]hat a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way; or [t]hat the parties simultaneously file specified documents or information enclosed in sealed envelopes to be opened as directed by the court.”(8)
When considering a request for a protective order, a trial court should follow the general rules that a) protective orders are intended to be protective, not prohibitive, and b) protective orders should not be entered when the effect is to frustrate and prevent legitimate discovery.(9) The fact that privacy interests attach to financial information should not ordinarily extend so far as to preclude a requesting party’s access to that information.(10) Until substantial evidence shows that bad faith or harassment motivates the discoverer’s action, a court should not intervene to limit or prohibit the scope of pretrial discovery.(11) Nonetheless, a court has a duty to assure that the scope of discovery is restricted to the extent necessary to prevent an unreasonable intrusion into the producer’s privacy.(12)
A request for production of a person or entity’s tax returns carries a somewhat heightened burden. Although tax returns are not privileged, they should not be automatically discoverable upon a de minimis showing of relevancy.(13) When ruling on a request for a protective order, a trial court should weigh the requesting party’s interest in obtaining the information sought in the tax returns against the responding individual’s privacy interest.(14) If a request for tax returns seems unduly burdensome or evidence shows that the request is intended merely to embarrass or harass the responding individual, the court can preclude the discovery.(15) The court likewise can preclude the discovery of tax returns, at least initially, if evidence shows that the financial information contained in requested tax returns could be obtained by other means.(16) If it later appears that other documents do not accurately reflect the subject’s financial condition at the relevant times, the court can then compel production of the tax returns.(17)
While heightened protections apply to tax returns, they do not apply to an individual’s bank records. The law deems banking records as the property of the bank in which the account holder has no reasonable expectation of privacy.(18) Why? In the context of a civil dispute (which should include a divorce action), appellate courts have held that a person has no reasonable expectation of privacy in copies of checks and deposit slips relating to a checking account, because they are instruments of commercial trade which must necessarily be exposed to numerous persons in the ordinary course of business.(19)
(1) O.C.G.A. § 9-11-26(b); O.C.G.A. §§ 9-11-34(a)(1); 9-11-34(c)(1). See also Sechler Family Partnership v. Prime Group, 255 Ga.App. 854, 857, 567 S.E.2d 24 (2002). (2) See, e.g., Sechler Family Partnership, supra, 255 Ga.App. at 859(5). (3) Borenstein v. Blumenfeld, 151 Ga.App. 420, 420-421, 260 S.E.2d 377 (1979), citing Bailey v. Bruce, 132 Ga.App. 782, 786, 209 S.E.2d 135, 138 (1974). (4) See generally, McGinn v. McGinn, 273 Ga. 292, 294, 540 S.E.2d 604 (2001); Sechler Family Partnership, supra, 255 Ga.App. at 859(5); Borenstein, supra, 151 Ga.App. at 420-421. (5) O.C.G.A. § 10-1-761(4). (6) See Sechler Family Partnership, supra, 255 Ga.App. at 859. See also O.C.G.A. § 9-11-26(c). (7) Sechler Family Partnership, supra, 255 Ga.App. at 857; and O.C.G.A. § 9-11-26(c). (8) O.C.G.A. § 9-11-26(c)(1)-(8). (9) McGinn, supra, 273 Ga. at 294; and DeLoitte Haskins & Sells v. Green, 187 Ga.App. 376, 379(2), 370 S.E.2d 194 (1988). (10) See generally DeLoitte Haskins, supra, 187 Ga.App. at 378(1). (11) DeLoitte Haskins, supra, 187 Ga.App. at 379(2). (12) McGinn, supra, 273 Ga. at 294; and Holman v. Burgess, 199 Ga.App. 61, 64, 404 S.E.2d 144 (1991). (13) Borenstein, supra, 151 Ga.App. at 420-421. (14) Ledee v. Devoe, 225 Ga.App. 620, 625, 484 S.E.2d 344 (1997). (15) Ledee, supra, 225 Ga.App. at 625. See generally Sechler Family Partnership, supra, 255 Ga.App. at 859(5). (16) Borenstein, supra, 151 Ga.App. at 421(1); See generally Sechler Family Partnership, supra, 255 Ga.App. at 859(5). (17) Snellings v. Sheppard, 229 Ga.App. 753, 757(3), 494 S.E.2d 583 (1997). (18) Hickey v. Rref BB SBL Acquisitions, LLC, 336 Ga.App. 411, 416, 785 S.E.2d 72 (2016). (19) Id., citing Adams v. Trust Co. Bank, 145 Ga.App. 702, 704(2), 244 S.E.2d 651 (1978).