In Estate of Heiniger v. Commissioner, Docket No. 8096-17, the estate tax dispute surrounded whether certain property, including a condominium and multiple works of art, should be included in the gross estate of former Rolex CEO, Patrick Heiniger. The estate and intervenor, Hana Stevens (Patrick’s girlfriend at the time of his death), asked the court for a protective order so as not to disclose certain personal information about Hana and information about pieces of art that Hana claimed to have owned. That information included the name of the work, the name of the artist and information regarding the work’s value. They argued that the protective order was needed because the market value of the identified artwork might decrease, and there would be an increased likelihood of attempts to steal the art. They also claimed that the titles and artists should be treated like trade secrets and should be entitled to the protection typically provided to such secrets.
Protective Orders and the Public’s Right of Access
Internal Revenue Code Section 7458 provides that “hearings before the Tax Court and its divisions shall be open to the public.” Further, IRC Section 7461(a) states that “all evidence received by the Tax Court and its divisions, including a transcript of the stenographic report of the hearings, shall be public records open to the inspection of the public.”
Section 7461(b)(1) sets forth an exception to these general rules by declaring that the court may make any provision that’s necessary to prevent the disclosure of trade secrets or other confidential information, including a provision that any document or information be placed under seal to be opened only as directed by the court.
Generally, official court records are open and available for public inspection. The presumptive right to access, however, may be rebutted by a showing of countervailing interests sufficient to outweigh the public interest in access. Therefore, the public’s right to access judicial records is subject to the discretion of the presiding court to control and seal them if good cause is demonstrated. In exercising such discretion, the court must weigh the interests of the public, which are presumptively paramount, against those advanced by the parties. The party seeking protection has the burden to present appropriate testimony and factual data to support claims of harm that would occur as a result of disclosure.
Information Relating to Artwork
The court denied the request for a protective order regarding information related to the artwork. It found that the estate failed to show with specific examples or articulated reasoning that harm would result absent a protective order or that their interests outweigh the strong public interest in access to the court’s records. The estate and Hana failed to provide additional evidence to corroborate or support their claims that the artwork would lose value or be more likely to be stolen. These unsupported statements are insufficient to establish good cause.
The court also rejected the claim that the information about the art should be treated as a trade secret. It noted that neither the estate nor Hana was an art dealer or involved in a trade relating to the artwork.
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