Public perception notwithstanding, it is not a basis to publicly disclose Imperial Pacific International (CNMI) LLC’s confidential income tax information, according to IPI.
In fact, according to IPI counsel Viola Alepuyo and Philip J. Tydingco, the stay and injunction issued by a U.S. Court of Appeals for the Ninth Circuit against the Commonwealth Casino Commission “serves to relieve that public perception to the extent it exists.”
In IPI’s reply memorandum supporting its emergency motion filed before the Ninth Circuit, Alepuyo and Tydingco noted that CCC executive director Edward C. Deleon Guerrero had testified that CCC wants to publicly disclose IPI’s confidential income tax information in order to project a public image that CCC is not “in bed” with IPI.
The lawyers said Deleon Guerrero’s testimony was in the audio recordings of the preliminary injunction proceedings in the Superior Court.
IPI submitted the audio recordings to the U.S. District Court for the NMI, which later heard IPI’s lawsuit.
Alepuyo and Tydingco said the record reveals that CCC did not present any evidence concerning how redacting IPI’s confidential income tax information in IPI’s financial statements harms CCC or the public interest.
The lawyers said CCC cannot show how a stay and injunctive relief harms it or the public interest as, at worst, the stay and injunctive relief only delays CCC’s ability to publicly disclose IPI’s confidential income tax information.
“CCC has now shown how such a delay prejudices it or the public interest,” the lawyers said.
Alepuyo and Tydingco said IPI has met its burden of showing that the Ninth Circuit should stay U.S. District Court for the NMI Chief Judge Ramona V. Manglona’s ruling on the preliminary injunction motion and stop CCC from disclosing IPI’s confidential income tax information that are contained in its financial statements.
They said a stay and injunction pending appeal are appropriate, describing Manglona’s ruling on the merits as “the product of erroneous legal premises, clearly erroneous factual findings, as well as an abuse of discretion.”
Alepuyo and Tydingco said CCC and Manglona both relied on Public Law 19-24 as the basis for concluding that IPI lacks confidential and/or privacy rights in its income tax information.
“This reasoning fails to survive scrutiny,” they said.
They said Public Law 19-24 Section 10 amends a section of the Commonwealth Gaming Act by enumerating a list of certain information that are not confidential and may be disclosed by CCC.
The lawyers said the exemption applies only to a narrow portion of IPI’s business gross receipts tax.
Alepuyo and Tydingco said income tax information is not included within or mentioned by P.L. 19-24.
Thus, they said, P.L. 19-24 does not authorize public disclosure of any income tax information and neither CCC nor the District Court articulate or clearly analyze how P.L. 19-24 exempts IPI’s income tax information from the Commonwealth’s tax privacy law.
They said the Commonwealth tax statute constitutes specific legislation concerning tax matters whereas P.L. 19-24, which concerns gaming, is a general statute with respect to tax matters.
On the irreparable harm issue, Alepuyo and Tydingco pointed out that the injunctive relief that IPI seeks is not meant to preclude the public disclosure of its financial statements but to preclude disclosing its income tax information contained in the financial statements.
The lawyers also cited the testimony of Shen Yan, president of Global Capital Market, which is a division of IPI’s parent company, that releasing the confidential information would make it harder to raise capital in foreign markets. They said this testimony was not contradicted or controverted by any evidence.
Manglona had deemed that testimony insufficient to establish the probability of irreparable harm. Alepuyo and Tydingco said that disregarding or negating Yan’s uncontroverted testimony in such a specialized area and determining that IPI will not suffer irreparable harm “constitutes an erroneous factual finding as well as an abuse of discretion.”
Last Aug. 8, the Ninth Circuit temporarily prohibited CCC from disclosing IPI’s confidential income tax information that is subject of a legal dispute.
Ninth Circuit Judges A. Wallace Tashima and Milan D. Smith Jr. temporarily stayed or suspended the order of Manglona that denied the petition of IPI and its two subsidiaries for a preliminary injunction.
The Ninth Circuit issued the order after IPI filed an emergency motion requesting the appellate court to stay Manglona’s order while its appeal is pending.
The Ninth Circuit judges ordered that CCC is temporarily enjoined from disclosing the confidential income tax information that is the subject of dispute between IPI and CCC, pending resolution of the emergency motion.
Last Aug 6, Manglona ruled that IPI and its subsidiaries—Grand Marianas (CNMI) LLC and Imperial Pacific Properties LLC—have not met their burden for a preliminary injunction.
IPI and its subsidiaries have asked the federal court to prevent the disclosure of unredacted financial statements because, in their view, those statements contain confidential information protected from disclosure by provisions in the CNMI tax code and the Open Government Act, and by guarantees of privacy in the U.S. and Commonwealth constitutions.