John Palmeri and Heather Kelly of the Denver office prevailed in an appeal to the Supreme Court of Colorado addressing a litigant's right to privacy in financial records. In the trial court, Plaintiffs propounded discovery seeking "each and every record" related to defendant's income for a four-year period, claiming Defendant's financial motive was relevant to their case. Gordon & Rees objected to the discovery, citing a litigant's right to privacy in financial affairs. Plaintiffs filed a motion to compel, asserting that the only financial records that are quasi-confidential are income tax returns. The trial court granted Plaintiffs' motion to compel the discovery.
Gordon & Rees sought a writ from the Supreme Court of Colorado pursuant to its original jurisdiction, citing legal authority from across the country recognizing a right to privacy in financial affairs. Gordon & Rees argued a purported "financial motive" is present in any business relationship and could be a basis of financial discovery in every case alleging breach of fiduciary duty. The Supreme Court of Colorado reversed the trial court's order. The Supreme Court held that a litigant has a right to privacy in financial records and that disclosure is only required if the requesting party proves that: (1) the documents are relevant to the subject matter of the case; (2) disclosure is required to serve a compelling state interest or there is a compelling need for the documents; (3) the requested information is not available from other sources; and, if it is, (4) that the requesting party is using the least intrusive means to obtain the information. Cedar St. Venture v. Judd, 256 P.3d 687 (Colo. 2011).
The opinion should protect litigants from broad requests for financial information and discourage "fishing expeditions" to harass corporate and individual defendants.
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