United States of America v. William T Romanowski, et al.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 UNITED STATES OF AMERICA, Case No. 23-cv-03003-YGR (ASK)

8 Plaintiff, ORDER RE: DISCOVERY DISPUTE v. 9 Re: Dkt. Nos. 90, 100 10 WILLIAM T ROMANOWSKI, et al., Defendants. 11

12 At her March 2026 deposition, Defendant Julie Romanowski asserted attorney-client 13 privilege in refusing to answer questions on the reasons for opening and using the N53 Wells 14 Fargo bank accounts. Ms. Romanowski testified that she spoke with her attorney, Brian Isaacson, 15 before opening one of the business accounts, and that it was Mr. Isaacson who authorized her use 16 of that account. Dkt. 90-6 at 3-4. However, she refused to answer questions concerning her 17 reasons for using the “business bank accounts to live [her] personal life” rather than maintaining a 18 personal bank account. Dkt. 90-6 at 5-8, 9-10. Her only response was that, “[a]fter conversations 19 with counsel[,] [she and Mr. Romanowski] opted not to open a[] [personal] account.” Dkt. 90-6 at 20 9. When asked whether her counsel told her to hide assets, Ms. Romanowski asserted the 21 privilege. Dkt. 90-6 at 10. 22 The United States insists that Ms. Romanowski waived any privilege over the advice that 23 she received from her “former attorney, Brian Isaacson, [] on opening bank accounts in N53’s 24 name” by previously disclosing the substance of that advice in her bankruptcy action and/or 25 putting that advice at issue in this action. Dkt. 90 at 1. The United States seeks an order 26 compelling Ms. Romanowski to provide substantive responses to their unanswered questions on 27 her communications with Mr. Isaacson regarding “(1) opening the N53 accounts at issue; (2) 1 personal expenses from business accounts; and (5) delaying filing tax returns.” Dkt. 100 at 6. For 2 the reasons explained below, the Court GRANTS the United States’s motion. 3 I. LEGAL STANDARD 4 “The attorney-client privilege protects confidential communications between attorneys and 5 clients, which are made for the purpose of giving legal advice.” United States v. Sanmina Corp., 6 968 F.3d 1107, 1116 (9th Cir. 2020). The privilege extends to a client’s confidential disclosures to 7 an attorney in order to obtain legal advice, as well as an attorney’s advice in response to such 8 disclosures. United States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009) (cleaned up). “Because it 9 impedes full and free discovery of the truth, the attorney-client privilege is strictly construed.” Id. 10 (cleaned up). 11 Parties may waive the privilege expressly or by implication. United States v. Sanmina 12 Corp., 968 F.3d 1107, 1116–17 (9th Cir. 2020). Express waiver “occurs when a party discloses 13 privileged information to a third party who is not bound by the privilege, or otherwise shows 14 disregard for the privilege by making the information public.” Id. at 1117. “In contrast, waiver by 15 implication, or implied waiver, is based on the rule that a litigant waives the attorney-client 16 privilege by putting the lawyer’s performance at issue during the course of litigation.” Id. (cleaned 17 up). Implied waiver rests on the principle “that parties in litigation may not abuse the privilege by 18 asserting claims the opposing party cannot adequately dispute unless it has access to privileged 19 materials.” Id. (cleaned up). In other words, parties are prohibited “from using the privilege as 20 both a shield and a sword.” Id. (cleaned up).

21 This fairness principle also animates the concept of subject matter waiver, in which voluntary disclosure of the content of a 22 privileged attorney communication constitutes waiver of the privilege as to all other such communications on the same subject. 23 Under this rule, disclosure of information resulting in the waiver of the attorney-client privilege constitutes waiver only as to 24 communications about the matter actually disclosed. 25 Id. (cleaned up & emphasis added). 26 II. DISCUSSION 27 The United States argues that Ms. Romanowski waived the attorney-client privilege 1 putting that attorney’s advice at issue in this action. 2 A. Express Waiver 3 The United States identifies four excerpts from Ms. Romanowski’s Summer 2024 4 bankruptcy testimony in which she purportedly disclosed “the advice Mr. Isaacson provided on: 5 avoiding using [the Romanowskis’] own bank accounts to shield funds from the IRS; delaying 6 filing their taxes; and opening bank accounts in N53’s name.” Dkt. 100 at 2. In those excerpts, Ms. 7 Romanowski testifies that: 8 • “Brian Isaacson had advised us just to make sure that we did everything in cash . . . 9 and he said the IRS would just swoop in and take any penny and every dollar, 10 which they have. So, we did not have a bank account per the advice of . . . our tax 11 attorney, Brian Isaacson.” Dkt. 100-1 at 4:16-21. 12 • The Romanowskis took “several years to file [their] delinquent tax returns” because 13 their “tax attorney, Brian Isaacson, told [them] . . . Let’s get through this lien and 14 levy, and as soon as that happens, . . . we will go ahead and file the tax returns.” 15 Dkt. 100-2 at 3:4-13. 16 • She “filled out the business bank application for [the] Wells Fargo account[]” “with 17 the help of [their] attorney, Brian Isaacson. . . . [H]e had [them] set up the account 18 name of Nutrition 53 II.” Dkt. 100-3 at 2:12–3:3. 19 • She created “a business account” rather than an account “in [her] and [her] 20 husband’s name” because “Brian Isaacson suggested that [they] open up this 21 account, considering the fact that with [their] company, [they] would have the COO 22 come and live in [their] home for two weeks out of each month . . . .” Dkt. 100-3 at 23 3:20–4:5. 24 In this bankruptcy testimony, Ms. Romanowski discloses Mr. Isaacson’s advice not to 25 maintain a personal bank account lest the IRS “swoop in[.]” Dkt. 100-1 at 4:16-21. She reveals 26 that Mr. Isaacson advised the Romanowskis to set up the Wells Fargo accounts as business— 27 rather than personal—accounts in the name of N53. Dkts. 100-3 at 2:12–3:3, 3:20–4:5. These 1 Romanowski’s conversations with Mr. Isaacson regarding the subjects of (a) the Romanowskis’ 2 use of N53 bank accounts, versus personal bank accounts, for conducting their finances, and (b) 3 the timing of her tax filings. Collectively, these waived subject matters cover all of the topics on 4 which the United States seeks a finding of waiver. It is immaterial that this waiver occurred in a 5 different proceeding. See In re Cavagnaro, No. C07MC-00027-RT, 2007 WL 4571194, at *5 6 (W.D. Wash. Dec. 26, 2007) (“Federal courts have generally concluded that information, once 7 disclosed to a party opponent, waives the attorney-client privilege as to future proceedings.” 8 (cleaned up)). 9 Ms. Romanowski’s arguments fail to change this result. She insists that her bankruptcy 10 testimony was made on behalf of N53, and thus only waives N53’s privilege because 11 “[c]orporations enjoy a direct, separate attorney-client privilege in California.” Dkt. 100 at 6. But 12 she provides no evidence supporting her factual contention that she was testifying only on N53’s 13 behalf. By contrast, the government contends that Ms. Romanowski’s bankruptcy testimony was 14 made “In the Matter of: WILLIAM T. ROMANOWSKI and JULIE I. ROMANOWSKI” on her 15 own behalf. See Dkt. 100-1 at 1; 100-2 at 1; 100-3 at 1. As the party bearing the burden to 16 establish the existence of the privilege, Ms. Romanowski fails to provide evidence substantiating 17 her factual claim that her bankruptcy testimony was not on her own behalf. The Court therefore 18 finds, based on this record, that Ms. Romanowski waived her own privilege, and not merely that 19 of N53. 20 B. Implied Waiver 21 The United States claims that Ms. Romanowski implicitly waived the privilege by 22 identifying Mr. Isaacson as a fact witness and “affirmatively relying on Mr. Isaacson’s advice to 23 explain and justify [the Romanowskis’] conduct[.]” Dkt. 90 at 3.

24 An implied waiver of the attorney-client privilege occurs when (1) the party asserts the privilege as a result of some affirmative act, such as 25 filing suit; (2) through this affirmative act, the asserting party puts the privileged information at issue; and (3) allowing the privilege would 26 deny the opposing party access to information vital to its defense. 27 Apple Inc. v. Samsung Elecs. Co., No. 11-CV-01846-LHK, 2015 WL 3863249, at *7 (N.D. Cal. 1 (9th Cir. 1995)). “A plaintiff may put his or her attorney’s advice in issue by filing a malpractice 2 action against the lawyer or a defendant may assert reliance on the advice of counsel as an 3 affirmative defense.” Genentech, Inc. v. Insmed Inc., 236 F.R.D. 466, 468 (N.D. Cal. 2006). But 4 “[a]dvice is not in issue merely because it is relevant, and does not necessarily become in issue 5 merely because the attorney’s advice might affect the client’s state of mind in a relevant manner.” 6 Id. at 469. Moreover, implicit “[w]aiver is not likely to be found when the statements alleged to 7 constitute waiver do not disclose the contents of a specific communication between client and 8 attorney. The mere denial of intent is insufficient to establish waiver of the privilege.” Id. (cleaned 9 up). 10 In this action, “the United States seeks to foreclose its tax liens against N53’s assets on the 11 grounds that N53 is the Romanowskis’ alter ego.” Dkt. 1 ¶ 17. The United States alleges that, 12 since the Tax Court determined that the Romanowskis personally owed a tax deficiency of 13 $15,330,277.83, id. ¶¶ 27-30, “the Romanowskis have used N53’s corporate funds to pay their 14 personal living expenses.” Id. ¶ 64. According to the United States, “[b]y using N53 to pay their 15 personal living expenses and those of their adult children, the Romanowskis have improperly used 16 N53 to thwart the IRS’s collection of the individual income tax assessments at issue in this case.” 17 Id. ¶ 114. The United States insists that, “[i]f the corporate fiction of N53 is not disregarded, the 18 Romanowskis will continue to use N53’s funds to improperly shield their assets and income from 19 the IRS’s collection[.]” Id. ¶ 116. So, the United States requests a determination that N53 is the 20 alter ego of the Romanowskis in Count Two. Id. ¶¶ 106-17. 21 To establish that N53 is liable for the Romanowskis’ personal tax deficiency under an alter 22 ego theory, the United States must demonstrate “(1) that there is such unity of interest and 23 ownership that the separate personalities of the corporation and the individual no longer exist and 24 (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow.” 25 Bank of Montreal v. SK Foods, LLC, 476 B.R. 588, 597 (N.D. Cal. 2012), aff’d sub nom. Bank of 26 Montreal v. Salyer, 599 F. App’x 706 (9th Cir. 2015). “To determine whether there is a sufficient 27 unity of interest and ownership to support alter ego liability,” courts consider, among several other 1 corporation as a mere shell, instrumentality or conduit for a single venture or the business of an 2 individual or another corporation;” and “the contracting with another with intent to avoid 3 performance by use of a corporate entity as a shield against personal liability[.]” Id. at 597-98. As 4 to the second requirement of the alter ego test, the question is whether “adherence to the fiction of 5 the separate existence of the corporation would, under the particular circumstances, sanction a 6 fraud” or “work an injustice to a third person.” Bank of Montreal v. SK Foods, LLC, 476 B.R. 588, 7 600 (N.D. Cal. 2012), aff’d sub nom. Bank of Montreal v. Salyer, 599 F. App’x 706 (9th Cir. 8 2015). 9 Ms. Romanowski’s intended purposes for the N53 Wells Fargo accounts—including the 10 Romanowskis’ reasons for opening, depositing checks into, and using the accounts for personal 11 expenses—are thus highly relevant to the ultimate determination of whether N53 is the 12 Romanowskis’ alter ego. When the United States asked questions at Ms. Romanowski’s March 13 2026 deposition targeted toward those intended purposes in an effort to establish that the 14 Romanowskis opened and used these N53 Wells Fargo accounts to evade the IRS, Ms. 15 Romanowski refused to answer on privilege grounds. However, she did testify that (1) Mr. 16 Isaacson authorized her opening of the N53 Wells Fargo accounts, Dkt. 100-4 at 56:9-11, 60:14– 17 61:13, 320:20-24; (2) she spoke with Mr. Isaacson before opening each account, Dkt. 100-4 at 18 64:12-17; (3) she and her husband opted not to open a personal bank account based on 19 conversations with Mr. Isaacson, Dkt. 100-4 at 155:7-22, 211:6-10; and (4) she decided against 20 filing timely tax returns based on conversations with Mr. Isaacson. Dkt. 100-4 at 322:21-23. For 21 example, the United States asked, “Why didn’t you deposit these checks into your own personal 22 bank account?” Dkt. 100-4 at 155:7-8. Ms. Romanowski, refusing on privilege grounds to answer 23 the question as posed, instead responded, “After having conversations with [Mr. Isaacson,] we 24 opted not to open an account.” Id. at 155:20-22. 25 This and other carefully crafted non-responses demonstrate Ms. Romanowski’s improper 26 invocation of the privilege “as both a shield and a sword, that is, to reveal a limited aspect of 27 privileged communications in order to gain a tactical advantage in litigation.” Century Aluminum ] intent, Ms. Romanowski injected Mr. Isaacson’s privileged advice into the case by revealing that 2 || her only reasons for opening and using the N53 Wells Fargo accounts for personal expenses were 3 || those supplied by Mr. Isaacson. This tactic amounts to more than a mere denial of intent—Ms. 4 |} Romanowski here asserts her counsel’s advice as a defense to the allegation that she and her 5 || husband improperly used N53 to handle their personal finances. She seeks to avert blame from 6 || herself and place it on her lawyer. 7 Ms. Romanowski thus implicitly waived the privilege over her attorney-client 8 communications with Mr. Isaacson by relying on Mr. Isaacson’s advice to justify her opening and 9 || use of the N53 Wells Fargo accounts. As she testified in her bankruptcy proceeding, “[e]verything 10 || that we have ever done... has been at the advice of our tax attorney.” Dkt. 100-2 at 3:22-24; see 11 also Dkt. 100-1 at 5:9-11 (“[E]verything [the Romanowskis] have done has been under the 12 guidance of [their] tax attorney[.]”). 13 || I. CONCLUSION 14 Ms. Romanowski has both expressly and implicitly waived attorney-client privilege over 2 15 all five topics identified by the United States. Accordingly, the Court GRANTS the United a 16 States’s motion to compel testimony related to Ms. Romanowski’s conversations with Mr.

2 17 || Isaacson regarding “(1) opening the N53 accounts at issue; (2) depositing personal checks into 5 18 || business accounts; (3) not opening personal accounts; (4) paying personal expenses from business 19 || accounts; and (5) delaying filing tax returns.” Dkt. 100 at 6. The United States is permitted to 20 || depose Ms. Romanowski for 90 more minutes to obtain such testimony. 21 IT IS SO ORDERED. 22 Dated: June 10, 2026 23 24 AJ SHNAN 25 United States Magistrate Judge 26 27 28