1 in the UNITED STATES DISTRICT COURT for the DISTRICT of PUERTO RICO WAL-MART PUERTO RICO, INC., ) ) Plaintiff, ) ) V. ) Case

Case 3:15-cv-03018-JAF Document 48 Filed 01/04/16 Page 1 of 17

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

WAL-MART PUERTO RICO, INC., ) ) Plaintiff, ) ) v. ) Case No. 3:15-cv-03018-JAF ) JUAN C. ZARAGOZA-GÓMEZ, in his official ) capacity as Secretary of the Treasury of the ) Commonwealth of Puerto Rico, ) ) Defendant. )

JOINT PLAN FOR DISCOVERY

Pursuant to this Court’s orders the parties respectfully submit this Joint Plan for

discovery on jurisdiction and the merits.

Meet and Confers

Counsel for both parties met and conferred telephonically about this plan on

December 28, December 30, and January 4. Counsel have succeeded in reaching agreement on some important issues—including a joint proposed protective order, submitted concurrently herewith. Counsel for both parties continue to meet and confer in good faith to resolve the outstanding discovery issues that remain. Counsel respectfully request additional time for these conferences, and will submit updates to this plan when additional dates and details are confirmed. The parties’ respective positions are set forth in more detail below.

Wal-Mart PR’s Proposed Discovery Plan

1. During the December 28 meet-and-confer, Wal-Mart PR suggested that counsel

for the Secretary propose topics for deposition, and Wal-Mart PR would then find persons

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knowledgeable about those topics to testify. In response, on December 30, counsel for the

Secretary stated that he wished to depose the following persons: Wal-Mart PR’s “external

auditor”; Wal-Mart PR’s “controller” or “CFO”; and an employee of the parent company, Wal-

Mart Stores, Inc., with knowledge of the transfer pricing policies between that company and

Wal-Mart PR. Over the weekend, Wal-Mart PR worked to identify those three witnesses and find dates when they would be available. On the morning of January 4, Wal-Mart PR offered to make these three witnesses available for deposition in San Juan, at the offices of McConnell

Valdes, for one-day depositions, to be held on January 12, 13, and 14.

2. Meanwhile, Wal-Mart PR began requesting documents and depositions from the

Secretary. On December 29, Wal-Mart served a detailed jurisdictional discovery request containing 30(b)(6) topics and document requests. (Exhibit D). On December 30, Wal-Mart PR sent subpoenas to the Secretary for third party depositions (Exhibits A, B, and C). On the morning of January 4, Wal-Mart PR served a second discovery request relating to the merits

(Exhibit E). These requests are discussed further below, in the “Details of Wal-Mart PR’s

Discovery Plan” section.

3. There are two primary issues on which the parties have not yet reached agreement. The first issue is the dates for Wal-Mart PR’s personnel to testify. Though Wal-

Mart PR has agreed to depose the Hacienda personnel when they are available (later in January,

according to counsel for the Secretary) the counsel for the Secretary has not agreed to do so for

Wal-Mart personnel. Counsel for the Secretary has indicated that he would not be ready to

depose Wal-Mart PR’s personnel on January 12, 13, and 14, and has requested that these depositions be post-poned.

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4. Wal-Mart PR respectfully submits that January 12, 13, and 14 are appropriate

dates for these depositions. Wal-Mart PR proposed these dates because the Secretary represented that its witnesses would not be available until later in January. Double-tracking

depositions later in January will add undue burden on both parties. Wal-Mart PR has confirmed

the witnesses’ availability on January 12, 13 and 14 and has offered to make these witnesses

available in San Juan (including any who live in Arkansas). Counsel have been informed that

some of these witnesses have other commitments later in January. Given the numerous tasks that

must be accomplished between now and the evidentiary hearing – e.g., the depositions of the

Secretary’s witnesses, the preparation of expert reports, the depositions of the experts, etc. –

Wal-Mart PR’s position is that the parties simply do not have the luxury of delaying the

depositions of currently-available witnesses.

5. The second issue of disagreement is the scope and timing of the Secretary’s

discovery requests. At approximately 7pm Atlantic Time, counsel for the Secretary greatly

expanded the discovery requests beyond the three specific witnesses that he requested during the meet and confer on December 30. The new requests also go far beyond what this Court ordered at the December 23 hearing. As the Court will see in the Secretary’s plan, below, the Secretary’s discovery requests now include entirely new topics, including for example, the “[c]orporate structure of Wal-Mart Stores, Inc.” including “the conglomerate’s structure (organizational chart and history of changes in since Wal-Mart began operations in Puerto Rico (4 February 1991)”; the “percentage of net taxable income over gross income for years 2004 thru 2015 of all jurisdictions in which Wal-Mart Stores, Inc. or related entities are engaged in a trade or business”; and some requests that are difficult even to understand, including, for example,

“volume and nature of uncontrolled transactions taken into account for analyzing their

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comparability with the multi-jurisdictional transaction entered into.” These requests are needlessly expansive and unduly burdensome. Wal-Mart’s discovery requests, by contrast, were

(1) provided long before the deadline for this plan; (2) have thus far drawn no objection from counsel for the Secretary; and (3) are narrowly focused on the issues identified by the Court. See

Exhibits A through D (jurisdictional discovery requests served on December 29 and 30); Exhibit

E (merits discovery requests, adding a few topics relevant to merits issues, served the morning of

January 4).

6. To date, counsel for the Secretary has not provided any dates for depositions of

Hacienda personnel, nor responded to the document requests.

7. Wal-Mart PR respectfully proposes the following discovery schedule:

 Jan. 8: Initial disclosures pursuant to Rule 26(a)

 Jan. 11: KPMG 30(b)(6) deposition by Wal-Mart PR, in San Juan (pending confirmation from KPMG—subpoena attached as Exhibit A)

 Jan. 12: Parties disclose expert witnesses

 Jan. 12: Governor’s Working Group 30(b)(6) deposition by Wal-Mart PR, in San Juan (pending confirmation from the Working Group—subpoena attached as Exhibit B)

 Jan. 12: One of three Wal-Mart PR witnesses to be deposed by Hacienda, in San Juan

 Jan. 13: One of three Wal-Mart PR witnesses to deposed by Hacienda, in San Juan

 Jan. 14: One of three Wal-Mart PR witnesses to deposed by Hacienda, in San Juan (pending confirmation from Hacienda—Wal-Mart PR has offered three witnesses covering the topics requested)

 Jan. 15: Conway MacKenzie LLC 30(b)(6) deposition, by Wal-Mart PR, in Detroit, MI or in San Juan, PR (pending confirmation from Conway MacKenzie—subpoena attached as Exhibit C)

 Jan. 18-20: Treasury 30(b)(6) deposition(s), by Wal-Mart PR, in San Juan (the deposition notices and document requests are attached as Exhibits D and E)

 Jan. 19: Parties simultaneously exchange expert reports

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 Jan. 21: Joint pre-trial order submitted to Court

 Jan. 201: Deposition of Secretary Zaragoza-Gomez, in San Juan, on one of these dates, depending on witness availability (pending confirmation from counsel for the Secretary, who is checking on witness availability—deposition notice and document request (if any) to be served later)

 Jan. 212: Deposition of GDB President Acosta Febo, by Wal-Mart PR, in San Juan deposition notice and document request (if any) to be served later)

 Jan. 21-27: Depositions of experts, by both parties, in San Juan (each deposition to last one day, and to be determined based on witness and counsel availability)

 Jan. 27: Discovery ends

 Feb. 2-5: Four-day trial

Details of Wal-Mart PR’s Discovery Plan

8. Wal-Mart PR’s Rule 30(b)(6) deposition(s) of Treasury, and related

document requests. On December 29, Wal-Mart PR served its first request for 30(b)(6)

deposition and document request on the Secretary. This request is directed to jurisdictional

issues. It is attached as Exhibit D. On December 30, the Court expanded the scope of the

hearing to include the merits. On January 4, Wal-Mart PR served its second 30(b)(6) deposition

and document request on the Secretary. This request is directed to merits issues. It is attached as

Exhibit E.

a. Wal-Mart PR has requested the Secretary schedule the requested 30(b)(6)

deposition(s) on January 18-20, and to produce the requested documents, relevant

to each topic, no later than the week of January 11-15 (Wal-Mart PR has

1 In earlier meet and confers, Wal-Mart PR proposed a broader range of acceptable dates for Secretary Zaragoza- Gomez’s deposition and President Acosta Febo’s deposition: January 19-27. Hearing no specifics from counsel for the Secretary, however, Wal-Mart PR respectfully submits that the schedule would work most efficiently if these witnesses were deposed on the specific dates stated above. This would permit the experts to respond, in their depositions, to any new facts disclosed in the fact depositions. However, Wal-Mart PR remains available to take these depositions on any dates in this range on which these witnesses are available. 2 See supra note 1. 5

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requested that documents relevant to a topic be produced no less than 5 days

before the deposition on that particular topic).

b. In response to this request, the Secretary has not yet provided dates, but has stated

that counsel is working in good faith to do so.

9. Subpoenas to KPMG, Conway MacKenzie, and the Governor’s Working

Group. In order to obtain information relevant to show the Commonwealth’s inability to pay

refunds in the future, and in keeping with this Court’s direction in the December 23 hearing,

Wal-Mart seeks to take targeted 30(b)(6) depositions, and obtain certain documents, from

KPMG, Conway MacKenzie, and the Governor’s Working Group. During the December 23

hearing, this Court indicated that it did not intend to take judicial notice of reports these entities

have recently prepared for the government. Instead, the Court ordered the parties to obtain facts

through sworn depositions. During the December 28 meet-and-confer, counsel for the Secretary

stated that the Secretary did not control KPMG, Conway MacKenzie, or the Working Group.

Therefore, Wal-Mart PR issued third-party subpoenas to these entities. See Exhibit A (KPMG);

Exhibit B (Working Group); and Exhibit C (Conway MacKenzie).

a. KPMG subpoena (Exhibit A). KPMG is the outside auditor of the

Commonwealth’s financial statements. No audited financial statements have been

released for fiscal years 2014 and 2015. Wal-Mart PR seeks to obtain the draft

statements and any written opinions; to discover the reasons why those statements

have not been released; and limited document discovery related to those topics.

i. Wal-Mart PR’s KPMG subpoena requests 30(b)(6) deposition

testimony on January 11, and requests an expedited response.

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ii. Wal-Mart PR emailed this subpoena to counsel for the Secretary

on December 30. Wal-Mart PR attempted to formally serve the

subpoena on the same day, but was unable to accomplish formal

service because KPMG’s office in San Juan is closed from

December 24 to January 4. Wal-Mart PR succeeded in formally

serving the subpoena on January 4.

iii. Wal-Mart PR has not yet received a response from KPMG.

b. Subpoena to the Governor’s Working Group for the Fiscal and Economic

Recovery of Puerto Rico (“Working Group”) (Exhibit B). The Working

Group was created by Governor García Padilla in Executive Order OE-2015-22

(Jun. 29, 2015). In that order, the Governor gave the Working Group full access

to all financial information from every government agency, id. pt.5, and further

required every agency to assist the Working Group with consulting and

accounting services, id. pt.6. On September 9, 2015, the Working Group issued

its Fiscal and Economic Growth Plan, containing detailed financial data and

projections—some of which are relied upon in the Complaint to demonstrate the

unlikelihood of Puerto Rico being able to pay a refund.3 Wal-Mart PR seeks

30(b)(6) testimony to describe the sources of the data used to prepare the Plan; to

obtain narrowly targeted testimony to confirm the Plan data that Wal-Mart PR

relied upon in its complaint; to learn of any updates or supplements to this data;

and limited document discovery related to those topics.

3 Working Group for the Fiscal and Economic Recovery of Puerto Rico, Puerto Rico Fiscal and Economic Growth Plan (Sep. 9, 2015), http://www.bgfpr.com/ documents/PuertoRicoFiscalandEconomicGrowthPlan9.9.15.pdf.; Complaint ¶¶56, 58, 61 & 63. 7

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i. Because the Working Group lacks a juridical identity, and thus

cannot be subpoenaed directly, Wal-Mart PR issued three

subpoenas to the group through the group’s three leaders:

Secretary of Justice Cesar Miranda; Secretary of State Victor

Suarez Mendez, and GDP President Acosta Febo. These three

subpoenas are identical; the subpoena to Secretary Miranda is

attached as Exhibit B.

ii. Wal-Mart PR’s subpoenas request 30(b)(6) testimony on January

12, and request an expedited response.

iii. Wal-Mart PR emailed all three subpoenas to counsel for the

Secretary on December 30. Wal-Mart PR attempted to formally

serve the subpoenas on the same day, but was unable to

accomplish formal service because all three officials’ offices were

closed on that date. On December 31, Wal-Mart PR succeeded in

formally serving the subpoenas on the Secretary of Justice and the

President of the GDB. The Secretary of State was served on

January 4.

iv. Wal-Mart PR has not yet received a response from the Working

Group. c. Conway MacKenzie subpoena (Exhibit C). Conway MacKenzie is a financial

and management consulting firm. It was retained on January 20, 2015, as an

advisor to the Government Development Bank for Puerto Rico. Its “scope of

services included evaluating the short-term liquidity of the Commonwealth’s

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General Fund (“GF”) and projecting the anticipated budget deficit and resulting

impact on the Commonwealth’s liquidity for FY2015 and FY2016.”4 On August

25, 2015, Conway MacKenzie issued a “Liquidity Update” that “projects a

negative Bank Cash balance of $511.6 million as of June 2016.”5 Wal-Mart PR

seeks 30(b)(6) testimony to describe the sources of the data used to prepare the

Liquidity Update, any supplements to the Liquidity Update, and limited document

discovery related to those two topics.

i. Wal-Mart PR’s subpoena requests 30(b)(6) testimony on January

15, and requests an expedited response. The subpoena also

requests testimony in or near Detroit, MI, because that is where the

firm is headquartered. See Fed. R. Civ. P. 45(c). However, Wal-

Mart PR has informed counsel for the Secretary, and will inform

Conway MacKenzie, that Wal-Mart PR will relocate this

deposition to San Juan if Conway MacKenzie agrees to send its

representative there.

ii. Wal-Mart PR has not yet received a response from Conway

MacKenzie.

10. Depositions of Secretary Juan Zaragoza-Gomez and GDB President Melba

Acosta Febo. Wal-Mart PR has asked counsel for the Secretary to propose acceptable dates for these depositions between January 19 and January 22.

4 Conway MacKenzie, Commonwealth of Puerto Rico Liquidity Update, at 2 (Aug. 25, 2015), http://www.bgfpr.com/documents/150825ConwayMacKenzieLiquidityUpdateReport.pdf. 5 Id. at 6. 9

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a. In order to make the most efficient use of Secretary Zaragoza-Gomez’s and

President Acosta Febo’s time, Wal-Mart PR has requested that these depositions

occur after the 30(b)(6) depositions of KPMG, Conway MacKenzie, the Working

Group, and the Treasury, and after the relevant documents are produced for those

30(b)(6) depositions.

b. Wal-Mart PR intends to serve deposition notices on Secretary Zaragoza-Gomez

and President Acosta Febo. These will be similar to (though likely shorter and

narrower than) the 30(b)(6) topics in the attached subpoenas to the Treasury,

KPMG, the Working Group, and Conway MacKenzie. Wal-Mart PR intends to

serve these notices as additional available from the subpoenas and notice already

issued; in any event, Wal-Mart PR will issue these notices later than the close of

the earlier 30(b)(6) depositions.

c. In response to this request, the Secretary has not yet provided dates, but has stated

that counsel is working in good faith to do so.

Secretary’s Statement on Discovery

Secretary’s General Statement Regarding Discovery Proceedings

The Secretary respectfully submits that his participation in the discovery proceedings,

including under the conditions set forth by this Honorable Court, does not constitute a waiver

of the jurisdictional defense asserted in the proper and timely filed Motion to Dismiss for

Want of Jurisdiction under Fed. R. Civ. P. 12(b)(1). (Dkt. No. 24). Accordingly, Defendant files this Joint Plan for Discovery without conceding, or submitting to, the jurisdiction of the

Court.

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In addition, the Secretary submits that the question of the Court's subject-matter jurisdiction over this controversy should be decided as a threshold matter, without imposing on the Secretary the obligation to participate in discovery proceedings, especially in connection with the merits of the constitutional controversies. The Secretary further contends that the conditions imposed by the Court to conduct discovery are oppressive and impair important policy considerations that are paramount under the general rules of comity that apply to cases involving tax challenges before federal courts. This is particularly true given that the district court has requested Wal-Mart to conduct discovery regarding areas that have a limited bearing on the constitutional dispute. Consequently, such discovery --involving, for example, public officials and the Commonwealth external auditors, which will raise serious controversies potentially involving deliberative process privilege and public disclosure of confidential financial information--, may run afoul of the proportionality principle recently incorporated in the amendments to the Federal Rules of Civil Procedure.

Moreover, by setting a hearing to adjudicate the merits of the constitutional question within less than two months from the service of the Original Complaint and simultaneously limiting the time to conduct discovery regarding such controversy (see, Dkt. No. 42 & 46), the district court is significantly impairing the Secretary's ability to present an adequate defense, thus affecting important constitutional and comity values.

For these reasons, the Secretary's filing of this discovery plan, pursuant to the order of this Honorable Court, and participation in the discovery process, especially on the merits, do not constitute a waiver of any of his procedural and constitutional rights. Nor do they constitute a waiver of his right to move this Court to alter the present procedural posture of the case.

Case 3:15-cv-03018-JAF Document 48 Filed 01/04/16 Page 12 of 17

Secretary’s Discovery Plan

Secretary’s Response to Wal-Mart’s Scheduling Protestations

Initially the parties were to conduct discovery in connection with the jurisdictional dispute to be discussed during a status conference set by the Court for Februrary 1, 2016. On

December 30, 2015 the District Court entered an order (Docket no. 42) stating that the parties must also engage in discovery concerning the merits of the case, which will then be adjudicated during a hearing that will commence on February 2, 2016. Thus, the discovery envisioned originally was limited to the jurisdictional dispute. At the time of the December 30, 2015 conference, the Secretary had preliminarily identified certain discovery areas, and advised that the actual discovery would specified in the discovery plan. The discovery served today and the depositions identified herein are aimed at the merits of the constitutional dispute. The Secretary is working expeditiously to complete this discovery within the time allotted by the Court, although the Secretary does not waive its procedural objection that the constraints imposed by the Court impair the Secretary’s right to an adequate defense.

As to the schedule for the depositions, the Secretary will continue working with Wal-

Mart to establish a mutually satisfactory schedule. The dates for the depositions of Wal-Mart’s witnesses had not been set, and Wal-Mart cannot select those dates unilaterally. Indeed, only today has Wal-Mart informed that his witnesses would available for the week beginning on

January 11, 2016. It is evident that by that time the Secretary will not have had a minimum of time to obtain and evaluate the information necessary to conduct such depositions, much less obtain the necessary expert advice. Hence, the deposition under Rule 30(b)(6) for Wal-Mart’s witnesses are not being “postponed”, but rather the Secretary is proposing that the same be scheduled for a reasonable date mutually acceptable. Given the time constraints imposed by the

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Court’s calendar, the Secretary has proposed to Wal-Mart that such depositions be taken on the week of January 18, 2016. This will allow the Secretary a modicum of time to obtain necessary information before entering into the depositions. The Secretary will continue working with Wal-

Mart to accommodate such depositions and other discovery issues.

The Secretary also proposes that in order to better frame the issues and expedite the progress of the case, the report by plaintiff’s expert should be produced in advance of the report of the Secretary’s expert by at least two days,

Secretary’s Discovery

The Secretary will conduct discovery regarding the relationship between Wal-Mart’s affiliated parties, particularly between Wal-Mart P.R. and its parent company, and the effect of such transactions on Wal-Mart P.R.’s taxable income. The Secretary has served on Wal-Mart a

First Request for Production of Documents and a First Set of Interrogatories, both of which are attached hereto as Exhibit F and Exhibit G. The Secretary will examine witnesses to be produced by Wal-Mart pursuant to Rule 30(b)(6), or specifically designated by the Secretary. The written discovery requests served on Wal-Mart may serve as a guideline for the topics to be the subject of the depositions to be taken under Rule 30(b)(6), which include the following topics, as to which Wal-Mart will have to designate witnesses.

 Corporate structure of Wal-Mart Stores, Inc. (controlled group of corporations). The

witness should be knowledgeable about: the conglomerate’s structure (organizational

chart and history of changes in since Wal-Mart began operations in Puerto Rico (4

February 1991); country of tax residence of each of the enterprises comprised in the

group with whom multi-jurisdictional transactions have been made by Wal-Mart P.R.,

and the ownership linkages among them; the nature of the business of Wal-Mart Puerto

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Rico, Inc., and the industry in which it operates and the business of the related

enterprises, and the reasons for changes in structure over the years;

 Affiliates conducting transactions with Wal-Mart Puerto Rico, Inc.

 Expenses incurred or paid by Wal-Mart PR to a related entity if such expense is

attributable to the conduct of a trade or business in Puerto Rico and are not subject to

income tax or withholding at source according to the Puerto Rico Internal Revenue Code;

 The amount representing the transfer of costs or the allocation of expenses to Wal-Mart

PR, e.g., salary allocations, management fees, parent company allocations;

 The value of personal property sold from a related entity that is not subject to income tax

withholding at source according to the Puerto Rico Internal Revenue Code. What is the

fair market value of such property.

 Invoicing from affiliates to Wal-Mart PR for the value of the personal property sold to

the latter;

 Percentage of net taxable income over gross income for years 2004 thru 2015 of all

jurisdictions in which Wal-Mart Stores, Inc. or related entities are engaged in a trade or

business.

 Taxable income generated by Walmart Puerto Rico, Inc., through the years, including

entity classification, inclusion of income as part of parent entity(ies) and inclusion of

income as part of calculation of Foreign Income Tax Credit in other jurisdictions;

evidence of inclusion of income generated by Walmart Puerto Rico, Inc., in its parent

income tax return and evidence of calculation and discount of foreign tax credit for taxes

paid to Puerto Rico.

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 The nature, terms and prices of multi-jurisdictional transaction entered into with each

related entity, details of property transferred or services provided and the quantum and

the value of each such transaction or class of such transaction;

 Functions performed, risks assumed and assets employed or to be employed by Walmart

Puerto Rico, Inc., and by the related entity involved in multi-jurisdictional transactions;

 Economic and market analyses, forecasts, budgets or any other financial estimates

prepared by the Wal-Mart P.R. and/or its affiliates for its business as a whole or

separately for each division or product which may have a bearing on the multi-

jurisdictional transactions entered into by Walmart Puerto Rico, Inc.;

 Volume and nature of uncontrolled transactions (i.e., transactions between non-related

parties) taken into account for analyzing their comparability with the multi-jurisdictional

transaction entered into, including a record of the nature, terms and conditions relating to

any uncontrolled transaction with third parties which may be of relevant to the pricing of

the multi-jurisdictional transactions;

 Analysis performed to evaluate comparability of uncontrolled transactions with the

relevant multi-jurisdictional transaction;

 Methods considered for determining the arm's length price in relation to each multi-

jurisdictional transaction or class of transaction, the method selected as the most

appropriate method along with explanations as to why such method was so selected, and

how such method was applied in each case;

 Working documents created in connection with determining the arm's length price,

including details of the comparable data and financial information used in applying the

most appropriate method and adjustments, if any, which were made to account for

Case 3:15-cv-03018-JAF Document 48 Filed 01/04/16 Page 16 of 17

differences between the multi-jurisdictional transaction and the comparable uncontrolled

transactions or between the entities entering into such transaction;

 The assumptions, policies and price negotiations if any which have critically affected the

determination of the arm's length price;

 Details of the adjustments, if any made to the transfer price to align it with arm's length

price determined under these rules and consequent adjustment made to the total income

for tax purposes;

 Relevant information or data relating to the associated entity which may be relevant for

determination of the arm's length price.

The Secretary intends to depose a representative of Wal-Mart PR’s “external auditor”;

Wal-Mart PR’s “comptroller” and/or “CFO”; and similar executives and external consultants of

the parent company, Wal-Mart Stores, Inc., with knowledge of the tax treatment of Puerto Rico

source income and transfer pricing policies between that company and Wal-Mart PR. On

January 4, Wal-Mart PR offered to make these three persons available for deposition in San

Juan, at the offices of McConnell Valdes, for one-day depositions, to be held on January 12, 13,

and 14. These persons have not been designated yet by Wal-Mart PR. In addition to the

particular dates to be set for these depositions (see comments, supra), the parties will continue

working out on proposals to conduct this discovery efficiently.

In addition, the Secretary has advised Wal-Mart that all the information on Wal-Mart’s taxpayer records under the controlled of the Treasury Department of Puerto Rico may be used por purposes of the defense of this case, subject to the terms of the Confidentiality Order.

Moreover, the Secretary will serve written discovery requests for Wal-Mart by January 4, 2016,

Case 3:15-cv-03018-JAF Document 48 Filed 01/04/16 Page 17 of 17

in relation to the topics identified above, and other related matters. The discovery should be answered before the 30(b)(6) depositions.

DATED: January 4, 2016 Respectfully submitted,

By: /s/ Neal S. Manne /s/ Roberto A. Fernández-Quiles

Neal Manne (TX Bar No. 12937980)* GONZÁLEZ CASTAÑER, PSC Joseph S. Grinstein (TX Bar No. 24002188)* 128 F.D. Roosevelt Ave., 2nd Floor Vikram Swaruup (CA Bar No. 290869)* San Juan, Puerto Rico 00918-2409 SUSMAN GODFREY LLP Tel. 787-758-7819/ Fax 787-758-4152 1000 Louisiana Street, Suite 5100 /s/José Luis González-Castañer Houston, Texas 77002 Telephone: (713) 651-9366 JOSÉ LUIS GONZÁLEZ CASTAÑER Facsimile: (713) 654-6666 USDC-PR 201905 [email protected] [email protected]; [email protected] [email protected] ROBERTO A. FERNÁNDEZ-QUILES Shawn Rabin (NY Bar No. 4814224)* USDC-PR No. 206301 Steven M. Shepard (NY Bar No. 5291232)* [email protected]; SUSMAN GODFREY LLP [email protected] 560 Lexington Avenue, Fifteenth Floor New York, New York 10022-6828 Attorneys for Defendant Telephone: (212) 336-8330 Facsimile: (212) 336-8340 [email protected] [email protected]

Juan A. Marqués-Díaz (USDC-PR No. 211803) Francisco G. Bruno (USDC-PR No. 117011) McCONNELL VALDÉS LLC P.O. Box 364225 San Juan, Puerto Rico 00936-4225 Telephone: (787) 250-2619/5608 Fax: (787) 759-2772/620-8325 [email protected] [email protected]

Attorneys for Plaintiff

* Admitted pro hac vice

Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 1 of 8

Exhibit A Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 2 of 8 Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 3 of 8 Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 4 of 8 Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 5 of 8 Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 6 of 8 Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 7 of 8 Case 3:15-cv-03018-JAF Document 48-1 Filed 01/04/16 Page 8 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 1 of 8

Exhibit B Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 2 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 3 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 4 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 5 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 6 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 7 of 8 Case 3:15-cv-03018-JAF Document 48-2 Filed 01/04/16 Page 8 of 8 Case 3:15-cv-03018-JAF Document 48-3 Filed 01/04/16 Page 1 of 7

Exhibit C Case 3:15-cv-03018-JAF Document 48-3 Filed 01/04/16 Page 2 of 7 Case 3:15-cv-03018-JAF Document 48-3 Filed 01/04/16 Page 3 of 7 Case 3:15-cv-03018-JAF Document 48-3 Filed 01/04/16 Page 4 of 7 Case 3:15-cv-03018-JAF Document 48-3 Filed 01/04/16 Page 5 of 7

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

SCHEDULE “A” TO SUBPOENA TO CONWAY MACKENZIE

Plaintiff Wal-Mart Puerto Rico, Inc., (hereinafter “Wal-Mart PR”) serves this Subpoena for documents and deposition testimony pursuant to Rules 45 and 30(b)(6) of Civil Procedure.

1. Pursuant to Rule 30(b)(6), Wal-Mart PR will take the deposition or depositions of

Conway MacKenzie, through one or more of their officers or employees or such other authorized persons who consent to testify on Conway MacKenzie’s behalf on January 15, 2016, at a location at or near Detroit, MI, to be determined upon consulation with Conway MacKenzie.

2. Wal-Mart PR is willing to adjourn the deposition(s) to another mutually agreeable date. However, the deposition(s) must occur before late January. The deposition must occur then in order to comply with the order of Hon. José Antonio Fusté, U.S. District Judge for the

District of Puerto Rico, the presiding judge in this case. On December 23, 2015, Judge Fusté set a deadline of January 30, 2016, to obtain the information and testimony sought in this subpoena.

3. Conway MacKenzie has a duty to designate one or more officers, directors, managing agents, or other persons with sufficient knowledge to testify on their behalf on all

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Timestamp: 12/30/2015 8:18 AM EST information known or reasonably available to each on the topics set forth below. The deposition(s) will be taken for the purpose of discovery, to perpetuate the testimony of the witness(es) for use at trial, and for all other purposes permitted under the Federal Rules of Civil

Procedure. The deposition(s) will be taken under oath and will be stenographically recorded.

4. Pursuant to Rule 45, and pursuant to the Court’s order on December 23, Wal-Mart

PR requests that Conway MacKenzie, at least five business days before the deposition(s), produce documents sufficient to disclose the information requested in the below topics. Conway

MacKenzie is under a duty to search for and produce reasonably available internal memoranda, opinions, studies, reports, budgets, and other such papers, responsive to the topics set forth below.

TOPICS FOR DEPOSITION AND DOCUMENT REQUESTS

Topic One. The “liquidity outlook” projections summarized on page 9 of the August

25, 2015, Liquidity Update.1

Topic Two. The sources of data used to calculate the “liquidity outlook” projections discussed in Topic One.

Topic Three. Any material changes in the “liquidity outlook” projections since August

25, 2015. Please describe any changes to the “liquidity details,” described in pages 12-19 of the

Liquidity Update, that are responsible for any such material changes in the “liquidity outlook.”

DATED: December 30, 2015 Respectfully submitted,

By: /s/Alejandro J. Cepeda Diaz Neal Manne (TX Bar No. 12937980)* Joseph S. Grinstein (TX Bar No. 24002188)* Vikram Swaruup (CA Bar No. 290869)* SUSMAN GODFREY LLP

1 http://www.bgfpr.com/documents/150825ConwayMacKenzieLiquidityUpdateReport.pdfbudget. 2 Case 3:15-cv-03018-JAF Document 48-3 Filed 01/04/16 Page 7 of 7

Timestamp: 12/30/2015 8:18 AM EST

1000 Louisiana Street, Suite 5100 Houston, Texas 77002 Telephone: (713) 651-9366 Facsimile: (713) 654-6666 [email protected] [email protected] [email protected]

Shawn Rabin (NY Bar No. 4814224)* Steven M. Shepard (NY Bar No. 5291232)* SUSMAN GODFREY LLP 560 Lexington Avenue, Fifteenth Floor New York, New York 10022-6828 Telephone: (212) 336-8330 Facsimile: (212) 336-8340 [email protected] [email protected]

Juan A. Marqués-Díaz (USDC-PR No. 211803) Francisco G. Bruno (USDC-PR No. 117011) Alejandro J. Cepeda Diaz (USDC-PR No. 222110) McCONNELL VALDÉS LLC P.O. Box 364225 San Juan, Puerto Rico 00936-4225 Telephone: (787) 250-2619/5608 Fax: (787) 759-2772/620-8325 [email protected] [email protected]

* Admitted pro hac vice

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Exhibit D Case 3:15-cv-03018-JAF Document 48-4 Filed 01/04/16 Page 2 of 17

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

WAL-MART PUERTO RICO, INC., ) ) Plaintiff, ) ) v. ) Case No. 3:15-cv-03018-ADC ) JUAN C. ZARAGOZA-GÓMEZ, in his official ) capacity as Secretary of the Treasury of the ) Commonwealth of Puerto Rico, ) ) Defendant. )

PLAINTIFF’S FIRST REQUEST FOR JURISDICTIONAL DISCOVERY

Plaintiff Wal-Mart Puerto Rico, Inc., (hereinafter “Wal-Mart PR”), pursuant to discussions among counsel, submits this First Request for Jurisdictional Discovery to the

Secretary of the Treasury (“Secretary”) pursuant to Rules 26 and 34 of the Rules of Civil

Procedure (governing document production) and Rule 30(b)(6) of Civil Procedure (governing deposition testimony by a governmental agency).

a. Pursuant to Rule 30(b)(6), Wal-Mart PR will take the deposition or depositions of the Department of the Treasury, through one or more of their officers or employees or such other authorized persons who consent to testify on the Department’s behalf on a date to be mutually agreed upon, but in any event prior to the depositions to be scheduled of Secretary Zaragoza-

Gomez and former Secretary Melba Acosta Febo.

b. Defendant has a duty to designate one or more officers, directors, managing agents, or other persons with sufficient knowledge to testify on their behalf on all information known or reasonably available to each on the topics set forth below. The deposition(s) will be

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taken for the purpose of discovery, to perpetuate the testimony of the witness(es) for use at trial, and for all other purposes permitted under the Federal Rules of Civil Procedure. The deposition(s) will be taken under oath and will be stenographically recorded.

c. Pursuant to Rules 26 and 34, and pursuant to the Court’s order on December 23, see Hearing Tr., at 42, Wal-Mart PR requests that the Secretary, at least five business days before the deposition(s), produce documents sufficient to disclose the information requested in the below topics. The Secretary is under a duty to search for and produce reasonably available internal memoranda, opinions, studies, reports, budgets, and other such papers, responsive to the topics set forth below.

30(b)(6) TOPICS AND DOCUMENT REQUESTS

Topic One. The relative payment priority of income tax refunds, in comparison to the payment priorities of the Commonwealth’s other liabilities.

a. Please describe the priority given to income tax refund payments, in comparison with the Commonwealth’s other liabilities (e.g., debt payments, payroll, pensions, etc.).

b. Please describe any specific legal authority for the priority accorded to income tax refund payments.

c. Please identify all categories of liabilities with higher priority than income tax refund payments.

d. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of any manuals, memoranda, guidelines, or other guidance on the priority of tax refund payments in general. Please also provide copies of any statutes, regulations, circular letters, legal opinion letters, etc., which provide legal authority for the answers.

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Topic Two. The funds or accounts currently used to pay income tax refunds.

a. Please identify all funds or accounts currently used to pay income tax refunds.

Please identify the legal authority that justifies using each identified fund or account for this purpose.

b. For each fund or account identified, please describe all other purposes for which money in this account may be used, other than paying income tax refunds.

c. Please identify all officials with authority to authorize payments out of these funds or accounts, for any purpose.

d. Please state how much money is currently in each of these funds or accounts.

e. Please state the largest balance and the smallest balances in these funds or accounts, and the mean balance, during 2015.

f. Please provide the Department’s projection or forecast of the amount of money in these funds or accounts for 2016 and for any future years for which such projections or forecasts exist.

g. Please describe how these funds or accounts are funded. Please identify all officials or agencies with authority to authorize transfers into these funds or accounts.

h. Document requests relating to this topic: Please provide, at least five business days before the deposition, any regulations, memoranda, guidelines, or other legal authority relating to the funds or accounts used to pay income-tax refunds, including the legal authorities identified in paragraph (a). Please also provide copies of summary ledgers, account statements, reports or other documents showing the balances in the identified accounts during 2015. Please provide any manuals, memoranda, guidelines, or other guidance on the management of these accounts, including the authorization of payments out of these funds or accounts. Please provide

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any projections or forecasts, prepared in 2015, of the amount of money estimated to be in these funds or accounts in the future.

Topic Three. The Commonwealth’s estimated budget (i.e., revenues and expenses) during the next six years.

a. Please confirm the budget projections provided in the Plan prepared by the

Governor’s Working Group, pages 61-62: http://www.bgfpr.com/documents/PuertoRicoFiscalandEconomicGrowthPlan9.9.15.pdf. Please identify and explain any large changes to the projections since this Plan was published.

b. Please confirm the “liquidity outlook” projections summarized on page 9 of the

August 25, 2015, Liquidity Update authored by Conway MacKenzie: http://www.bgfpr.com/documents/150825ConwayMacKenzieLiquidityUpdateReport.pdfbudget.

Please identify and explain any large changes to the liquidity outlook since the Liquidity Update was published. Please describe any such changes in detail by reference to the relevant changed

“liquidity details” described in pages 12-19 of the Liquidity Update.

c. Please identify the projected yearly cost of each liability that has a higher priority than refund payments. (See Topic One.)

d. Document request relating to this topic: Please provide, at least five business days before the deposition, any internal memoranda, studies, reports, or projections, prepared in

2015, relating to estimates of the Commonwealth’s future budget. Please also provide any updates, supplements, or amendments to the Working Group Plan and the Liquidity Update, or to any similar study.

Topic Four. The Commonwealth’s audited financial statements.

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a. Please state whether the Commonwealth’s auditor, KPMG, has provided an opinion regarding the Commonwealth’s financial statements for fiscal years 2014 and 2015. If not, please state and explain the reasons why not. If so, please state and explain the reasons why the Government has not made KPMG’s opinion(s) public.

b. Please state and explain the reasons why the Government has not published audited financial statements for fiscal years 2014 and 2015.

c. Document request relating to this topic: Please provide, at least five business days before the deposition, any written opinions rendered by KPMG, any communications from

KPMG describing their reasons for not giving an opinion, and the financial statements for fiscal years 2014 and 2015.

Topic Five. The income tax refund-request process.

a. Please identify, describe, and produce (at least five days before the deposition) any regulations governing the Department’s procedure for processing an income tax refund request made under 2011 Internal Revenue Code, Sections 6021.02 and 6025.01-.02.

b. Please identify and describe any procedure for requesting an income tax refund, other than the procedure set forth in 2011 Internal Revenue Code, Sections 6021.02, 6025.01 and

6025.02.

c. Please identify and describe any procedure available to Wal-Mart PR to seek relief from the corporate AMT, if Wal-Mart PR is unable to pay its tax burden under Act 72.

Please state and explain whether those procedures would recognize Wal-Mart PR’s claims under the dormant Commerce Clause and the Federal Relations Act.

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d. Please state and explain, with citation to legal authority, the Department’s position as to the earliest date that Wal-Mart PR is entitled to file a refund request for the corporate AMT imposed by Act 72.

e. Please state and explain the Department’s position on whether the Department has authority to grant a tax refund request on the ground that the tax in question is contrary to the

U.S. Constitution, including the dormant Commerce Clause, or is contrary to the Federal

Relations Act.

f. Please state and explain the Department’s position on whether a deadline exists for the Department to respond to a taxpayer request for an income tax refund, and if so what the deadline is, any formal written documents (e.g., memorandums) establishing the deadline, and the extent to which the Department actually complies with the deadline.

g. Please state the average length of time a taxpayer currently waits, after filing an income tax refund request, before the Department issues a response, when the reason for the refund request is the taxpayer’s contention that the tax law is illegal, invalid, or unconstitutional.

h. Please identify any income-tax refund requests, filed in the last three years, that received a response in a time period that was more than one standard deviation above or below the mean response time, and the dollar amounts of such requests. Please state and explain the reasons for these deviation.

i. Document requests relating to this topic: Please produce (at least five days before the deposition) any regulations, memoranda, guidelines, or similar documents, whether internal or published, that regulate or describe: (1) the process by which a taxpayer submits an income-tax refund request; (2) the process by which the Department evaluates an income-tax refund request, and (3) the process by which the Department issues a denial of such a request.

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Please also produce any studies, analyses, charts, tables, memoranda, or reports on the time it takes the Department to process income-tax refund requests.

Topic Six. The delays in issuing a denial of the refund requests in Philip Morris and

Island Security Services.

a. For each of the refund requests reviewed by the court in Island Security Services, please state (a) the date the refund request was received by the Department; and (b) the date the

Department issued its formal denial of the refund request in the form required by Section

6025.01(a). See Island Sec. Servs., Inc. v. Estado Libre Asociado de Puerto Rico, No. K

CD2012-0907, 2013 WL 1099661 (P.R. Cir. Feb. 14, 2013).

b. Please state and explain the reasons for the Department’s delay in processing the refund requests received in Island Security Services.

c. For each of the refund requests reviewed by the court in Philip Morris, please state (a) the date the refund request was received by the Department; and (b) the date the

Department issued its formal denial of the refund request in the form required by Section

6025.01(a). See Philip Morris USA, Inc. v. Departamento de Hacienda, No. KLAN201500575,

2015 WL 5179006 (P.R. Cir. June 26, 2015).

d. Please state and explain the reasons for the Department’s delay in processing the refund requests received in Philip Morris.

e. Document requests relating to this topic: Please produce (at least five days before the deposition) any reports, memoranda, payment schedules, or other documents describing the evaluation or denial of the refund requests submitted by the taxpayers that were at issue in Island Security Services and Philip Morris.

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Topic Seven. Judicial review of the denial of an income tax refund request.

a. Please identify all of the taxpayer appeals under Section 6025.01(a), during the last five years, in which the amount of refund claimed exceeded $1 million. For each appeal identified, please provide:

i. The date on which the refund request was filed with the Department

ii. The date the Department issued its denial;

iii. The date of final disposition by the court system.

b. Please state and explain the Department’s position on whether the Puerto Rico

Court of First Instance has jurisdiction to hear a taxpayer’s refund request before the Department has rejected that refund request.

c. Please state and explain the Department’s position on whether the Puerto Rican courts have authority to reverse the Department’s denial of a refund request on the ground that the tax in question is contrary to the U.S. Constitution, including the dormant Commerce Clause, or is contrary to the Federal Relations Act.

d. Please state and explain the Department’s position on the appropriate standard of review that the Puerto Rico Court of First Instance should apply when reviewing the Hacienda’s denial of a taxpayer’s refund request, where the basis of the taxpayer’s claim is that the tax in question is contrary to the U.S. Constitution, including the dormant Commerce Clause, or the

Federal Relations Act.

e. Document requests relating to this topic: Please produce any regulations, memoranda, guidelines, or similar documents, whether internal or published, that regulate or describe the process by which the Puerto Rican courts review a taxpayer lawsuit brought under

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Section 6025.01(a). Please also produce (at least five days before the deposition) any memoranda, reports, or similar documents, whether internal or published, describing or analyzing the Puerto Rico courts’ review of the Department’s denials of taxpayer income-tax refund requests.

Topic Eight. Processing times and amounts for tax refunds requested for Tax Years 2011,

2012, and 2013.

a. Please state whether any refund requests are still pending from Tax Years 2011,

2012, and 2013. If so, please provide the mean dollar amount and mean delay time in responding to those requests.

b. Please state the mean and median delay in making all income-tax refund payments (or denials) for Tax Years 2011, 2012, and 2013. Please identify any refunds whose processing times were one standard deviation above or below the mean delay. Please explain the reasons for those deviations.

c. Please state the mean and median delay in income-tax refund payments (or denials) for Tax Years 2011, 2012, and 2013, in which the refunded amount exceeded $1 million. Please identify any requests whose processing times were one standard deviation above or below the mean delay. Please explain the reasons for those deviations.

d. Document requests relating to this topic: Please produce (at least five days before the deposition) any reports, memoranda, charts, or similar documents, describing the delays and processing times requested in this topic. For any specific refund request identified as an outlier (i.e., whose processing time was one standard deviation above or below the mean) please produce documents sufficient to show the nature of the refund request, the amount of the refund, and the identity of the taxpayer.

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Topic Nine. Processing times and amounts for tax refunds requested for Tax Year 2014

a. Please state the number of income-tax refund requests received by the Department for returns filed for Tax Year 2014.

b. Please state the number of income-tax refund requests, received by the

Department for returns filed for Tax Year 2014, in which the requested refund exceeds $1 million.

c. Please state the number of income-tax refund requests, received by the

Department for returns filed for Tax Year 2014, in which the requested refund exceeds $10 million.

d. Please state the mean and median dollar amount of income-tax refunds claimed by taxpayers in income-tax refund requests received by the Department for returns filed for Tax

Year 2014. Please identify any refund requests whose dollar amounts were one standard deviation above or below the mean delay.

e. Please state the total amount of income-tax refunds actually paid to taxpayers based on income-tax refund requests received by the Department for returns filed for Tax Year

2014.

f. Please state the total amount of income-tax refunds that are owed to taxpayers

(based on income-tax refund requests received by the Department) but that have not yet been paid, for returns filed for Tax Year 2014.

g. Please identify the average amount per taxpayer of the income-tax refunds actually paid to taxpayers as a result of income-tax refund requests received by the Department for returns filed for Tax Year 2014.

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h. Please state the mean and median delay in making income-tax refund payments

(or denials) for Tax Year 2014. Please identify any refunds whose processing times were one standard deviation above or below the mean delay. Please explain the reasons for those deviations.

i. Please identify any income-tax refunds whose processing times were one standard deviation above or below the average delay. Please explain the reasons for those deviations.

j. Please explain why some refunds have been withheld and others have been paid, for returns filed for Tax Year 2014. Specifically, please explain the criteria used to determine which refunds would be paid first, and which would be paid later.

k. Please identify the specific legal authority that authorized the Department to delay income-tax refund payments for returns filed for Tax Year 2014.

l. Please describe the current plan for paying any remaining refunds from Tax Year

2014, including the date when the Department expects they will be paid, and the reasons why that is the expected date.

m. Document requests relating to this topic: Please produce (at least five days before the deposition) any regulations, memoranda, guidelines, or similar documents, whether internal or published, describing the process for determining the order or priority in which income-tax refunds would be paid for Tax Year 2014 or have been paid for this tax year. Please produce any plans, projections, estimates or forecasts of how income-tax refunds from Tax Year

2014 would be paid. For any specific refund request identified as an outlier (i.e., whose processing time was one standard deviation above or below the mean) please produce documents sufficient to show the nature of the refund request, the amount of the refund, and the identity of the taxpayer.

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Topic Ten. Tax Refunds for Tax Year 2015

a. Please state and explain the Department’s projection or estimate of the total amount of income-tax refunds that will be claimed by taxpayers for income-tax returns filed for

Tax Year 2015, and explain the reasons for that projection or estimate.

b. Please state and explain the Department’s projection or estimate of the delays that will be imposed on income-tax refunds that will be claimed by taxpayers for income-tax returns filed for Tax Year 2015, and explain the reasons for that projection or estimate.

c. Please describe any plans for reviewing and paying refund requests for Tax Year

2015, including any plans for delaying some or all of those refunds. Please state the date when the Department expects to pay these refunds.

d. Please state whether any refunds have yet been paid for Tax Year 2015, and if so, state the total amount of payments made for these refunds claimed, and also state the total amount of refunds claimed.

e. If any refunds from Tax Year 2015 have been paid, please produce documents sufficient to show the nature of the refund request, the amount of the refund, and the identity of the taxpayer.

f. Please identity the officer(s) who approved the decision to withhold refund payments for Tax Year 2015, or the officer(s) who would have authority to approve such a decision in the future.

g. Document requests relating to this topic: Please produce (at least five days before the deposition) any regulations, memoranda, guidelines, or similar documents, whether internal or published, describing the process for determining the order or priority in which income-tax refunds would be paid in Tax Year 2015. Please produce any plans, memoranda,

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projections, estimates or forecasts of how income-tax refunds from Tax Year 2015 would be paid.

Topic Eleven. The refund payments made to taxpayers as a result of the Puerto Rico

Supreme Court’s ruling in Herrero y Otros v. Emmanuelli, 2010 T.S.P.R. 95 (P.R. 2010).

a. Please identify the date when the Department made its final payment in satisfaction of the judgment.

b. Please state the amount of tax that was (a) collected from plaintffs pursuant to (b) the automobile tax found by the Supreme Court to be invalid.

c. Please state the total amount of payments made by the Department as a result of the judgment in this case.

d. Please explain the negotiation process between the Department and the taxpayers following the Supreme Court’s opinion.

e. Document requests relating to this topic: Please produce (at least five days before the deposition) any reports, memoranda, payment schedules, or other documents describing the negotiation process with the Herrero plaintiffs after the Supreme Courts decision, or describing the payments made in satisfaction of the Herrero judgment.

Topic Twelve. The effect of the Fiscal Sustainability Act, Law 66-2014, on the payment of any tax refund ordered by the Puerto Rican courts.

a. Please state and explain the Department’s position on how Section 28 of the

Fiscal Sustainability Act would affect any payment of refunds ordered by Puerto Rican courts of

Wal-Mart PR’s AMT payments.

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b. Please identify any refund judgments (whether or income tax or any other tax), entered against the Department by the Puerto Rican courts since the Fiscal Sustainability Act took effect. Please describe any “payment plan” the Department created, pursuant to Section 28, to pay such a judgment.

c. Document requests relating to this topic: Please produce (at least five days before the deposition) any reports, memoranda, payment schedules, or other documents describing the effect of the Fiscal Sustainability Act on taxpayer refund requests (of any kind of tax) and on court judgments ordering refunds (of any kind of tax). Please produce the payment plans described in response to paragraph (b), as well as any reports, memoranda, or other documents describing those payment plans.

Topic Thirteen. The availability of a credit or offset to Wal-Mart PR in future tax years, if a court were to determine that the AMT that Wal-Mart PR is currently paying is unconstitutional.

a. Please confirm that the credit referenced in paragraphs 1, 6, 21, 47 of the Answer is the AMT Credit provided in 2011 Internal Revenue Code § 1051.02.

b. Please state and explain the Department’s position on how the credit referenced in paragraphs 1, 6, 21, 47 of the Answer would provide a remedy to Wal-Mart PR, in the event that

Wal-Mart PR’s current AMT were determined to be unconstitutional.

c. Please identify any cases in which income-tax refunds were reimbursed to the taxpayer using the credit referenced in paragraphs 1, 6, 21, 47 of the Answer. (This request includes refunds due for any reason, including but not limited to overpayments by the taxpayer and judgments entered by the Puerto Rican courts.)

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d. Please identify any legal authority supporting counsel’s statement, on December

23, that “[i]f Wal-Mart would prevail during the course of this year, in this case, after having paid the alternate minimum tax as part of its taxes in the Commonwealth, Wal-Mart would be entitled to take a credit for the following year against the taxes that Wal-Mart will pay next year.” Hearing Tr., at 17.

e. Please identify any cases in which a taxpayer received the credit described by counsel in paragraph (d). Please state and explain the reasons why the credit was given in those cases, whether the taxpayer agreed to or requested the credit, and for how many years the credit was used.

f. Document requests relating to this topic: Please produce (at least five days before the deposition) any reports, memoranda, payment schedules, or other documents describing the effect of the AMT Credit, or of the credit described in paragraph (d), on any income-tax refund payments.

DATED: December 29, 2015 Respectfully submitted,

By: /s/ Steven M. Shepard Neal Manne (TX Bar No. 12937980)* Joseph S. Grinstein (TX Bar No. 24002188)* Vikram Swaruup (CA Bar No. 290869)* SUSMAN GODFREY LLP 1000 Louisiana Street, Suite 5100 Houston, Texas 77002 Telephone: (713) 651-9366 Facsimile: (713) 654-6666 [email protected] [email protected] [email protected]

Shawn Rabin (NY Bar No. 4814224)* Steven M. Shepard (NY Bar No. 5291232)* SUSMAN GODFREY LLP

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560 Lexington Avenue, Fifteenth Floor New York, New York 10022-6828 Telephone: (212) 336-8330 Facsimile: (212) 336-8340 [email protected] [email protected]

* Admitted pro hac vice

CERTIFICATE OF SERVICE

I certify that I emailed the above Plaintiff’s First Jurisdictional Discovery Request to Mr. Jose Gonzalez and Mr. Roberto Fernandez, counsel for the Secretary, on December 29, 2015.

/s/ Steven M. Shepard Steven M. Shepard

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Exhibit E Case 3:15-cv-03018-JAF Document 48-5 Filed 01/04/16 Page 2 of 8

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

PLAINTIFF’S SECOND REQUEST FOR DISCOVERY (ON THE MERITS)

Plaintiff Wal-Mart Puerto Rico, Inc., (hereinafter “Wal-Mart PR”), pursuant to the

Court’s order on December 30, setting an evidentiary hearing on the merits to begin on February

2, and pursuant to discussions among counsel, submits this Second Request for Discovery (on the Merits) to the Secretary of the Treasury (“Secretary”) pursuant to Rules 26 and 34 of the

Rules of Civil Procedure (governing document production) and Rule 30(b)(6) of Civil Procedure

(governing deposition testimony by a governmental agency).

Gomez and former Secretary Melba Acosta Febo.

b. Defendant has a duty to designate one or more officers, directors, managing agents, or other persons with sufficient knowledge to testify on their behalf on all information

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known or reasonably available to each on the topics set forth below. The deposition(s) will be taken for the purpose of discovery, to perpetuate the testimony of the witness(es) for use at trial, and for all other purposes permitted under the Federal Rules of Civil Procedure. The deposition(s) will be taken under oath and will be stenographically recorded.

c. Pursuant to Rules 26 and 34, and pursuant to the Court’s order on December 23, see Hearing Tr., at 42, Wal-Mart PR requests that the Secretary and the Treasury Department

(“the Treasury”), at least five business days before the deposition(s), produce documents sufficient to disclose the information requested in the below topics. The Secretary and the

Treasury are under a duty to search for and produce reasonably available internal memoranda, opinions, studies, reports, budgets, and other such papers, responsive to the topics set forth below.

ADDITIONAL 30(b)(6) TOPICS AND DOCUMENT REQUESTS (ON THE MERITS)

Topic Fourteen. The Treasury’s contentions regarding the taxation of transfer pricing.

a. Please describe all taxation difficulties and issues the Treasury has previously encountered with taxpayers who utilize transfer pricing in their income tax returns.

b. Please describe the steps the Treasury took to address the difficulties and issues identified in (a).

c. Please identify all past taxpayers whom the Treasury has found via audit to have engaged in improper manipulation of their income via transfer pricing.

d. Please state and explain the Treasury’s calculation of the amount of taxes that the

Treasury has been denied due to corporations’ alleged manipulation of their income via transfer pricing and the specific corporations the Treasury contends have engaged in said manipulation.

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e. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents relating to (1) Puerto Rico’s tax treatment of transfer pricing, (2) auditing of taxpayers who have used transfer pricing in their tax returns, and

(3) estimate of income taxes denied to Puerto Rico on account of corporations’ use of transfer pricing.

Topic Fifteen. The Treasury’s contentions regarding Wal-Mart PR’s use of transfer pricing in its income tax returns.

a. Please describe the Treasury’s contentions, in this case, as to whether Wal-Mart

PR has improperly utilized transfer pricing. Please include the Treasury’s contentions as to whether Wal-Mart PR has complied with all applicable Commonwealth and IRS regulations.

b. Please identify all tax audits that the Treasury has conducted of Wal-Mart PR regarding Wal-Mart PR’s approach to transfer pricing.

c. Please describe the Treasury’s contentions as to the amount of revenue that has been denied to the Treasury on account of Wal-Mart PR’s allegedly improper use of transfer pricing.

a. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents relating to Wal-Mart PR’s use of transfer pricing and any review, analysis, evaluation and/or audit, whether formally initiated or not, of

Wal-Mart PR on this issue.

Topic Sixteen. Tax credits for the AMT.

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a. Please describe the Treasury’s policies, if any, to allow Puerto Rico taxpayers to claim credits against the AMT for taxes paid in other U.S. jurisdictions by their related entities on income realized from the transfers of goods and services to Puerto Rico taxpayers.

b. Please identify any instances in which the Treasury has provided such credits to taxpayers.

c. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents relating to the Treasury’s policies relating to said tax credits and any instances in which said tax credits have been provided.

Topic Seventeen. Comparison of the AMT to other jurisdictions.

a. Please describe the Treasury’s contentions regarding whether the AMT is similar to the approach that other U.S. jurisdictions take to the taxation of entities who employ transfer pricing.

b. Please identify all other U.S. jurisdictions that employ an AMT similar to that of

Puerto Rico.

c. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents that the Treasury contends reflect the AMT’s of other jurisdictions that are similar to Puerto Rico’s AMT.

Topic Eighteen. Documents provided by Treasury to the Legislature relating to Act

72’s amendment to the corporate AMT.

a. Please describe all requests from the Legislature to Treasury for information or advice relating to Act 72’s amendment of the corporate AMT.

b. Please describe what was done by Treasury to respond to any such requests.

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c. Please identify and produce all documents provided by Treasury to the

Legislature, relating to the corporate AMT, during the Legislature’s consideration of Act 72

(from approximately February 1, 2015, to May 25, 2015).

d. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents described above: specifically, all documents provided by Treasury to the Legislature, relating to the corporate AMT, during the Legislature’s consideration of Act 72 (from approximately February 1, 2015, to May 25, 2015); and, all requests from the Legislature to Treasury for information or advice relating to Act 72’s amendment to the corporate AMT.

Topic Nineteen. Estimated collections from the corporate AMT.

a. Please identify and produce all documents relating to any estimate of the total amount of corporate AMT that will be collected, from all corporate taxpayers, in Tax Year 2015 and any subsequent years.

b. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents relating to any estimate of the total amount of corporate AMT that will be collected in Tax Year 2015 and any subsequent years.

Topic Twenty. Documents submitted by Wal-Mart PR.

a. Please identify and produce all documents, submitted by Wal-Mart PR to the

Treasury, on which Treasury intends to rely at the evidentiary hearing (whether on the merits or on jurisdiction).

b. Document requests relating to this topic: Please provide, at least five business days before the deposition, copies of all documents, submitted by Wal-Mart PR to the Treasury,

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on which Treasury intends to rely at the evidentiary hearing (whether on the merits or on jurisdiction).

DATED: January 4, 2016 Respectfully submitted,

* Admitted pro hac vice

CERTIFICATE OF SERVICE

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I certify that I emailed the above Plaintiff’s Second Discovery Request to Mr. Jose Gonzalez and Mr. Roberto Fernandez, counsel for the Secretary, on January 4, 2016.

/s/ Steven M. Shepard Steven M. Shepard

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