Securities and Exchange Commission v. James V Mazzo et al

Filing 35

MINUTES (IN CHAMBERS): ORDER by Judge David O. Carter: DENYING 29 Motion to Intervene; DENYING 29 Motion to Stay Civil Discovery. (See document for details.) (rla)

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SACV 12-1327-DOC(ANx)

Date: February 25, 2013

Title: SECURITIES AND EXCHANGE COMMISSION V. JAMES V MAZZO ET AL.
PRESENT:
THE HONORABLE DAVID O. CARTER, JUDGE
N/A
Court Reporter

Julie Barrera
Courtroom Clerk
ATTORNEYS PRESENT FOR PLAINTIFF:
None Present

PROCEEDING: (IN CHAMBERS):

ATTORNEYS PRESENT FOR DEFENDANT:
None Present

ORDER DENYING U.S. ATTORNEY’S
MOTION TO INTERVENE AND FOR A
PARTIAL STAY OF CIVIL DISCOVERY

Before the Court is a Motion to Intervene and for a Partial Stay of Civil Discovery
brough by the United States Attorney’s Office for the Central District of California.
(“Mot.,” Dkt. 29.) The Court finds this matter appropriate for decision without oral
argument. Fed. R. Civ. P. 78; Local Rule 7-15. The Court has considered the Motion and
Opposition filed by Defendant James Mazzo, and hereby DENIES the Motion without
prejudice.
I. Background
The Securities and Exchange Commission (“the Commission”) has sued
Defendants Mazzo, David L. Parker (“Parker”), and Eddie C. Murray (“Murray”),1
alleging that in early 2009 Mazzo, then the Chairman of Advanced Medical Optics, Inc.
(“Advanced Medical”), tipped Douglas V. DeCinces (“DeCinces”) information that
Abbott Laboratories, Inc., was going to buy the outstanding shares of Advanced Medical.
Compl. ¶¶ 1-3, 32-74. In a prior civil case, the Commission alleged that DeCinces then
tipped off Parker, Murray, and three other men who traded on the basis of that
information. Id. ¶¶ 6-12, 77-102. The Commission settled its claims in August 2011 as to
DeCinces and the three other men that the Commission alleged had traded using the
1

Defendant Murray has consented to entry of judgment against him (Dkt. 3), and the Court shall approve that
proposed Order.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SACV 12-1327-DOC(ANx)

Date: February 25, 2013
Page 2

tipped information. The settlements in the DeCinces case included permanent injunctions
against certain violations of the Securities and Exchange Act, as well as disgorgement of
profits obtained from the trading, and civil penalties. See Final Judgments (Dkts. 7-10),
Securities and Exchange Commission v. Douglas V. DeCinces et al., 8:11-SACV-1168DOC-AN.
On November 28, 2012, a grand jury returned an indictment against DeCinces,
two other defendants from the DeCinces case, and, as is most relevant here, against
Parker. See Indictment, (Dkt. 1), United States v. DeCinces, et al., 8:12-CR-0269-AG.
Mazzo is not a defendant in the criminal case.
II. The Current Motion
On January 15, 2013, the U.S. Attorney’s Office for the Central District of
California filed a Motion seeking to intervene and to stay any depositions in this case.
The U.S. Attorney seeks this partial stay until February 11, 2014, so that the criminal
case can be completed before defendants in this civil case take any depositions. The U.S.
Attorney argues that “the overriding public interest in law enforcement” supports a stay,
as does judicial economy, because the criminal case could resolve issues in the civil case.
Mot. 2. Only Defendant Mazzo opposed the Motion. Mazzo Opp’n (Dkt. 25). The U.S.
Attorney did not file a Reply to Mazzo’s Opposition.
“In the absence of substantial prejudice to the rights of the parties involved,”
parallel civil and criminal proceedings are “unobjectionable under our jurisprudence.”
Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 1995) (quoting
Securities & Exchange Comm'n v. Dresser Indus., 628 F.2d 1368, 1375 (D.C.Cir.
1980), cert. denied, 449 U.S. 993 (1980).
The central reason that the Court shall, at this time, deny the U.S. Attorney’s
Motion, is that the request does not identify with any particularity what depositions
would imperil the public interest in law enforcement.
The U.S. Attorney invokes the need to protect “the integrity of the criminal case,”
Mot. 7, and a concern that a criminal defendant should not be able to use civil discovery
to get broader discovery than is available under the Federal Rules of Criminal Procedure,

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SACV 12-1327-DOC(ANx)

Date: February 25, 2013
Page 3

id. 6.2 Such broad claims of possible abuse are generally not sufficient to support a stay.
See Lizarraga v. City of Nogales, No. CV-06-0474-TUC-DCB, 2007 WL 215616 at *3
(D. Ariz. Jan. 24, 2007).
Indeed, without a more specific request—particular depositions that should be
stayed, for example—the Court cannot perform the case-specific analysis required for a
thoughtful decision about whether to deny Defendants Mazzo and Parker one of the
means by which they can defend themselves in this civil case. See Keating, 45 F.3d at
324 (noting that the decision to stay civil proceedings in light of a parallel criminal case
should be made “in light of the particular circumstances and competing interests involved
in the case”) (quoting Fed. Sav. & Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th
Cir. 1989).
This denial is without prejudice, as a particular deposition may arise that the U.S.
Attorney may be able to argue should be stayed. But a broad stay of all depositions for a
period of at least a year cannot be justified at this point.3 Because the Court determines
the Motion on the merits of the stay request, it is not necessary to reach the issue of
whether to allow the U.S. Attorney to intervene.
The Clerk shall serve a copy of this minute order on counsel for all parties in this
action.

MINUTES FORM 11
CIVIL-GEN

Initials of Deputy Clerk: jcb

2

The U.S. Attorney does not explain why Defendant Mazzo must be prevented from taking
depositions when he is not a defendant in the criminal case.

3

The Court notes that other courts have looked with disfavor to the Government’s request for a
stay when a branch of the Government, and not private parties, has brought the civil lawsuit that
a U.S. Attorney’s office is then seeking to stay. S.E.C. v. Fraser, No. CV-09-0443-PHX-GMS,
2009 WL 1531854 at *3 (D. Ariz. June 1, 2009) (citing cases). The cases cited by the U.S.
Attorney’s Office in its Motion also typically involved far shorter stays, see, e.g., Bureerong v.
Uvawas, 167 F.R.D. 83 (C.D. Cal. 1996) (stay of less than four months), or cases in which there
was good reason to believe that a criminal defendant was in fact trying to manipulate civil
discovery to obtain information otherwise unobtainable in the criminal case, see, e.g., Campbell
v. Eastland, 307 F.2d 478, 488 (5th Cir. 1962).