Nutrition Distribution, LLC v. Enhanced Athlete, Inc.

Filing 67

ORDER signed by Magistrate Judge Kendall J. Newman on 4/9/2018 DENYING 62 Motion to Stay Discovery and GRANTING-IN-PART and DENYING-IN-PART 63 Motion to Compel. Within 14 days of this order, defendants shall produce documents and supplemental responses to plaintiffs first set of requests for production of documents and first set of special interrogatories. (Hunt, G)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11

NUTRITION DISTRIBUTION, LLC,

12
13
14
15

No. 2:17-cv-01491-TLN-KJN

Plaintiff,
v.

ORDER

ENHANCED ATHLETE, LLC, et al.,
Defendants.

16
17

Presently pending before the court are defendants’ motion to stay discovery for a period of

18

four months, pending resolution of an ongoing parallel criminal investigation (ECF No. 62) and

19

plaintiff’s motion to compel further responses to discovery and request for sanctions (ECF No.

20

63). Parties submitted joint statements as to each motion (ECF Nos. 64, 65) and these matters

21

came on regularly for hearing on April 5, 2018, at 10:00 a.m. Robert Tauler appeared on behalf

22

of plaintiff and Brian Berggren appeared on behalf of defendants.

23

After carefully considering the briefing and the parties’ oral argument, and for the reasons

24

stated on the record at the hearing, defendants’ motion to stay is denied without prejudice, and

25

plaintiff’s motion to compel is granted in part and denied in part.

26

RELEVANT BACKGROUND

27

On July 17, 2017, plaintiff Nutrition Distribution, LLC initiated this action against

28

Enhanced Athlete, Inc., alleging false advertising in violation of Section 43(a)(1)(B) of the
1

1

Lanham Act. (ECF No. 1.) Plaintiff served defendants with the first set of requests for

2

production of documents and the first set of special interrogatories, on November 13, 2017. (ECF

3

Nos. 64-8, 64-9, Dec. of Robert Tauler, Exs. A, B.)

4

On December 6, 2017, the United States Food and Drug Administration, in coordination

5

with other agencies, executed a search warrant at several Enhanced Athlete related locations,

6

allegedly to discover and confiscate certain drugs and research chemicals. (See ECF No. 64-23,

7

Dec. of Robert Tauler, Ex. P.) Then, on or around February 6, 2018, defendant Scott Cavell was

8

arrested for alleged violations of the terms of his probation and supervised release. (ECF No. 64-

9

3, Dec. of Michael Adams, Ex. B.)

10

Subsequently, on February 14, 2018, the court granted plaintiff’s motion to compel the

11

deposition of Anthony Hughes and ordered that the deposition take place within 60 days. (ECF

12

No. 57.)

13

Thereafter, parties submitted a stipulated protective order to the court to facilitate the

14

production of documents and supplemental responses by defendants to plaintiff’s requests for

15

production of documents and special interrogatories. (See ECF Nos. 60, 61.) On March 12,

16

2018, three days after the stipulated protective order was signed, defendants informed plaintiff

17

that no further discovery would be provided, as defendants would seek a stay of discovery due to

18

the pending criminal investigation of Mr. Cavell. (ECF No. 64-18, Dec. of Robert Tauler, Ex. K.)

19

The pending motions ensued.

20

LEGAL STANDARDS

21

A civil litigant is not automatically entitled to a stay of civil proceedings when he is also

22
23
24
25
26
27
28

under criminal investigation.
The Constitution does not ordinarily require a stay of civil
proceedings pending the outcome of criminal proceedings. “In the
absence of substantial prejudice to the rights of the parties involved,
[simultaneous] parallel [civil and criminal] proceedings are
unobjectionable under our jurisprudence.” “Nevertheless, a court
may decide in its discretion to stay civil proceedings . . . ‘when the
interests of justice seem [ ] to require such action.’ ”
The decision whether to stay civil proceedings in the face of a
parallel criminal proceeding should be made “in light of the
particular circumstances and competing interests involved in the
2

case.” This means the decisionmaker should consider “the extent to
which the defendant’s fifth amendment rights are implicated.” In
addition, the decisionmaker should generally consider the following
factors: (1) the interest of the plaintiffs in proceeding expeditiously
with this litigation or any particular aspect of it, and the potential
prejudice to plaintiffs of a delay; (2) the burden which any
particular aspect of the proceedings may impose on defendants; (3)
the convenience of the court in the management of its cases, and the
efficient use of judicial resources; (4) the interests of persons not
parties to the civil litigation; and (5) the interest of the public in the
pending civil and criminal litigation.

1
2
3
4
5
6
7

Keating v. Office of Thrift Supervision, 45 F.3d 322, 324–25 (9th Cir. 1995) (internal citations

8

omitted).
Importantly, “[t]he case for staying civil proceedings is ‘a far weaker one’ when ‘[n]o

9
10

indictment has been returned[, and] no Fifth Amendment privilege is threatened.’ ” Fed. Sav. &

11

Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 903 (9th Cir. 1989). Furthermore, “[a] stay of an

12

action is not necessary where a defendant’s fifth amendment rights can be protected through less

13

drastic means, such as asserting the privilege on a question-by-question basis . . .” Doe v. City of

14

San Diego, No. 12-CV-689-MMA-DHB, 2012 WL 6115663, at *2 (S.D. Cal. Dec. 10, 2012).

15

DISCUSSION

16

In the instant matter, defendants have failed to demonstrate that a stay of discovery is

17

justified, at this juncture. The facts underlying defendants’ motion are too ambiguous to lead the

18

court to conclude that any individual defendant’s Fifth Amendment privilege is threatened, at this

19

time.

20

First and foremost, there is no pending indictment or any indication that an indictment is

21

imminent. Indeed, at the hearing, defense counsel admitted that Mr. Cavell was originally

22

scheduled to have a conference with the U.S. Attorney’s Office in the next couple weeks,

23

regarding his arrest for alleged probation violations. However, Mr. Cavell has stipulated to

24

postpone that conference until approximately May 1, 2018.

25

Additionally, defendants have failed to sufficiently demonstrate that the pending

26

investigation overlaps with the instant civil action. At this point, Mr. Cavell knows that he is

27

under investigation for alleged violations of the terms of his probation and supervised release. It

28

is possible that this criminal investigation could be resolved without any criminal charges beyond
3

1

the alleged violations of probation, or even without any criminal charges whatsoever. This means

2

that the investigation could feasibly resolve without overlapping with this current civil action.

3

Additionally, defendants concede they have no idea when the investigation might be concluded,

4

whether it might result in an indictment, and if any indictment is returned, how long criminal

5

proceedings might last.

6

As such, defendants have failed to justify a stay of discovery, obviating their reasoning for

7

not producing documents and supplemental responses to plaintiff’s requests and interrogatories.

8

However, the court is not unsympathetic that complying with discovery while under criminal

9

investigation places defendants in a difficult position that may require challenging and

10

unappealing strategic decisions. Nothing in this order shall prevent any defendant or witness

11

from properly invoking his or her Fifth Amendment rights on a question-by-question basis.

12

Nonetheless, the court notes that it appears as if defendants may have sought this

13

unsupported stay, as part of larger effort to stall and delay these proceedings. Indeed, at the

14

hearing, defense counsel admitted that defendants were likely to seek an extension of the four

15

month stay, in the future, if it were granted at this time. Moreover, toward the end of the hearing,

16

defendants also requested a 30-day extension of time to complete the deposition of Anthony

17

Hughes, which the court had previously ordered to take place by April 16, 2018. (See ECF No.

18

57.) However, defendants were unable to demonstrate that they have made sufficient efforts to

19

schedule this deposition.

20

Accordingly, IT IS HEREBY ORDERED that:

21

1. Defendants motion to stay discovery (ECF No. 62) is DENIED without prejudice.

22

2. Plaintiff’s motion to compel further responses to discovery and request for sanctions

23

(ECF No. 63) is GRANTED IN PART AND DENIED IN PART, on the terms

24

outlined in this order.

25

3. Within 14 days of this order, defendants shall produce documents and supplemental

26

responses to plaintiff’s first set of requests for production of documents and first set of

27

special interrogatories.

28

4. Defendants shall produce Anthony Hughes for a deposition by May 1, 2018. By noon
4

1

on April 10, 2018, defendants shall reach out to Robert Tauler and set the date, time,

2

and location where the deposition of Mr. Hughes will take place. The deposition will

3

take place in person, unless Mr. Tauler decides that he will take the deposition via

4

video conference.

5
6
7

5. Defendants’ failure to schedule the deposition or produce Mr. Hughes, as outlined in
this order, may result in sanctions against defendants and/or defense counsel.
6. The parties are encouraged to utilize the undersigned’s procedure for informal

8

telephonic conferences, regarding any discovery disputes that may arise related to this

9

order. See http://www.caed.uscourts.gov/caednew/index.cfm/judges/all-judges/5046/

10
11

IT IS SO ORDERED.
Dated: April 9, 2018

12
13
14
15
16
14/17-1491.nutrition.order stay and mtc

17
18
19
20
21
22
23
24
25
26
27
28
5