Adams County, Board of County Commissioners v. Asay et al

Filing 119

ORDER. Defendant Jerry Rheas (Rhea) Motion for Stay and for Protective Order 111 is DENIED. By Magistrate Judge Kristen L. Mix on 12/10/2012.(cmacd)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-02238-PAB-KLM
THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF ADAMS,
Plaintiff,
v.
LELAND ASAY,
SAMUEL VIDAL GOMEZ,
JERRY LEE RHEA,
DENNIS GLENN COEN, and
QUALITY PAVING CO., a Colorado corporation,
Defendants.
____________________________________________________________________
ORDER
____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendant Jerry Rhea’s (“Rhea”) Motion for
Stay and for Protective Order [Docket No. 111; Filed October 24, 2012] (the
“Motion”). On November 19, 2012, Plaintiff filed a Response [#115]. On November
30, 2012, Defendant Rhea filed a Reply [#117]. On December 3, 2012, the parties
presented oral argument on the Motion. See Minute Entry [#118]. The Motion is thus
ripe for resolution.
Defendant Rhea seeks a stay of this matter until completion of parallel criminal
proceedings against him. Motion [#111] at 2. The Court previously imposed a stay
in this matter on November 28, 2011, based on pending separate criminal
proceedings against Defendants Gomez, Rhea, and Coen. Order [#58]. That stay
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was lifted on June 22, 2012. Minute Order [#76] at 1. On October 24, 2012,
Defendant Rhea sought imposition of another stay pending resolution of the appeal
of his criminal trial. Motion [#111]. Plaintiff objects to any further stay in this matter.
Id. at 1. Defendant Quality Paving Co. objects if a stay is applied only to Defendant
Rhea but does not object if a stay is applied to the entire civil action. Id. at 1-2.
Defendant Leland Asay does not object to the Motion. Id. at 2. Defendants Gomez
and Coen are presently incarcerated and have not expressed a preference regarding
a stay. Id.
In the interest of justice, the Court may, at its discretion, stay a civil action until
completion of parallel criminal proceedings. See AIG Life Ins. Co. v. Phillips, No. 07cv-00500-PSF-MEH, 2007 WL 2116383, at *2 (D. Colo. July 20, 2007) (citing United
States v. Kordel, 397 U.S. 1, 12 n.27 (1970)) (additional citations omitted). However,
there is no constitutional right requiring a stay of civil proceedings pending the
outcome of criminal proceedings, “absent substantial prejudice to a party’s rights.”
Creative Consumer Concepts, Inc. v. Kreisler, 563 F.3d 1070, 1081 (2009).
In determining whether a stay is warranted in a particular case, the Court must
generally balance the plaintiff’s interests “in moving forward with the litigation against
the interests of a defendant asserting Fifth Amendment rights who faces the choice
of being prejudiced in the civil litigation if those rights are asserted or prejudiced in the
criminal litigation if those rights are waived.” See AIG Life Ins. Co., 2007 WL
2116383, at *2 (quoting In re CFS-Related Secs. Fraud Litig., 256 F. Supp. 2d 1227,
1236 (N.D. Okla. 2003)).
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When exercising its discretion, the Court considers the following factors:
1) the extent to which the issues in the criminal case overlap with those
presented in the civil case; 2) the status of the case, including whether
the defendants have been indicted; 3) the private interests of the
plaintiffs in proceeding expeditiously weighed against the prejudice to
plaintiffs caused by the delay; 4) the private interests of and burden on
the defendants; 5) the interests of the courts; and 6) the public interest.
See AIG Life Ins. Co., 2007 WL 2116383, at *2 (quoting In re CFS, 256 F. Supp. 2d
at 1236-37). Further, the Court may consider alternatives to a general stay, including
“the imposition of protective orders, sealed interrogatories, a stay for a finite period
of time, or a stay limited to a specific subject matter.” See AIG Life Ins. Co., 2007 WL
2116383, at *2 (quoting In re CFS, 256 F. Supp. 2d at 1236).
With respect to the first factor, the parties had previously agreed that there was
substantial overlap between the criminal and civil proceedings with regard to
Defendant Rhea. See Order [#58] at 4. Defendant Rhea continues to assert this
same overlap.

Motion [#111] at 6-7.

Plaintiff, however, argues that because

Defendant Rhea’s criminal case is now in the appeal phase, there is not sufficient
overlap. Response [#115] at 9. Plaintiff misreads the purpose behind this factor,
however. The factor does not focus on the timing of each proceeding, which is
addressed more appropriately as part of the second factor. Rather, the first factor
focuses solely on the evidence and issues of each case. See Creative Consumer
Concepts, 563 F.3d at 1081. Plaintiff has presented no argument that the evidence
and issues underlying these cases has changed since November 2011 when it had
previously agreed to a stay based, in part, on the overlap between the criminal and
civil proceedings. Accordingly, the Court finds that this factor weighs in favor of a
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stay.
With respect to the second factor, the Court generally inquires whether the
criminal cases are in the pre- or post-indictment stages. See AIG Life Ins. Co., 2007
WL 2116383, at *2. “A stay is more likely warranted if an indictment has already been
issued because (1) ‘the likelihood that a defendant may make incriminating
statements is greatest after an indictment has issued,’ and (2) ‘the prejudice to the
plaintiffs in the civil case is reduced since the criminal case will likely be quickly
resolved due to Speedy Trial Act considerations.’” Id. (quoting M.D. Diet Weight Loss
& Nutrition Clinic, L.C. v. Absolute Weight Loss & Nutrition Ctr., LLC, No. 2:05-CV605 TS, 2006 WL 2471524, at *1 (D. Utah Aug. 24, 2006)). Here, the criminal case
against Defendant Rhea is in the post-indictment stage. However, a criminal trial has
already been held and Defendant Rhea is now appealing his convictions.
Courts in the Tenth Circuit have not yet addressed the issue of whether to
grant a request for a stay by a civil defendant also appealing a criminal sentence in
parallel proceedings. However, the only cases directly on point cited by the parties
have found that a stay should not be imposed based on a pending criminal appeal.
See Gen. Dynamics Corp. v. Selb Mfg. Co., 481 F.2d 1204, 1214 (8th Cir. 1973); In
re Terrorist Attacks on Sept. 11, 2011, No. 03 MDL 1570, 2011 WL 5913526, at *4-5
(S.D.N.Y. Nov. 22, 2011); Sparkman v. Thompson, No. 08-01-KKC, 2009 WL
1941907, at *2 (E.D. Ky. July 6, 2009); United States v. Ianniello, No. 86 Civ. 1552CSH, 1986 WL 7006, at *4 (S.D.N.Y. June 17, 1986). The Court has found no cases
holding the opposite. See also In re Terrorist Attacks, 2011 WL 5913526, at *5
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(stating that the defendant did not cite any cases and the court could not find any “in
which a stay of civil discovery was granted after the related criminal trial had
concluded, based on the mere possibility that a successful appeal might lead to a new
trial”). Rather, a stay on civil discovery in parallel proceedings is disfavored after a
defendant has been tried, convicted and sentenced. Id. (quoting Sparkman, 2009 WL
1941907, at *2). The Court agrees with this assessment, and, based on these
considerations, the Court finds that the second factor weighs against imposition of a
stay.
With respect to the third factor, Plaintiff has a general interest in the
expeditious resolution of its case. See also Order [#58] at 4. In addition, imposition
of a stay as to only Defendant Rhea could substantially increase litigation costs, in
that it is likely a stay would not be lifted until well after discovery closed and, in all
probability, until after trial, should this case proceed to that. See Response [#115] at
11. Further, the indefinite length of the stay leaves Plaintiff’s final resolution of this
matter a long-term uncertainty. Compare id. at 10 (suggesting that a stay would
potentially remain in place until early 2016) with Reply [#117] at 2 (suggesting that a
stay could be as short as lasting until mid-2013). Finally, as Plaintiff points out, if a
stay lasts until early 2016, the risk that “witnesses will become unavailable, memories
of conversations will fade, and documents will be lost and destroyed” is greatly
increased, especially as the events underlying this litigation occurred between 2005
and 2007. Response [#115] at 10-11 (quoting SEC v. Brown, No. 06-1213, 2007 WL
4192000, at *2 (D. Minn. July 16, 2007)). Thus, the Court finds that this factor weighs
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against imposition of a stay.
With respect to the fourth factor, Defendant Rhea generally has an interest in
avoiding the conflict between waiving his Fifth Amendment rights and, in essence,
compromising his defense in this civil matter. See Order [#58] at 4-5. However, part
of the reason that a stay on civil discovery in parallel criminal proceedings is
disfavored after a defendant has been tried, convicted and sentenced is because the
defendant:
has already challenged the government's case in trial, he knows exactly
how the government intends to prove his guilt and he is exceedingly
able to avoid making incriminating statements that might be used
against him if retried. Also, absent a waiver of his Fifth Amendment
privilege, he has only a minimal concern that civil discovery will aid the
criminal prosecution because the government has already assembled
all the evidence needed for a conviction.
In re Terrorist Attacks, 2011 WL 5913526, at *5 (quoting Sparkman, 2009 WL
1941907, at *2).
Defendant Rhea stresses the potential for an adverse inference in this civil
matter to be made against him based on exercise of his Fifth Amendment privilege.
See, e.g., Baxter v. Palmigiano, 425 U.S. 308, 317-18 (1976) (stating that the Fifth
Amendment does not bar adverse inference when a party claims the privilege in a
civil action). In short, Defendant Rhea argues that invocation of his Fifth Amendment
right to protect himself in his criminal case, should his appeal be granted and
remanded for retrial, will severely damage his defense in the instant civil case and the
prosecution of his cross-claims. However, the detriment suggested by Defendant
Rhea from any negative inference is purely speculative at this point. See In re CFS,
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256 F. Supp. 2d at 1241 (finding in part that imposition of a stay was not warranted
based on the speculative nature of any potential negative inference). Further, the trial
judge will be in a position to fairly “determine the extent of any negative inference
based upon the events that have transpired prior to that time.” Id. (citation omitted).
The Court therefore finds that this factor is neutral and weighs neither in favor of nor
against imposition of a stay.
With respect to the fifth factor, “[t]he Court has a strong interest in keeping
litigation moving to conclusion without necessary delay.” In re CFS, 256 F. Supp. 2d
at 1241. On the other side of the scale, final resolution of the parallel criminal
proceedings could increase the possibility of settlement in this case, at least as to
Defendants Rhea. See AIG Life Ins. Co., 2007 WL 2116383, at *4. Thus, the Court
finds that this factor weighs neither in favor of nor against a stay.
With regard to the sixth and final factor, the Court finds that the public’s only
interest in this case is a general interest in its efficient and just resolution. Thus, the
Court finds that this factor is neutral in light of those goals.
The strong presumption against stays in this district, as well as application of the
factors examined above, results in the conclusion that the imposition of a stay of
discovery is not justified in this matter, either for the entire case or for Defendant Rhea
alone, because the prejudice to Plaintiff outweighs the harm to Defendant Rhea and
other Defendants.
Defendant Rhea also seeks a protective order against all pending discovery
tendered to Defendant Rhea. See Motion [#111] at 3. As acknowledged by Defendant
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Rhea, his request for a protective order is inextricably entwined with his request for a
stay. See Reply [#117] at 5. For essentially the same reasons as outlined above, the
Court finds that entering a blanket protective order is not justified at this stage of the
case. However, the Court notes that a variety of procedures exist to lessen any
detriment to Defendant Rhea by having to defend himself in this civil matter. These
include, for example, “sealing answers to interrogatories, sealing answers to depositions,
imposing protective orders . . . , or limiting disclosure only to counsel.” In re CFS, 256
F. Supp. 2d at 1240. Where circumstances warrant, Defendant Rhea may seek
permission from the Court to utilize these or other procedures in connection with specific
discovery sought by Plaintiff. Accordingly,
IT IS HEREBY ORDERED that the Motion [#111] is DENIED.
DATED: December 10, 2012 at Denver, Colorado.

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