Sullivan v. MacPherson et al

Filing 78

ORDER GRANTING DEFENDANTS' MOTION TO STAY re 61 , 69 , 75 - Signed by JUDGE LESLIE E. KOBAYASHI on 1/11/2022. For the foregoing reasons, Defendants' Motion to Stay Proceedings, filed June 25, 2021, and D efendants' second motion, filed December 13, 2021, are HEREBY GRANTED. The instant case is STAYED until March 11, 2022. (eta)COURT'S CERTIFICATE OF SERVICE - Leihinahina Sullivan served by First Class Mail to the address of record listed on the Notice of Electronic Filing (NEF) on January 11, 2021. Registered Participants of CM/ECF received the document electronically to the email addresses listed on the Notice of Electronic Filing (NEF).

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UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
LEIHINAHINA SULLIVAN,

CIV. NO. 20-00248 LEK-KJM

Plaintiff,
vs.
UNITED STATES OF AMERICA,
OFFICE OF THE U.S. ATTORNEY,
DISTRICT OF HAWAII, DEPARTMENT
OF TREASURY, INTERNAL REVENUE
SERVICE,
Defendants.
ORDER GRANTING DEFENDANTS’ MOTIONS TO STAY
On June 25, 2021, Defendants United States of America;
Office of the U.S. Attorney District of Hawaii; and the
Department of Treasury, Internal Revenue Service (“IRS” and
collectively “Defendants”) filed their Motion to Stay
Proceedings (“First Motion to Stay”).

[Dkt. no. 61.]

Pro se

Plaintiff Leihinahina Sullivan (“Sullivan”) filed her response
to the First Motion to Stay (“First Response”) on July 9, 2021,
and Defendants filed their reply on July 26, 2021.
nos. 63, 64.]

[Dkt.

On August 10, 2021, Sullivan filed a motion

seeking leave to file a response to Defendants’ reply.
no. 65.]

[Dkt.

On August 16, 2021, an entering order was issued:

granting Sullivan’s motion; stating Sullivan’s August 10, 2021
filing was considered in reviewing the First Motion to Stay; and

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informing the parties that the First Motion to Stay was granted,
a written order would follow, and the case was stayed until
December 17, 2021.

[Dkt. no. 66.]

On December 13, 2021, Defendants filed a motion
seeking to extend the stay until at least March 7, 2022 (“Second
Motion to Stay”).

[Dkt. no. 69.]

In the December 15, 2021

entering order directing Sullivan to respond to the Second
Motion to Stay, [dkt. no. 70,] this Court stated the stay would
remain in effect until a written order on the First Motion to
Stay and the Second Motion to Stay (collectively “Motions to
Stay”) was issued.

On January 6, 2022, Sullivan filed a

document that this Court construes as her response to the Second
Motion to Stay (“Second Response”).1

[Dkt. no. 75.]

The Court finds the Motions to Stay suitable for
disposition without a hearing pursuant to Rule LR7.1(c) of the
Local Rules of Practice for the United States District Court for
the District of Hawaii (“Local Rules”).

For the reasons set

forth below, Defendants’ Motions to Stay Motion are hereby

Sullivan asks this Court to consider the arguments in her
motion to compel discovery (“Motion to Compel”), [filed 12/29/21
(dkt. no. 72),] as part of her response to the Second Motion to
Stay. [Second Response at 1.] Because Sullivan is proceeding
pro se, her filings must be liberally construed. See Erickson
v. Pardus, 551 U.S. 89, 94 (2007) (per curiam). This Court
therefore liberally construes Sullivan’s Motion to Compel as
part of her Second Response.
1

2

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granted, and the instant case is stayed, pending the resolution
of the criminal proceedings against Sullivan.
BACKGROUND
I.

Criminal Proceedings Against Sullivan
Sullivan was indicted on February 15, 2017 in United

States v. Sullivan, CR 17-00104 JMS (“CR 17-104”).
dkt. no. 1.]

[CR 17-104,

The operative charging document in that case is

the Fourth Superseding Indictment, filed on December 26, 2019.
[Id., dkt. no. 495.]

It alleges that, from approximately

January 2009 until at least October 2018, Sullivan operated
Mobile Native Hawaiian Health, Inc. (“MNHH”).

[Id. at ¶ 2.]

The charges in CR 17-104 arise from Sullivan’s actions related
to MNHH’s bank accounts, as well as similar actions related to
personal and joint bank accounts in both Sullivan’s name and the
names of other individuals.

[Id. at ¶¶ 4-5.]

Sullivan is

charged with: seven counts of wire and mail fraud, in violation
of 18 U.S.C. §§ 1343, 1341 (Counts 1-7); twenty-one counts of
filing false claims, in violation of 18 U.S.C. § 287 (Counts 828); eighteen counts of wire fraud, in violation of 18 U.S.C.
§ 1343 (Counts 29-34 and 35-47); six counts of aggravated
identity theft, in violation of 18 U.S.C. § 1028A(a)(1)
(Counts 48-53); four counts of money laundering, in violation of
18 U.S.C. § 1956 (Counts 54-57); two counts of obstructing an
official proceeding, in violation of 18 U.S.C. § 1512(c)
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(Counts 58 and 59); and one count of Hobbs Act extortion, in
violation of 18 U.S.C. § 1951 (Count 60).
On July 16, 2021, an Information was filed in United
States v. Sullivan, CR 21-00096 JMS (“CR 21-096”), charging
Sullivan with one count of aggravated identity theft, in
violation of § 1028A(a)(1).

[CR 21-096, dkt. no. 1.]

On July 20, 2021, a further change of plea hearing in
CR 17-104 was held, together with a further waiver of
indictment, arraignment, and plea hearing in CR 21-096.

[CR 17-

104, Minutes, filed 7/20/21 (dkt. no. 1202) (“Change of Plea
Minutes”).]

Pursuant to a plea agreement, Sullivan pled guilty

to Counts 1, 29, and 35 of the Fourth Superseding Indictment in
CR 17-104 and to Count 1 of the Information in CR 21-096.

[Id.

at PageID #: 12418; CR 17-104, Mem. of Plea Agreement, filed
7/20/21 (dkt. no. 1203).]

Plaintiff United States of America

(“the Government”) will move to dismiss the remaining counts in
CR 17-104 after sentencing.

[CR 17-104, Mem. of Plea Agreement

at 3.]
Sullivan’s sentencing was originally scheduled for
December 2, 2021.
#: 12418.]

[Id., Change of Plea Minutes at PageID

It was subsequently continued to March 7, 2021.

See

id., Government’s Motion to Continue Sentencing and Presentence
Report Completion Date, filed 10/27/21 (dkt. no. 1275); EO,
filed 11/3/21 (dkt. no. 1278) (granting the motion).
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II.

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The Instant Case
Sullivan filed her original complaint in this case on

May 28, 2020.

[Dkt. no. 1.]

The operative pleading was filed

on May 1, 2021 (“Second Amended Complaint”).

[Dkt. no. 46.]

Sullivan alleges Defendants violated the Right to Financial
Privacy Act (“RFPA”) and her rights under the Fourth and
Fourteenth Amendments to the United States Constitution because
an IRS agent accessed her customer financial records without
first complying with RFPA’s requirements.

[Second Amended

Complaint at PageID #: 307.]
In the First Motion to Stay, Defendants argue
Sullivan’s theory in the instant case is that the documents
which the charges in CR 17-104 are based upon were improperly
obtained.

Defendants argue Sullivan should not be allowed to

“abuse . . . the broad scope of civil discovery” to obtain
material to support her defense in CR 17-104.
Stay at 2.]

[First Motion to

The Second Motion to Stay argues any stay in this

case should extend through at least the continued sentencing
date for CR 17-104 and CR 21-096.
DISCUSSION
The Ninth Circuit has stated:
The Constitution does not ordinarily require
a stay of civil proceedings pending the outcome
of criminal proceedings. Federal Sav. & Loan
Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th
Cir. 1989); Securities & Exchange Comm’n v.
5

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Dresser Indus., 628 F.2d 1368, 1375 (D.C. Cir.),
cert. denied, 449 U.S. 993, 101 S. Ct. 529, 66 L.
Ed. 2d 289 (1980). “In the absence of
substantial prejudice to the rights of the
parties involved, [simultaneous] parallel [civil
and criminal] proceedings are unobjectionable
under our jurisprudence.” Dresser, 628 F.2d at
1374. “Nevertheless, a court may decide in its
discretion to stay civil proceedings . . . ‘when
the interests of justice seem [] to require such
action.’” Id. at 1375 (quoting United States v.
Kordel, 397 U.S. 1, 12 n.27, 90 S. Ct. 763, 769
n.27, 25 L. Ed. 2d 1 (1970)).
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 case.” Molinaro, 889 F.2d at
902. This means the decisionmaker should
consider “the extent to which the defendant’s
fifth amendment rights are implicated.” Id. 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. Id. at 903.
Keating v. Off. of Thrift Supervision, 45 F.3d 322, 324-25 (9th
Cir. 1995) (alterations in Keating).
Having reviewed the allegations in the instant case,
having compared them with the charges in CR 17-104 and CR 21096, and having considered the current procedural posture of the
criminal proceedings, this Court concludes that there are
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significant overlapping issues between the three cases because:
the instant case challenges the manner in which Defendants
obtained information from various financial institutions about
Sullivan and other third-parties; and that information was used
to support the Government’s case in the criminal proceedings.
Further, this Court concludes that Sullivan’s Fifth Amendment
rights may be implicated if the instant case is litigated before
judgments are entered in CR 17-104 and CR 21-096 because, inter
alia, although Sullivan has pled guilty to some of the charges,
the remaining charges will not be dismissed until after she is
sentenced.

See CR 17-104, Mem. of Plea Agreement at 3.
As to the first factor of the stay analysis, while

Sullivan has an interest in the expeditious resolution of this
case, the stay will not be indefinite and will last for
approximately seven months, i.e. from August 16, 2021 to
March 11, 2022.

Further, this Court finds that there will be

minimal, if any, prejudice to Sullivan as a result of the
relatively brief stay.

As Defendants point out, Sullivan

already had a limited opportunity to conduct discovery in CR 17104, and she filed several motions raising discovery issues.
See Mem. in Supp. of First Motion to Stay at 7; see also CR 17104, Motion to Dismiss for Lack of Providing Discovery for the
Last Three (3) Years, filed 9/30/19 (dkt. no. 256); id., Motion
to Compel Discovery, filed 11/12/19 (dkt. no. 319); id., Motion
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to Subpoena the Following for Pretrial Motion Hearings, filed
11/21/19 (dkt. no. 352); id., Motion to Subpoena Apple Inc.
etc., filed 2/18/20 (dkt. no. 669).
In her Second Response, which incorporates her Motion
to Compel, Sullivan argues the discoverability of the documents
described in the Motion to Compel case must be addressed.

The

magistrate judge denied Sullivan’s Motion to Compel without
prejudice and stated Sullivan could re-file it if the stay is
lifted.

[EO, filed 1/3/22 (dkt. no. 74).]

Even if the Motions

to Stay are granted, the stay will be for a limited period, and
Sullivan can then re-file the Motion to Compel.

Thus, the first

factor in the stay analysis is either neutral or weighs only
slightly against stay.
As to the second factor in the stay analysis,
Defendants argue they would be prejudiced if they are forced to
defend against this civil action because, if Sullivan is
convicted in CR 17-104 and CR 21-096, civil claims that
effectively challenge the conviction would be barred by the Heck
v. Humphrey, 512 U.S. 477 (1994), doctrine.

Further, Defendants

argue they would be impaired in their defense in the instant
case if they are forced to conduct discovery while Sullivan is
still entitled to invoke her Fifth Amendment right against selfincrimination.

This Court agrees and finds that the second

factor weighs in favor of a stay.
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The third factor also weighs in favor of a stay
because staying the instant case pending the resolution of
CR 17-104 and CR 21-096 is the more efficient use of judicial
resources.

If judgments of conviction are ultimately entered

against Sullivan, some or all of the instant case may be barred
by the Heck doctrine.

Thus, litigating the instant case after

the criminal proceedings have been resolved will likely
streamline the issues that must be resolved in the instant case.
As to the fourth factor, the primary impact that the
instant case will have on non-parties - e.g., the financial
institutions and other affected account owners - will likely be
the necessity to respond to discovery and provide testimony
about relevant events.

As previously noted, litigating the

instant case after the criminal proceedings have been resolved
will likely streamline the issues.

This is likely to limit the

burdens that this civil litigation will place on the relevant
third-parties.

This Court therefore finds that the fourth

factor weighs slightly in favor of stay.
As to the fifth factor, “the public interest is
furthered by a stay because the public’s interest in the
integrity of the criminal case is entitled to precedence over
the civil litigant.”

See Micron Tech., Inc. v. United

Microelectronics Corp., Case No. 17-cv-06932-MMC, 2019 WL
3037542, at *3 (N.D. Cal. July 11, 2019) (citation and quotation
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659

marks omitted).

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Although the public also has an interest in the

resolution of this civil action and with RFPA compliance in
general, those interests will not be impaired by the requested
stay because the instant case will be addressed, to the extent
possible in light of any Heck impact, after the relatively brief
stay.

Therefore, the fifth factor weighs in favor of a stay.
Having considered all of the relevant factors, this

Court concludes that a stay pending the resolution of CR 17-104
and CR 21-096 is appropriate here, “in light of the particular
circumstances and competing interests involved in the case.”
See Molinaro, 889 F.2d at 902 (citation omitted).
CONCLUSION
For the foregoing reasons, Defendants’ Motion to Stay
Proceedings, filed June 25, 2021, and Defendants’ second motion,
filed December 13, 2021, are HEREBY GRANTED.

The instant case

is STAYED until March 11, 2022.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, January 11, 2022.

LEIHINAHINA SULLIVAN VS. UNITED STATES OF AMERICA, ET AL; CV 2000248 LEK-KJM; ORDER GRANTING DEFENDANTS’ MOTION TO STAY

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