USA et al v. E-BIOFUELS, LLC et al

Filing 78

ORDER granting 58 Motion to Stay; denying 60 Motion to Dismiss for Failure to State a Claim; denying 63 Motion for Judgment on the Pleadings; denying 66 Motion to Strike ; denying 68 Motion to Dismiss for Failure to State a Claim; denying 70 Motion for Clerk's Entry of Default. **SEE ORDER**. Signed by Judge Tanya Walton Pratt on 8/25/2014.(MGG)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
UNITED STATES OF AMERICA ex rel
Alexander Chepurko and Gary Williky,
Plaintiff,
vs.
E-BIOFUELS, LLC Default entered 8/1/2014
in related case,
E-BIOFUELS WEST, LLC,
CARAVAN TRADING, LLC,
CIMA GREEN, LLC,
GREEN GREASE SOLUTIONS, LLC,
TRU VERDE, LLC,
AUGSBURG ENERGY, LLC,
ELEMENT ALTERNATIVE ENERGY, LLC,
WERKS MANAGEMENT, LLC,
IMPERIAL PETROLEUM, INC.,
VISION BIODIESEL, INC,
ULTRA GREEN ENERGY SERVICES, LLC,
ASTRA ENERGY CANADA, INC,
ASTRA OIL COMPANY, LLC,
FLYING J INC.,
JOSEPH S FURANDO,
CHRISTINE M FURANDO,
EVELYN KATARINA TRACY,
CRAIG D DUCEY,
CHAD D DUCEY,
CHRISTOPHER D. DUCEY,
BRIAN D CARMICHAEL,
ANDREW POLLOCK,
JEFFREY T. WILSON,
AARON WILSON,
ROBERT "JAY" PIERCE,
VERN MANWARRING,
TROY MCKEE,
J GREGORY THAGARD,
REID MILLER,
CIMA ENERGY GROUP,
STEVE BOLIN,
PINNACLE BIOFUELS, INC,
Defendants.

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No. 1:14-cv-00377-TWP-MJD

ORDER ON MOTION TO STAY
This matter comes before the Court on Plaintiff United States of America’s (“United
States”) Motion for Stay. [Dkt. 58.] This civil qui tam suit alleges fraudulent biodiesel
recertification. [Id.] Meanwhile, at least eight of the defendants in this matter also face criminal
charges for conspiracy and other crimes, which charges are based on the same scheme alleged by
the Relators in this matter. [Id. at 1-2.] Because of the overlapping issues in the criminal
proceedings and this qui tam matter, the United States believes that a stay of proceedings would
be in the interest of justice, so as to protect the criminal defendants’ Fifth Amendment privilege
against self-incrimination, and in the interest of judicial economy, as the criminal cases are
currently set for trial in the Fall of 2014 and should soon be resolved. [Id. at 2-4.] In response,
no defendant in this matter objects to the United States’ motion for stay, though Defendant Astra
Oil Company, LLC (“Astra Oil”) notes in its response brief (the only response brief filed) that
“[t]he pendency of this action, with its associated threatened liabilities, is a significant burden on
Astra Oil,” but makes no further elaboration on what the “burden” is or how it is “significant.”
[Dkt. 59 at 1-2.]
“[T]he power to stay proceedings is incidental to the power inherent in every court to
control the disposition of the causes on its docket with economy of time and effort for itself, for
counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). To exercise this
power to stay proceedings, the Court must first weigh any competing interests. Id.; see also
Radio Corp. of Am. v. Igoe, 217 F.2d 218, 220 (7th Cir. 1954) (“Benefit and hardship will be set
off, one against the other, and upon an ascertainment of the balance the court will exercise a
discretionary judgment in the exercise of its power”). District courts are afforded a wide latitude
of discretion in deciding whether to stay proceedings, and their decisions will not be reversed

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save for an abuse thereof. Northfield Ins. Co. v. City of Waukegan, 701 F.3d 1124, 1133 (7th
Cir. 2012).
While the United States Constitution does not require a stay of civil proceedings simply
because a criminal action is simultaneously pending, Courts often grant such stays when the
interest in protecting one’s Fifth Amendment right against self-incrimination outweighs the
burden that a stay of litigation would impose. See, e.g., Jones v. City of Indianapolis, 216 F.R.D.
440, 450 (S.D. Ind. 2003) (Baker, J.); Smith v. Bravo, 2000 WL 1051855 at *4 (N.D .Ill. 2000).
When considering such a motion to stay, courts can weigh several factors, including but not
limited to:
(1) whether the civil and criminal proceedings involve the same subject matter;
(2) whether the government has initiated both proceedings; (3) the posture of the
criminal proceeding; (4) the effect on the public interest of granting or denying a
stay; (5) the interest of [the parties] in proceeding expeditiously, and the potential
prejudice that [the parties] may suffer from a delay; and (6) the burden that any
particular aspect of the civil case may impose on [the parties] if a stay is denied.
Salcedo v. City of Chicago, No. 09-CV-05354, 2010 WL 2721864 at *2 (N.D. Ill. July 8, 2010).
In considering the sixth factor, courts are especially mindful that “the noncriminal proceeding, if
not deferred, might undermine the party's Fifth Amendment privilege against self-incrimination,
expand rights of criminal discovery beyond the limits of Federal Rule of Criminal Procedure
16(b), expose the basis of the defense to the prosecution in advance of criminal trial, or otherwise
prejudice any criminally charged parties.” Sec. & Exch. Comm'n v. Dresser Indus., Inc., 628
F.2d 1368, 1376 (D.C. Cir. 1980). Additionally, the “strongest case” for staying civil
proceedings in light of the pendency of criminal matters is “where a party under indictment for a
serious offense is required to defend a civil or administrative action involving the same matter.”
Id. at 1376-77, n.20 (D.C. Cir. 1980) (emphasis added).

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Here, the United States has asserted that “the same conduct” is the basis for this civil
matter and that there are “overlapping issues,” and there has been no assertion to the contrary.
[Dkt. 58 at 1, 3; see Dkt. 59.] Additionally, as discussed in Dresser Industries, several of the
defendants in this civil matter are also under criminal indictment for that “same conduct.” Thus,
the first factor weighs heavily in favor of a stay of the proceedings, as this civil matter involves
the same subject matter as the parallel criminal cases against some of the same parties. Second,
while the United States has declined to intervene in this civil matter, this matter cannot be
resolved without the United States’ consent. 31 U.S.C. § 3730(b)(1). Consequently, the second
factor also weighs in favor of a stay of proceedings. The third factor again weighs in favor of a
stay of proceedings, as the criminal matters are scheduled for trial in the near future. [Id. at 4.]
As the public has a financial interest as taxpayers in preserving judicial economy, the fourth
factor also weighs in favor of a stay of civil proceedings while the criminal proceedings unfold.
[See id.] Fifth, although Astra Oil alleges that “pendency of the instant action . . . is a significant
burden,” there is no argument posed or evidence presented to support this assertion, so this
factor, though weighing in favor of a denial of the United States’ motion, does not weigh
heavily. [Dkt. 59 at 2.] Finally, although the Court acknowledges that the risk of selfincrimination is speculative at this point, as discovery has not yet commenced, the fact that the
subject matter overlaps is a strong indication that the defendants’ Fifth Amendment rights could
potentially be at risk if the stay is denied. [See Dkt. 58 at 3-4.]
Thus, after weighing the relevant factors, the Court finds that it is appropriate and within
the Court’s broad discretion to stay the proceedings pending resolution of the parallel criminal
cases. Accordingly, the Unites States’ Motion for Stay is GRANTED, and all pending motions
are therefore DENIED without prejudice to their refiling when the stay is lifted.

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Date: 8/25/2014

Distribution:
Chris D Collins
BARLOW GARSEK & SIMON LLP
[e-mail]

Lawrence Coe Lanpher
K & L GATES LLP
[e-mail]

Matthew K. Walton
BARLOW GARSEK SIMON LLP
[e-mail]

David K. Colapinto
KOHN KOHN & COLAPINTO
[e-mail]

Michele Lorbieski Anderson
FROST BROWN TODD LLC
[e-mail]

Theodore John Minch
SOVICH MINCH LLP
[e-mail]

Thomas W. Farlow
FROST BROWN TODD LLC
[e-mail]

Richard Charles Richmond, III
TAFT STETTINIUS & HOLLISTER LLP
[e-mail]

Alice McKenzie Morical
HOOVER HULL LLP
[e-mail]

Shelese M. Woods
UNITED STATES ATTORNEY’S OFFICE
[e-mail]

Amanda L.B. Mulroony
HOOVER HULL LLP
[e-mail]

Joyce R Branda
US Attorney’s Office
Commercial Litigation Branch
PO Box 261 Ben Franklin Station
Washington, DC 20044

David F. Hurley
HURLEY & HURLEY PC
[e-mail]

Brian J. McCabe
US DEPARTMENT OF JUSTICE-CIVIL
DIVISION
[e-mail]

Barry M. Hartman
K & L GATES LLP
[e-mail]

Tracy Lyle Hilmer
US Department of Justice - Civil Division
PO Box 261
Ben Franklin Station
Washington, DC 20044

Christine A. Jochim
K & L GATES LLP
[e-mail]

James H. Voyles
VOYLES ZAHN & PAUL
[e-mail]
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