Walker v. Northwestern Mutual Investment Services, LLC et al
Filing
21
MEMORANDUM OPINION AND ORDER: Pla's 16 MOTION to Stay is GRANTED as to all discovery in this case. This matter is held in abeyance and the Court's 15 Scheduling Order is set aside. Parties shall file status reports every 90 days or within 10 days of conclusion of Pla's criminal case. Signed by Judge Joseph M. Hood on September 4, 2015. (AWD) cc: COR,D,JC
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
DEBRA WALKER,
)
)
) Action No. 5:15-CV-79-JMH
)
)
)
)
MEMORANDUM OPINION & ORDER
)
)
)
Plaintiff,
v.
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY,
Defendant.
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**
This case is before the Court on Plaintiff’s motion to stay
discovery. [DE 16].
has replied [DE 20].
Defendant has responded [19], and Plaintiff
Thus, this motion is ripe for review.
For
the reasons that follow, Plaintiff’s motion to stay discovery is
granted with respect to all discovery.
I.
Factual and Procedural Background
Plaintiff, Debra Walker, filed suit against Defendant, The
Northwestern Mutual Life Insurance Company, for claims related to
Defendant’s
alleged
non-payment
of
benefits
under
insurance
policies issued by Defendant, including claims for breach of
contract, violations of the Kentucky Unfair Claims Settlement
Practices Act, and bad faith. [DE 1].
Subsequent to Plaintiff
filing her Complaint in this Court, she was indicted by the
Commonwealth of Kentucky for insurance fraud claims related to
insurance policies issued to her by Defendant. [DE 16, Exhibit A].
The state court criminal prosecution is currently pending in the
Jessamine Circuit Court. Id.
Plaintiff filed a Motion to Stay Discovery with respect to
her pending a determination that the threat of criminal prosecution
has ended on the basis that she cannot adequately engage in
discovery in this civil action without relinquishing her Fifth
Amendment right not to incriminate herself in the Jessamine Circuit
Court criminal case. [DE 16]. Plaintiff argues that a stay is
appropriate
because
the
criminal
prosecution
and
this
action
involve many of the same transactions, and likewise, that she faces
a risk of self-incrimination. Id.
In contrast, Defendant argues that Plaintiff should not be
permitted to stay discovery and use the Fifth Amendment as a “sword
and shield” because Plaintiff was responsible for bringing the
civil suit.
[DE 19].
Plaintiff responds by pointing out that her
criminal indictment was initiated after she filed the civil suit.
[DE 20].
II.
Standard
While nothing in the U.S. Constitution requires a civil
action to be stayed in light of a pending or impending criminal
indictment, a court has “broad discretion in determining whether
to stay a civil action while a criminal action is pending or
impending.”
F.T.C. v. E.M.A. Nationwide, Inc., 767 F.3d 611,
627 (6th Cir. 2014) (quoting Chao v. Fleming, 498 F. Supp. 2d
2
1034, 1037 (W.D. Mich. 2007)); Sparkman v. Thompson, No. 08-01KKC, 2009 WL 1941907, at *1 (E.D. Ky. July 6, 2009); Porter v.
Buckler, No. 0:14-127-DLB, 2015 WL 1926363, at *2 (E.D. Ky. Apr.
28, 2015).
The power to stay proceedings is incidental to the
power inherent in every court to control the disposition of the
causes in its docket.
Ohio Envtl. Council v. U.S. Dist. Court,
S. Dist. of Ohio, E. Div., 565 F.2d 393, 396 (6th Cir. 1977)
(citing Landis v. North American Company, 299 U.S. 248, 254-55
(1936).
A court may grant a stay “because the denial of a stay could
impair
a
party's
Fifth
Amendment
privilege
against
self-
incrimination, extend criminal discovery beyond the limits set
forth in Federal Rule of Criminal Procedure 16(b), expose the
defense's theory to the prosecution in advance of trial, or
otherwise prejudice the criminal case.” Sparkman, 2009 WL 1941907,
at *1 (quoting Trustees of Plumbers & Pipefitters Nat'l Pension
Fund
v.
Transworld
(S.D.N.Y.1995)).
Mech.,
Inc.,
886
F.
Supp.
1134,
When considering whether to grant a stay, courts
consider and balance a number of factors, including:
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.
3
1138
E.M.A. Nationwide, 767 F.3d 611, 627; Sparkman, 2009 WL 1941907,
at *2; Porter, 2015 WL 1926363, at *2.
III. Discussion
A. The Overlap Between the Civil and Criminal Case
The first factor the Court considers is whether there is an
overlap between this civil action and the pending criminal case.
Simultaneous civil and criminal cases involving the same or closely
related facts may give rise to Fifth Amendment concerns sufficient
to warrant a stay of the civil proceeding.
at
1037.
This
case
involves
Chao, 498 F. Supp. 2d
allegations
by
Plaintiff
that
Defendant has failed to pay disability benefits owed to her under
the terms of insurance policies she purchased from Defendant. [DE
1, Attachment 3, State Court Record].
The criminal indictment
involves claims of insurance fraud related to benefits Plaintiff
received from Defendant pursuant to her insurance policies with
Defendant. [DE 16, Exhibit A].
Therefore, the first factor weighs
in favor of granting a stay because there is substantial overlap
between the issues in the civil and criminal cases in that the
core of both cases arise from Plaintiff’s insurance policies
purchased from Defendant.
B. The Status of the Criminal Case
Second, the Court must consider the status of the criminal
case.
The case for a stay is strongest where the defendant has
4
already
been
indicted
because
there
is
a
likelihood
that
incriminating statements could be used against him, and because
the criminal case will likely be quickly resolved, decreasing any
prejudice caused by a delay.
628
(quoting
Trustees
of
E.M.A. Nationwide, Inc., 767 F.3d at
Plumbers,
886
F.
Supp.
at
1139).
Plaintiff was indicted in Jessamine Circuit Court on or about April
8, 2015 and states that she has and will continue to invoke her
Fifth Amendment protection.
[DE 16, Exhibit A].
Therefore, this
factor weighs in favor of a stay.
C.
Private Interests
The third and fourth factors seek to balance the private
interests of the parties against the potential prejudice faced by
each.
Defendant has not filed any claims against Plaintiff in
this case and has not alleged any potential prejudice in terms of
a delay if a stay is imposed.
Rather, Defendant’s primary concern is the inequity Defendant
perceives of Plaintiff being permitted to maintain her civil case
while also invoking her Fifth Amendment privilege in the pending
criminal action.
[DE 19].
Defendant relies upon a case from the
Southern District of New York for its contention that while a
Defendant in a civil action may be entitled to a stay of a civil
mater pending resolution of criminal charges, a Plaintiff is not.
See Waldbaum v. World Vision Enterprises, Inc., 84 F.R.D. 95
(S.D.N.Y. 1979).
The Court recognizes that while it may be more
5
commonplace for a defendant to be the party in a civil suit seeking
a
stay
as
a
result
of
parallel
civil
and
criminal
actions,
plaintiffs, too, under appropriate circumstances, may invoke the
Fifth Amendment in a civil case.
See Afro-Lecon, Inc. v. U.S.,
820 F.2d 1198(Fed. Cir. 1987); Wheling v. Columbia Broadcasting
System, 608 F.2d 1084, 1087 (5th Cir. 1079).
Indeed, the U.S.
Supreme Court instructs that any witness may invoke the Fifth
Amendment, and that the privilege is not limited to criminal
proceedings. See Kastigar v. United States, 406 U.S. 441, 444
(1972).
A party claiming the Fifth Amendment privilege should
also suffer no penalty for his silence.
See Simmons v. United
States, 390 U.S. 377, 394 (1968).
The third and fourth factors weigh in favor of a stay since
Plaintiff
risks
self-incrimination
if
forced
to
engage
in
discovery in the civil matter while, on balance, Defendant faces
no prejudice from the stay so long as the stay applies to both
parties.
The Court does not dispute that it would be unfair to
permit Plaintiff to proceed with discovery in this suit, while
depriving Defendant of information needed to prepare its defense,
including deposing Plaintiff. For this reason, as set forth below,
the stay will apply to all discovery in this case, not just to
discovery with respect to Plaintiff.
D.
Court and Public Interests
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The fifth and sixth factors to be considered are the interests
of the Courts in docket management and expeditious resolution of
the case and the interest of the public.
If the Court were to
deny the motion to stay, the parties and the Court would have to
consume time and resources to determine the specific contours of
Plaintiff’s Fifth Amendment rights.
In addition, because it is
possible that all or part of this action will be resolved by
allowing the criminal case to proceed unabated, the Court concludes
that, given the notion of judicial economy, the interest of the
Court and the public favor a stay.
IV.
Conclusion
Balancing the foregoing considerations, the Court concludes
that a stay should issue.
There is substantial overlap between
the issues in the pending civil and criminal actions, Plaintiff
has invoked her Fifth Amendment right in the criminal action and
discovery
in
this
case
may
severely
prejudice
Plaintiff
by
requiring her to disclose evidence that may be used against her,
and the Court and public have an interest in conserving judicial
resources by staying this matter until the criminal action has
concluded.
For the reasons stated above, IT IS ORDERED that Plaintiff’s
Motion to Stay [DE 16] is GRANTED as to all discovery in this case.
This matter is held in abeyance and the Court’s scheduling order
DE 15] is set aside.
The parties SHALL file status reports every
7
ninety
(90)
days
or
within
ten
(10)
Plaintiff’s criminal case.
This the 4th day of September, 2015.
8
days
of
conclusion
of
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