Warren v. Geller et al

Filing 305

ORDER & REASONS re United States' 277 Motion to Intervene and Stay: for the reasons set forth herein, IT IS HEREBY ORDERED that the Motion is GRANTED and this litigation will be completely stayed for sixty days; IT IS FURTHER ORDERED that if the United States has not filed criminal charges after the sixty day stay, it must provide the Court with an in camera review so that the Court can assess the status of the grand jury investigation; IT IS FURTHER ORDERED that if criminal charges are filed against Geller within sixty days of this order, this matter will be stayed and administratively closed until such time as the criminal matter is revolved, the Untied States attorney is to provide the Court with the status of this matter every six months. Signed by Judge Nannette Jolivette Brown on 4/9/2013. (rll, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TERRELL LEBEAUX WARREN

CIVIL NO. 11-2282

VERSUS
BENJAMIN GELLER, ET AL.

SECTION: “G” (1)

ORDER AND REASONS
Before the Court is the United States' Motion to Intervene and Stay Civil Proceedings.1
Defendant Arlyn Nelson ("Nelson") opposes the pending motion. Plaintiff Terrell LeBeaux Warren
("Plaintiff") takes no position on this motion, and all other parties do not object to the relief sought by
the United States.2 After considering the motion, the memorandum in support, the opposition, the reply,
the surreply, the record, and the applicable law, the Court will grant the pending motion and stay this
proceeding in for sixty (60) days from the date of this order.
I. Background
A. Factual Background
This Court has previously outlined in detail the allegations of Plaintiff in the complaint.3 The
issues in the pending motion do not warrant repetition of those allegations here. In short, Plaintiff is the
widow of Frank Warren ("Warren"). Prior to Warren's death, his agent Benjamin Geller ("Geller")
offered to create an irrevocable trust for Warren, and with the help of Nelson, an insurance agent, the
trust would be the beneficiary of a life insurance policy. When Warren died, his family received

1

Rec. Doc. 277.

2

Id. at p. 1

3

Rec. Doc. 270 at pp. 2-5.

1

payments, purportedly from the trust, for a period of time. However, it was later discovered that a
substantial portion of the $1,000,000 life insurance policy proceeds were unaccounted for and not
available to Plaintiff. Plaintiff has accused the defendants, including Geller, of fraud and negligence
in the formation of an alleged trust and in failure to properly pay the policy proceeds. Plaintiff has
specifically alleged that Geller stole trust funds for his own personal benefit.
B. Procedural Background
Plaintiff filed the complaint in this action on September 12, 2011.4 On March 5, 2013, the
United States filed the pending motion to intervene and stay this proceeding.5 On March 19, 2013,
Nelson filed an opposition.6 With leave of court, the United States filed a reply on March 25, 2013.7
In response, Nelson filed a surreply on March 28, 2013.8
II. Parties' Arguments
In support of the pending motion, the United States explains that Geller is the subject of a grand
jury's federal criminal investigation "involving the exact set of facts, circumstances, witnesses, and
evidence relating to this civil suit."9 The United States avers that "permitting this case to continue into
discovery, summary judgment, and trial will operate to irreparably harm the Grand Jury's
investigation," and therefore this matter should be stayed.10

4

Rec. Doc. 1.

5

Rec. Doc. 277.

6

Rec. Doc. 285.

7

Rec. Doc. 293.

8

Rec. Doc. 298.

9

Rec. Doc. 277-1 at p. 2.

10

Id. at p. 5.

2

The United States argues that pursuant to Federal Rule of Civil Procedure 24(b), an applicant
may intervene with leave of court when the applicant "has a claim or defense that shares with the main
action a common question of law or fact." The United States notes that federal courts have allowed the
government to intervene in civil actions, especially for the limited purpose of moving to stay a civil
proceeding.11 The United States cites Campbell v. Eastland,12 where the Fifth Circuit set out guidelines
for district courts to follow when deciding whether to stay a civil proceeding pending the result of an
ongoing criminal investigation of prosecution:
There is a clearcut distinction between private interests in civil litigation and the public
interest in a criminal prosecution, between a civil trial and a criminal trial, and between
the Federal Rules of Civil Procedure and the Federal Rules of Criminal Procedure. but
these distinctions do not mean that a civil action and a criminal action involving the
same parties and some of the same issues are so unrelated that in determining good
cause for discovery in the civil suit, a determination that requires the weighing of
effects, the trial judge in the civil proceeding should ignore the effect discovery would
have on a criminal proceeding that is pending or just about to be brought. The very fact
that there is clear distinction between civil and criminal actions requires a government
policy determination of priority: which case should be tried first. Administrative policy
gives priority to the public interest in law enforcement. This seems so necessary and
wise that a trial judge should give substantial weight to it in balancing the policy against
the right of a civil litigant to a reasonably prompt determination of his civil claims or
liabilities.13

The United States argues that the Campbell court advised district courts to remember the differences
and policy objectives in civil and criminal discovery; specifically, the Fifth Circuit cautioned that
criminal defendants should not be able to benefit from the more liberal discovery available in civil
matters.14

11

Id. (citing United States v. Kordel, 397 U.S. 1, 12 n. 27 (1970)).

12

307 F.2d 478 (5th Cir. 1962).

13

Id. at 487.

14

Rec. Doc. 277-1 at p. 7.

3

The United States also argues that allowing this civil action to proceed may injure some of the
civil parties, because Geller may invoke his Fifth Amendment rights during discovery in this matter.15
Further, the United States notes that district courts within the Fifth Circuit have recognized several
factors in considering whether to stay a civil proceeding: "(1) the extent to which the issues in the
criminal case overlap with those presented in the civil case; (2) the status of the criminal case, including
whether defendants have been indicted; (3) the private interests of the plaintiff in proceeding
expeditiously, weighed against the prejudice to plaintiffs caused by the delay; (4) the private interests
of the burden on the defendants; (5) the interests of the courts; and (6) the public interest."16
Concerning the first factor, the United States acknowledges that the similarities in the facts and
issues between the civil and the criminal matter is the most important factor in determining whether to
grant a stay.17 The United States contends that "[h]ere, there is a common nucleus of operative facts in
both the civil and criminal matters."18 Attached to the pending motion, the United States has appended
the declaration of FBI Special Agent Orvin, who states that the parties, witnesses, evidence, and
operative facts are nearly identical in the two parallel proceedings.19
In regard to the second factor, the United States argues that while an indictment of Geller has
not been issued, the "investigation into potential criminal violations has been ongoing and is still an

15

Id. at pp. 7-8.

16

Id. at pp. 8-9 (citing Heller Healthcare Fin., Inc. v. Boyes, No. 300-1335, 2002 WL 1558337, at * 2 (N.D.
Tex. July 15, 2002)).
17

Id. at p. 9 (citing Waste Mgmt. of La., LLC, v. River Birch, Inc., No. 11-2405, 2012 WL 520660, at * 4
(E.D. La. Feb. 15, 2012) (Brown, J.)).
18

Id. at p. 10.

19

Rec. Doc. 277-2.

4

active investigation."20 The United States notes that the fact that a criminal investigation is ongoing
does not foreclose the availability of a stay in the civil matter.21 Moreover, "the applicability of the
Speedy Trial Act guarantees that the criminal trial will occur quickly after indictment."22
In connection with the third factor, the United States avers that no party will suffer substantial
prejudice based on a delay of the civil proceeding.23 The United States explains that Plaintiff may be
a victim in the criminal proceedings and therefore entitled to restitution under 18 U.S.C. §§ 3663,
3663A. Further, the United States maintains that Plaintiff may actually benefit from the stay because
she would have the benefit of the information gathered during the criminal investigation.
Next, the United States avers that the interests of the defendants would be served by the stay,
because any defendant who has criminal exposure would be able to address criminal liability first, prior
to any civil liability.24 Additionally, the United States argues that some defendants in the civil
proceeding may be prejudiced in their ability to prepare a defense if a stay is not granted because other
witnesses, such as Geller, may invoke their Fifth Amendment rights.25
In addressing the fifth and sixth factors, the United States argues that as the role of the
prosecutor is to serve both private victims and the general public, the criminal case is entitled to
precedence over the civil litigation.26 Finally, concerning the sixth factor, the United States avers that

20

Rec. Doc. 227-1 at p. 11.

21

Id. (citing Wehling v. CBS, 608 F.2d 1084, 1089 (5th Cir. 1979)).

22

Id.

23

Id. at p. 12.

24

Id.

25

Id.

26

Id. at p. 13 (citing In re Ivan F. Boesky Sec. Litig., 128 F.R.D. 47, 49 (S.D.N.Y. 1989)).

5

the interests of judicial economy counsel in favor of a stay in the civil proceeding pending the outcome
of the ongoing criminal matter, because the criminal matter may streamline the civil litigation by
eliminating certain evidentiary issues.27
In opposition, Nelson claims that the United States has failed to provide support for its claim
that it has a right to intervene in this action.28 Geller takes issue with the United States claim that courts
have regularly allowed the government to intervene in civil proceedings to stay discovery in light of
a criminal investigation, by simply "includ[ing] a string of citations."29 Further, Geller argues that under
Federal Rule of Civil Procedure 24(c), an intervener must state in its motion "the grounds for
intervention" and the "claim or defense for which intervention is sought." Geller avers that the pending
motion should be denied for the United States' failure to abide by the pleading requirements.30
Additionally, Nelson argues that the United States' motion is untimely under Rule 24(a)(2) or
(b)(1). Nelson explains that under Fifth Circuit precedent, timeliness is determined from all of the
circumstances,31 and four factors are considered relevant: (1) the length of time during which the
would-be intervener actually knew or reasonably should have known of his interest in the case before
he petitioned for leave to intervene; (2) the extent of the prejudice that the existing parties to the
litigation may suffer as a result of the would-be intervener's failure to apply for intervention as soon
as he actually knew or reasonably should have known of his interest in the case; (3) the extent of the
prejudice that the would-be intervener may suffer if his petition for leave to intervene is denied; (4) and

27

Id. at p. 14 (citing Waste Management, 2012 WL 520660, at * 5).

28

Rec. Doc. 285 at p. 1.

29

Id. at p. 5.

30

Id.

31

Id. (citing Lucas v. McKeithen, 102 F.3d 171, 173 (5th Cir. 1996)).

6

(4) the existence of unusual circumstances militating either for or against a determination that the
application is timely.32
In consideration of these factors, Nelson contends that "[i]t is undisputed that the Government
knew of plaintiff's civil and criminal claims against Geller before the civil lawsuit was ever filed. It is
further undisputed that the Government began its former criminal investigation as early as July 22,
2011."33 Despite this, Nelson argues the United States waited until March 5, 2013 to request a stay, after
much of the discovery in this matter had been completed.34 Next, Nelson argues that because the United
States knew of their interest in this dispute since the summer of 2011, this factor weighs heavily in
favor of denying the pending motion.
In consideration of the prejudice the parties will suffer by a stay, Nelson argues that had the
Government intervened back in 2011, "the parties would not have spent significant sums on discovery,
motion practice, and preparing the case for trial."35 Nelson also argues that a stay would now force the
parties to incur additional attorney's fees to "re-prepare the case for trial," and that Nelson will be
especially prejudiced because "the plaintiff's claim of fraud will continue to linger for an indefinite
period causing further damage to his personal and professional reputation."36
Alternatively, Nelson maintains that the United States will not be prejudiced by the denial of
the pending motion. Nelson argues that the pending motion fails to point to any discovery that it claims

32

Id. (citing Edwards v. City of Houston, 78 F.3d 983, 1000 (5th Cir. 1996) (en banc) (citing Stallworth v.
Monsanto Co., 558 F.2d 247, 264-66 (5th Cir. 1977))).
33

Id. at p. 6 (citing Rec. Doc. 284-1, Subpoena for GE Life & Annuity to Testify Before Grand Jury).

34

Id.

35

Id. at pp. 6-7.

36

Id. at p. 7.

7

would prejudice the criminal prosecution. Moreover, Nelson claims that this action has been pending
since September 2011, and all parties have already engaged in substantial written and deposition
discovery.37 Nelson also argues that the United States has not provided any "unusual circumstances"
to justify it waiting so long to request the stay in this matter.
Nelson explains that the issuance of a stay in a civil proceeding is an extraordinary remedy that
should not be granted lightly.38 Nelson also argues that "[t]he criminal investigation is in its infancy and
no indictment has been issued. The requested stay, therefore, necessarily is for an undetermined time
period, dependant on the speediness of the investigation and any subsequent indictment (i.e., all at the
mercy of the Government)."39
Finally, Nelson argues that the three reasons given by the United States as to why a stay is
necessary to avoid substantial and irreparable harm are not implicated under these circumstances. First,
Nelson argues that the United States has not pointed to any specific discovery that would provide Geller
a procedural advantage in the criminal proceeding, because much of the discovery in this matter has
already been completed.40 Next, Nelson points out that only Geller is the subject of a criminal
investigation, and during his deposition he never invoked his Fifth Amendment rights. Therefore,
Nelson contends that no party would be prejudiced if a stay was not granted. Finally, Nelson avers that
"this case does not involve a situation where a criminal defendant has filed a civil action to gain a
procedural advantage in the criminal action," and notes that the criminal target, Geller, does not object
to the issuance of the stay requested by the United States, and therefore is not attempting to use this

37

Id.

38

Id. at p. 8 (citing United States v. Simcho, 326 F. App'x 791, 792 (5th Cir. 2009)).

39

Id. at pp. 8-9.

40

Id. at pp. 9-10.

8

civil action's more liberal discovery to benefit him in the potential criminal action.41 Therefore, Nelson
argues that "a denial of the stay will not set 'dangerous precedent' or prejudice the Government in any
way."42
In reply, the United States argues that its intervention is both proper and timely.43 The United
states quotes the Second Circuit, which stated that "[t]he government ha[s] a discernible interest in
intervening in order to prevent discovery in the civil case from being used to circumvent the more
limited scope of discovery in the criminal matter."44 The United States claims that it is entitled to
intervene based on Rule 24(a) because it has an interest "relating to the property or transaction that is
the subject" of this case. The United States also claims that it may intervene under Rule 24(b) because
the United States "has a claim or defense that shares with the main action a common question of law
or fact."45 Therefore, the United States argues that it is entitled to intervene as a matter of right under
Rule 24(a), or that a permissive intervention is appropriate under Rule 24(b).46 The United States also
notes that other courts have found intervention to be appropriate where, like here, criminal charges are
"anticipated, but have not yet been filed.47
Regarding timeliness, the United States claims that Nelson's assertions on when the criminal
investigation began and "when the Government's interests would have been first affected by this case"

41

Id. at p. 10.

42

Id. at p. 11.

43

Rec. Doc. 293 at p. 3.

44

Id. (quoting SEC v. Chestman, 861 F.2d 49 (2d Cir. 1988)).

45

Id. at p. 4 (internal quotation marks omitted).

46

Id.

47

Id. n. 1 (citing In re Air Cargo Shipping Servs., No. 06-1775, 2010 WL 5027536, at *1 (E.D.N.Y. Dec. 3,

2010)).

9

are "speculative."48 Further, the United States notes that the requirement of timeliness is not meant to
act as a punishment for a tardy intervener, but rather as a mechanism to guard against prejudice to the
original parties for the would-be intervener's failure to apply sooner.49 The United States also notes that
the Fifth Circuit has instructed lower courts to discourage premature intervention.50
Specifically, the United States claims that the 2011 subpoena cited by Nelson does not indicate
the initiation of a formal criminal investigation into Geller. The United States argues that the 2011
subpoena "called for records from a life insurance company relating to Frank Warren's life insurance
policy," and "did not request records reflecting the expenditure of Warren's trust funds, nor did it
request records relating to communications between the plaintiff and anyone else relevant here,
including the trustee, defendant Geller, both of which are matters at the heart of the grand jury
investigation here."51 Therefore, the United States argues that the 2011 subpoena does not "by itself,
put the Government on notice as to its interest in this case," and "did not [] yield all the facts currently
known by the Government."52 The United States also cites Fifth Circuit precedent where the court
allowed intervention in an environmental suit that had been pending for eight years after it became
apparent to the applicant that its interests were affected.53
In addition, the United States avers that even if it should have known of its interest to intervene
in this matter in 2011, Nelson cannot demonstrate "any real prejudice to him by the Government's

48

Id.

49

Id. (citing Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994)).

50

Id. at p. 5 (citing Espy, 18 F.3d at 1206).

51

Id.

52

Id.

53

Id. (citing Espy, 18 F.3d at 1205-06).

10

request here."54 First, the United States notes that Nelson complains that if the United States had
intervened sooner, he and the other parties would not have spent significant sums of money on
discovery, motions practice, and preparing the case for trial. The United States argues that this
argument is "of no moment," because these sums would have been expended eventually.55 Second, the
United States takes issue with Nelson's complaint that further delay of this action will allow the
accusations against him to "linger" and further damage his personal reputation. The United States
argues that this is disingenuous because Nelson did not object to Plaintiff's most recent amended
complaint and continuation of the trial date.56 Further, the United States notes that the Fifth Circuit has
stated that "prejudice must be measured by the delay in seeking intervention, not the inconvenience to
the existing parties of allowing the intervener to participate in the litigation."57
Additionally, the United States claims that Nelson has failed to address the six factors governing
this analysis, and reiterates its contention that all six "overwhelmingly counsel in favor the
Government's request here."58
Next, the United States maintains that if this action is allowed to proceed, "the grand jury's
investigation will be irreparably damages."59 "For example, if this case were to proceed to trial, some
of the litigants might be forced to choose between asserting their Fifth Amendment rights to protect

54

Id.

55

Id. at pp. 5-6.

56

Id. at p. 6 (citing Rec. Doc. Nos. 259, 271).

57

Espy, 18 F.3d at 1206.

58

Rec. Doc. 293 at pp. 6-7.

59

Id. at p. 7.

11

their interests in the criminal case while risking an adverse inference instruction in the civil case."60 The
United States contends that the fact that no party has yet to assert their Fifth Amendment rights is of
no consequence.61
The United States claims that given the stage of the grand jury's investigation, "and the
likelihood of parties with potential criminal exposure in this matter, the invocation of a party's Fifth
Amendment rights may still occur here."62 Further, the United States notes that some courts have
permitted the Government to intervene and stay civil cases, even where the putative defendant declares
that he will not assert his Fifth Amendment rights.63 In addition, the United States argues that there is
currently a motion pending before this Court on the validity of the trust at issue, and resolution of that
issue will "certainly impact the grand jury's investigation and any charges that are brought."64 The
United States also highlights that a new complaint has been filed in this matter recently, and therefore
it is likely that additional discovery will need to be conducted, which may allow a criminal litigant
access to materials he otherwise would not be entitled to receive. The United States avers that "despite
the fact that discovery has already begun here, the continuation of this case, the Court's ruling on key
issues, and this matter's eventual trial would irreparably damage the grand jury's investigation," and
therefore this matter should be stayed.65
In surreply, Nelson argues that while the United States claims that he engaged in "speculation"

60

Id. at pp. 7-8.

61

Id. at p. 8 n. 5.

62

Id.

63

Id. (citing Sw. Recovery Group, LLC v. BP Am., Inc., 278 F.R.D. 162, 167 (E.D. La. 2012)).

64

Id. at p. 8.

65

Id.

12

when he stated that the formal criminal investigation began in July 2011, the United States has not
denied this fact nor stated when the investigation began.66 Nelson claims that this an attempt to "distract
the Court from the real issue: the length of time during which the proposed interveners actually knew
or reasonably should have known of their interest in the case."67
Next, Nelson contends that the United States has failed "to provide any specific prejudice it will
suffer if this action is not stayed."68 Finally, Nelson argues that the United States has failed to explain
how the Court's ruling on issues in this case – mainly the validity of the trust – will impact the grand
jury's investigation.69 Nelson avers that this question is purely legal, and has already been briefed for
the Court. Therefore, Nelson maintains that the United States has failed to satisfy its burden to
demonstrate "substantial and irreparable prejudice."70
III. Law and Analysis
A. Standard for a Stay
It is undisputed that a district court has inherent power to “control the disposition of the causes
on its docket with economy of time and effort for itself, for counsel, and for litigants,”71 and this
authority includes the district court’s wide discretion to grant a stay in a pending matter.72 When “the
interests of justice seem[] to require such action,” a court may exercise its discretion to stay civil

66

Rec. Doc. 298 at p. 2.

67

Id.

68

Id. at p. 3.

69

Id.

70

Id.

71

Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).

72

In re Ramu Corp., 903 F.2d 312, 318 (5th Cir. 1990).

13

proceedings, postpone discovery, or impose protective orders and conditions.73
It is well recognized that a district court “may stay a civil proceeding during the pendency of
a parallel criminal proceeding.”74 Indeed, a district court may sometimes stay a civil action “until the
criminal case or the likelihood of a criminal case is ended.”75 Federal district courts are empowered to
stay civil proceedings pending the completion of parallel criminal prosecutions, even when the request
for a stay is made by the prosecution.76 Although “[t]he simultaneous prosecution of civil and criminal
actions is generally unobjectionable” because of the different interests promoted in the different suits,77
a stay of the pending civil action may be appropriate “when there is a real and appreciable risk of selfincrimination.”78 In fact, in some circumstances, a district court abuses its discretion by failing to stay
discovery until applicable criminal statutes of limitation have run, if the stay would not impose undue
hardship on the non-moving party.79
Although the Fifth Circuit has determined that a stay may be warranted where “special
circumstances” exist to prevent a party from suffering substantial and irreparable prejudice,80 courts

73

United States v. Kordel, 397 U.S. 1, 12 n.27 (1970); see also, Mayo v. Tri-Bell Indus., 787 F.2d 1007,
1012 (5th Cir. 1986).
74

SEC v. First Fin. Grp. of Tex., Inc., 659 F.2d 660, 668 (5th Cir. 1981).

75

DeLeon v. City of Corpus Christi, 488 F.3d 649, 655 (5th Cir. 2007) (citing Wallace v. Kato, 549 U.S.
384, 394 (2007) (citing Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 730 (1996))).
76

Kordel, 397 U.S. at 12 n. 27 ("Federal courts have deferred civil proceedings pending the completion of
parallel criminal prosecutions when the interests of justice seemed to require such action, sometimes at the request of
the prosecution.") (citing Campbell, 307 F.2d at 478).
77

First Fin. Grp., 659 F.2d at 667.

78

Brumfield v. Shelton, 727 F.Supp. 282, 284 (E.D. La. 1989) (citing Kordel, 391 U.S. at 8-9).

79

See Wehling, 608 F.2d at 1084(district court abused its discretion in forcing plaintiff to choose between
his Fifth Amendment right to silence and his lawsuit).
80

First Fin. Grp., 659 F.2d at 668; see also, United States v. Little Al, 712 F.2d 133, 136 (5th Cir. 1983).

14

within the Fifth Circuit have looked to six factors to determine whether the civil action should be
stayed.81 These factors include:
1.
2.
3.
4.
5.
6.

The extent to which the issues in the criminal case overlap with those presented in the
civil case;
The status of the criminal case, including whether the defendant has been indicted;
The private interests of the plaintiff in proceeding expeditiously, weighed against the
prejudice to the plaintiff caused by the delay;
The private interests of and burden on the defendant;
The interests of the courts; and
The public interest.82

B. The United States' Right to Intervene

Nelson has challenged the United States' "grounds for intervention," and asserts that the United
States has not complied with Rule 24(c), which requires a party seeking intervention to state the claim
or defense for which intervention is sought. The Fifth Circuit has recognized the prosecution's interest
in intervening in civil proceedings to stay discovery and protect a criminal investigation.83 Moreover,
other sections of this Court have found that when evidence demonstrates that the civil action and the
criminal investigation include identical subject matter, the United States has carried its burden to show
that it has a right to intervene pursuant to Rule 24.84 Here, the United States has come forward with such
evidence, and affirmed that the criminal investigation of Geller coincides with the accusations made
in this matter. Therefore, the United States has demonstrated its right to intervene.

81

Alcala v. Tex. Webb Cty., 625 F. Supp. 2d 391, 399 (S.D. Tex. 2009) (collecting district court cases
within the Fifth Circuit applying this test); see also, Lebouef v. Global X-Ray and Testing Corp., No. 07-5755, 2008
U.S. Dist. LEXIS 6470, at *4 (E.D. La. Jan. 29, 2008) (Barbier, J.) (“To determine whether special circumstances
exist, the court must ‘balance the competing constitutional and procedural interests of the parties,’ as illustrated
through the six-factor test . . . .”) (citation omitted).
82

Alcala, F.Supp. 2d at 399.

83

Campbell, 307 F.2d at 478.

84

See, e.g., Sw. Recovery Group, LLC, 278 F.R.D. at 167.

15

Nelson has also claimed that the pending motion should be denied because it was not timely
made. "The concept of 'timeliness' in connection with motions for leave to intervene is a flexible one,
which is left to the sound discretion of the trial court."85 "The requirement of timeliness is not a tool of
retribution to punish the tardy would-be intervener, but rather a guard against prejudicing the original
parties by the failure to apply sooner."86 In John Doe No. 1 v. Glickman,87 the Fifth Circuit
acknowledged that:
Th[is] analysis is contextual; absolute measures of timeliness should be ignored.” Espy,
18 F.3d at 1205. A court should ignore “[h]ow far the litigation has progressed when
intervention is sought[,] ... the amount of time that may have elapsed since the
institution of the action ... [, and] the likelihood that intervention may interfere with
orderly judicial processes.” Stallworth, 558 F.2d at 266.88
Instead, a Court must consider four factors to determine timeliness: (1) how long the potential
intervener knew or reasonably should have known of her stake in the case into which she seeks to
intervene; (2) the prejudice, if any, the existing parties may suffer because the potential intervener
failed to intervene when she knew or reasonably should have known of her stake in that case; (3) the
prejudice, if any, the potential intervener may suffer if the court does not let her intervene; and (4) any
unusual circumstances that weigh in favor of or against a finding of timeliness.89 However, "[t]hese
factors are a framework and 'not a formula for determining timeliness.' A motion to intervene may still
be timely even if all the factors do not weigh in favor of a finding of timeliness."90
85

7C Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1916 at
529 (citing McDonald v. E.J. Lavino Co., 430 F.2d 1065, 1074 (5th Cir. 1970)).
86

Espy, 18 F.3d at 1205.

87

256 F.3d 371 (5th Cir. 2001).

88

Id. at 375 (alternations in original).

89

Id. at 376.

90

Id. (internal citations omitted).

16

In consideration of the first timeliness factor, the evidence does indicate the that United States
knew, or should have known, of its stake in this matter for sometime, but failed to take action. The
United States has also failed to provide an explanation for its delay. While the United States argues that
the 2011 subpoena cited by Nelson did not relate to an investigation into the expenditure of the Warren
trust funds, it avoids ever stating when the investigation into Geller's alleged illegal activity began.
Therefore, this factor weighs in favor of finding the pending motion untimely.
However, it does not appear that the United States' delay in seeking intervention will prejudice
any of the existing parties. The Court first notes that no party, with the exception of Nelson, opposes
the pending motion. Additionally, on March 6, 2013, Plaintiff filed an amended complaint that added
several new defendants to this action.91 For this reason, the Court had already decided that it would
continue the trial to a date to be determined later to allow the new parties to conduct discovery and
motions practice.92 Moreover, as the United States has noted, Nelson did not object to this continuance.
As such, even without the United States' request for a stay, the Court had already determined that a
continuance and the allowance of additional discovery are appropriate in this matter. Therefore, this
Court finds that no additional prejudice will result from granting the United States' motion. As such,
this factor weighs in favor of finding the pending motion timely.
The United States has argued that allowing discovery to continue would prejudice the grand
jury proceedings against Geller. In response, Nelson has argued that most of the discovery in this case
has been completed, and therefore there is no possible prejudice that can come from allowing this
matter to proceed. Nelson is correct on this point; this is not a situation where a criminal defendant,

91

Rec. Doc. 281.

92

Rec. Doc. 271 (minute entry from status conference).

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Geller, filed a civil case to benefit from the more lenient civil discovery. However, as this Court
previously noted, due to the addition of several new defendants, this Court will have to reopen
discovery for these parties. While it is true that Geller has already participated in the more liberal civil
discovery available in this civil matter, now that it is known that a criminal investigation against him
is underway, he could take a position in the ongoing discovery to protect against self-incrimination,
which would deprive the newly added defendants of full discovery. Geller could also take such a
position at trial and impede the cases of the defendants. There is plenty of civil litigation left in this case
that could be adversely affected in the absence of a stay. Therefore, the Court finds that this factor
weighs in favor of a stay.
Finally, the United States has not provided any evidence or argument to demonstrate "unusual
circumstances" as to why it delayed filing this motion. As such, this factor does not weigh in favor of
a finding of timeliness.
While not all of the factors weigh in favor of finding this motion timely, this Court is cognizant
of the prejudice the motion could have on the other litigants.93 As the Court finds that the pending
motion would cause little to no prejudice to Nelson, the only party who objects to the United States'
motion, the Court finds that the motion is timely under Rule 24. The Court will now address whether
the United States has demonstrated that a stay is appropriate under the relevant factors.

C. Application of Factors for Issuance of a Stay

93

Espy, 18 F.3d at1205.

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1. The extent to which the issues in the criminal case overlap with those presented in the civil
case
Where there exists overlap between the civil and criminal proceedings, courts often feel
compelled to grant a stay.94 Many courts have found that “the similarity of the issues in the underlying
civil and criminal actions is considered the most important threshold issue in determining whether to
grant a stay.”95 Neither party disputes that the subject matter of this suit is "identical" or very similar
to the nature of the criminal investigation. Therefore, this factor weighs in favor of issuing a stay.
2. Status of Criminal Proceedings
Even when there are not yet criminal charges filed, “this fact does not militate against the
granting of a stay of discovery.”96 In fact, some district courts within this Circuit have found that "when
the government seeks a stay of civil discovery, the justification for obtaining a stay is often strongest
before an indictment is handed down."97 The United States has indicated that the investigation is
ongoing and that grand jury proceedings have commenced. The Court finds that allowing discovery to
continue could disrupt the progress of the criminal investigation, and therefore, this factor weighs in
favor of a stay.
3. Plaintiff’s Interest
Plaintiff has taken no position with regard to the pending motion. As such, this Court finds that
no prejudice will come to Plaintiff by the issuance of a stay. Again, even without a stay, this matter

94

Astoria Entm’t, Inc. v. Edwards, No. 98-3359, 1999 U.S. Dist. LEXIS 6040, at *3 (E.D. La. Apr. 22,
1999) (Duval, J.).
95

See, e.g., Dominguez v. Hartford Fin. Servs. Grp., 530 F. Supp.2d 902, 906-07 (S.D. Tex. 2008).

96

SEC v. Offill, No. 07-1643, 2008 WL 958072, at *3 (N.D. Tex. Apr. 9, 2008).

97

Id. at *2-3.

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would be delayed to account for the late inclusion of several new defendants, whose alleged
involvement was not known until discovery was coming to an end, and which Nelson did not oppose.
Therefore, this factor weighs in favor of the issuance of a stay.
4. Defendant’s Burden
Here, while Geller has already participated in a great deal of discovery, now that the criminal
investigation has been made known and additional parties must conduct discovery, Geller may be
forced to choose between his civil discovery obligations and his ability to assert his Fifth Amendment
privilege against self-incrimination. While Geller has not been indicted, the evidence indicates that the
criminal investigation is active and an indictment is on the horizon; many of the other defendants,
especially the newly added defendants, may rely on a defense that centers around the alleged fault of
Geller. These defendants may not be able to receive the full extent of discovery they are entitled to in
civil matters if Geller is to invoke his Fifth Amendment rights, now that Geller has been informed that
he may face criminal charges. Accordingly, these defendants may be left with no real way to defend
themselves, short of Geller forgoing his Fifth Amendment rights, if a stay is not granted here.
The Court notes that “[i]f the defendant would be burdened by civil discovery on the same
issues as a pending criminal case, this factor weighs in favor of a stay.”98 Geller and the other
defendants may be burdened by responding to discovery in both related matters and Geller potentially
would be faced with choosing between participating in discovery and testifying at trial and his right
against self-incrimination. The United States Supreme Court has acknowledged that Fifth Amendment
rights are “precious.”99 Courts have a duty to protect these rights.100 Therefore, the Court finds that this

98

Doe v. Morris, No. 11-1532, 2012 U.S. Dist. LEXIS 12454, at *4 (E.D. La. Feb. 2, 2012) (Vance, C.J.).

99

Miranda v. Arizona, 384 U.S. 436, 457 (1966).

100

United States v. Demchak, 545 F.2d 1029, 1031 (5th Cir. 1977).

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factor weighs in favor of a stay.
5. The Court’s Interest
“The Court has interests in judicial economy and expediency,”101 and granting a stay serves
those interests because “conducting the criminal proceedings first advances [] judicial economy.”102 If
a stay were not granted, it is almost certain that duplicative discovery and legal findings would occur.
Furthermore, allowing the criminal suit to proceed first may “streamline” this matter. There exists the
possibility that collateral estoppel or res judicata will affect some or all of the overlapping issues.103
As both parties have acknowledged, the Court has yet to rule on several contested issues in this matter.
Therefore, proceeding with this action at this time will result in the use of judicial resources that may
not be necessary if the case proceeds after the criminal investigation and action have been completed.
This factor also weighs in favor of granting a stay.
6. The Public Interest
The Fifth Circuit has recognized that the public interest in law enforcement efforts through
criminal investigation and prosecution of alleged fraud is substantial:
The very fact that there is clear distinction between civil and criminal actions requires
a government policy determination of priority: which case should be tried first.
Administrative policy gives priority to the public interest in law enforcement. This
seems so necessary and wise that a trial judge should give substantial weight to it in
balancing the policy against the right of a civil litigant to a reasonably prompt
determination of his civil claims or liabilities.104

101

Doe, 2012 U.S. Dist. LEXIS 12454, at *6.

102

Offill, 2008 WL 958072, at *3.

103

Emich Motors Corp. v. Gen Motors Corp., 340 U.S. 558, 568 (1951) (“It is well established that a prior
criminal conviction may work as estoppel.”) (citations omitted).
104

Campbell, 307 F.2d at 487.

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As noted several times before, Nelson is the only party in this action that opposes the request for a stay.
One of Nelson's main contentions is that a stay would delay him from clearing his name of some of the
allegations made against him in this matter. While the Court recognizes this as a valid concern, Fifth
Circuit precedent advises that Nelson's interest must yield to law enforcement's prerogative in this
situation. Additionally, as this matter would already be delayed due to the unopposed addition of
several new defendants (which Nelson specifically did not oppose), the Court finds that the stay itself
would not substantially harm Nelson's interests. Therefore, this factor weighs in favor of the issuance
of a stay. On balance, this Court finds that the factors weigh in favor of a stay, and therefore will grant
the pending motion.
C. April 4, 2013 Status Conference
In addition, this Court held a status conference with all of the parties, including the United
States, on April 4, 2013. In that conference, the United States communicated to the Court that in all
likelihood it would only need a stay of this action for sixty days to preserve the integrity of the grand
jury investigations. In light of the short amount of time the United States requests to stay this matter,
and considering the fact that the trial would nonetheless have to be continued because of the recent
addition of new parties, the Court finds further support for granting the pending motion, because the
short length of this stay assuages much of the prejudice Nelson feared would result from an indefinite
stay.

D. Scope of the Stay
“The stay of a pending matter is ordinarily within the trial court’s wide discretion to control the

22

course of the litigation, which includes authority to control the scope and pace of discovery.”105 Here,
the Court will grant a complete stay of the case, because the Court is persuaded that allowing this case
to continue would likely result in duplicative discovery and legal findings, as well as risk the integrity
of the criminal proceedings. However, the Court will only issue a stay for sixty days. If the United
States has not filed criminal charges after sixty days, the Court will order an in camera review to assess
the status of the grand jury investigation and determine if the stay should be lifted.
IV. Conclusion
For the reasons set forth above, the Court finds that the United States has met its burden to
demonstrate that a stay in this matter is warranted. Accordingly,
IT IS HEREBY ORDERED that the United States' Motion to Intervene and Stay Civil
Proceedings106 is GRANTED and this litigation will be completely stayed for sixty days;
IT IS FURTHER ORDERED that if the United States has not filed criminal charges after the
sixty day stay, it must provide the Court with an in camera review so that the Court can assess the status
of the grand jury investigation;

105

In re Ramu Corp., 903 F.2d at 318.

106

Rec. Doc. 277.

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IT IS FURTHER ORDERED that if criminal charges are filed against Geller within sixty days
of this order, this matter will be stayed and administratively closed until such time as the criminal
matter is resolved; the United States attorney is to provide the Court with the status of this matter every
six months.
NEW ORLEANS, LOUISIANA, this ______ day of April, 2013.

________________________________
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE

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