Cazaubon v. MR Precious Metals, LLC et al

Filing 29

ORDER AND REASONS granting 23 Motion by Walter Reed for Partial Stay and for Entry of Protective Order. IT IS ORDERED that this civil action is hereby partially stayed as to Reed for a period of ninety (90) days. IT IS FURTHER ORDERED that no party shall conduct discovery directed to Reed until February 1, 2016.. Signed by Chief Judge Sarah S. Vance on 8/17/15. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ERIC CAZAUBON

CIVIL ACTION

VERSUS

NO: 14-2241

MR PRECIOUS METALS, LLC, ET AL.

SECTION: R (1)

ORDER AND REASONS
Defendant Walter Reed moves the Court to partially stay this
action as it relates to Reed for a period of ninety days and to
enter a protective order under Federal Rule of Civil Procedure
26(c)(1)

delaying

discovery

requests

directed

to

Reed

resolution of federal criminal proceedings against him.1

until

For the

following reasons, the Court grants the motion.

I.

BACKGROUND
A.

Plaintiff’s Allegations

Plaintiff Eric Cazaubon filed this civil RICO2 complaint on
September 9, 2014.

The facts giving rise to this dispute, as

alleged in Cazaubon’s complaint, are as follows.3
As

background,

Cazaubon

explains

that

at

the

time

of

defendants’ conduct, Cazaubon was serving a criminal probation term

1

R. Doc. 23.

2

“RICO” refers to the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1961, et seq.
3

See R. Doc. 1.

of five years.4

While on probation in the summer of 2010, Cazaubon

established a gold-buying business in Slidell, Louisiana, which is
part of St. Tammany Parish.5
Tammany

Parish

District

Defendant Walter Reed, former St.

Attorney,

also

owned

a

gold-buying

business, defendant MR Precious Metals, LLC. Reed and his partner,
defendant Yancie Mosely, III, allegedly intimidated small goldbuying business owners like Cazaubon into doing business with MR
Precious Metals by asserting Reed’s official status as District
Attorney.6

Cazaubon also alleges that at some point, one of Reed’s

employees notified Reed that he believed MR Precious Metals was
illegally

purchasing

stolen

gold

and

failing

to

comply

with

applicable gold identification and reporting laws.7
After a month of working with MR Precious Metals, Cazaubon’s
relationship with Reed, Mosely, and their company soured, and
Cazaubon stopped doing business with them.8 Mosely warned Cazaubon
that he was “making a big mistake” by terminating their business
relationship.9

Within days, Cazaubon was assigned a new criminal

probation officer.10

Shortly thereafter, Cazaubon’s new probation

4

Id. at 3.

5

Id. at 4.

6

Id. at 5, 7-8.

7

Id. at 8.

8

Id. at 9.

9

Id.

10

Id.
2

officer searched Cazaubon’s home, but found no contraband.11
week

later,

St.

Tammany

police

premises, finding a stun gun.12
Cazaubon’s

home

and

found

searched

Cazaubon’s

One

business

The same day, police searched

marijuana.

Cazaubon

believes

his

probation officer planted the marijuana in his home at Reed’s
direction.13
Finding Cazaubon violated the terms of his parole, a local
state court revoked Cazaubon’s term of probation.

Cazaubon was

also charged with violating La. R.S. § 37:1910, which regulates the
second-hand gold market, for allegedly purchasing stolen gold from
a confidential informant.14

Cazaubon believes this was also a set-

up orchestrated at Reed’s direction. Cazaubon spent three years in
prison and ultimately lost his business.15

Cazaubon asserts that

these allegations demonstrate that Reed engaged in racketeering
activities to exercise improper control over the used gold market
in south Louisiana, causing Cazaubon to suffer serious financial
injury.

11

Id. at 10.

12

Id.

13

Id.

14

Id.

15

Id.
3

B.

Reed’s Indictment

Reed is currently under indictment in a criminal case pending
in this district.16
conspiracy,

six

The indictment charges Reed with one count of

counts

of

wire

fraud,

two

counts

of

money

laundering, four counts of tax fraud, and five counts of mail
fraud.17

All charges appear to relate to Reed’s campaign for St.

Tammany Parish District Attorney. The indictment charges that Reed
unlawfully used campaign funds for personal use. For example, Reed
allegedly caused payments to be made to his son’s businesses and
used campaign money to purchase lavish gifts, dinners, and other
items unrelated to Reed’s political campaign.

The tax fraud

counts, which incorporate by reference the indictment’s other
allegations, charge Reed with underreporting his taxable income
from 2009-2012.
Reed now moves the Court to stay this civil proceeding for a
period of ninety days and to issue a protective order under Federal
Rule of Civil Procedure 26(c)(1), preventing Cazaubon from taking
Reed’s deposition or otherwise issuing discovery requests to Reed.18
Cazaubon does not oppose the motion.

16

United States v. Walter P. Reed, et al., No. 2:15-cr00100 (E.D. La. April 23, 2015).
17

See R. Doc. 23-3.

18

R. Doc. 23.
4

II.

LEGAL STANDARD
A.

Stay

When a defendant in a civil case is facing criminal charges,
a district court may, in its discretion, stay the civil action.
United States v. Kordel, 397 U.S. 1, 12 (1970).

As the Fifth

Circuit instructs, in ruling on requests for stays of the civil
side of parallel criminal proceedings, a court should utilize
“judicial discretion and procedural flexibility . . . to harmonize
the conflicting rules and to prevent the rules and policies
applicable to one suit from doing violence to those pertaining to
the other.”

Campbell v. Eastland, 307 F.2d 478, 487 (5th Cir.

1962). In determining whether to stay the civil proceeding, courts
consider (1) the extent of overlap between the criminal case and
the civil case; (2) the status of the criminal case, including
whether the defendant has been indicted; (3) the plaintiff’s
interest in proceeding expeditiously, weighed against the prejudice
to the plaintiff caused by the delay; (4) the interests of and
burden on the defendant; (5) the interests of the courts; and (6)
the public interest.

Alcala v. Tex. Webb Cnty., 625 F. Supp. 2d

391, 399 (S.D. Tex. 2009) (collecting district court cases in the
Fifth Circuit that apply this test).
B.

Protective Order

In accordance with Federal Rule of Civil Procedure 26(c)(1),
a district court may, on a party’s showing of good cause, “issue an
order to protect a party or person from annoyance, embarrassment,
5

oppression, or undue burden or expense[.]”
26(c)(1).

Fed. R. Civ. P.

Among other things, the court’s protective order may

“forbid[] inquiry into certain matters, or limit[] the scope of
disclosure or discovery to certain matters[.]”
26(c)(1)(D).

Fed. R. Civ. P.

The party seeking the protective order bears the

burden to show “the necessity of its issuance, which contemplates
a particular and specific demonstration of fact[.]”

In re Terra

Int’l, 134 F.3d 302, 306 (5th Cir. 1998) (internal citation
omitted). The Court has broad discretion in determining whether to
grant a motion for a protective order because “[t]he trial court is
in the best position to weigh fairly the competing needs and
interests of the parties affected by discovery.” See Seattle Times
Co. v. Rhinehart, 467 U.S. 20, 36 (1984); Harris v. Amoco Prod.
Co., 768 F.2d 669, 684 (5th Cir. 1985).

III. DISCUSSION
A.

Partial Ninety-Day Stay

Reed moves the Court to stay this action as it relates to Reed
for ninety days to allow him to ascertain the extent to which the
issues in this case and the pending criminal case may overlap, as
well as the extent to which he and his counsel will be “consumed
with

defense

of

the

ongoing

criminal

prosecution.”19

After

considering the relevant factors, the Court finds that a partial
stay is warranted in this case.
19

R. Doc. 23-1 at 4.
6

1.

Overlap between the Civil Case and Criminal Case

The most important factor in determining whether to grant a
stay is the similarity of issues in the civil and criminal actions.
Dominguez v. Hartford Fin. Servs. Grp., Inc., 530 F. Supp. 2d 902,
906-07 (S.D. Tex. 2008) (internal citation omitted).
no

overlap,

there

[is]

no

danger

accordingly no need for a stay.”

of

“If there is

self-incrimination

and

Librado v. M.S. Carriers, Inc.,

No. 3:02-CV-2095D, 2002 WL 31495988, at *2 (N.D. Tex. Nov. 5,
2002).

In determining whether issues are related, courts impose a

“common-sense, fact-bound analysis.”

In re Ramu Corp., 903 F. 3d

312, 319 (5th Cir. 1990).
Here, the issues underlying the criminal action and this civil
action appear to overlap in only a limited sense.

The criminal

indictment charges Reed with illegal activity relating to the
misuse of his campaign funds.

To the extent Cazaubon’s civil suit

requires discovery of information related to Reed’s finances,
especially financial information regarding MR Precious Metals, the
two cases may overlap.

Indeed, in support of his motion to stay,

Reed explains that the Government has not yet itemized every source
of underreported income related to Reed’s tax fraud charges.20
Additionally, Reed asks for a limited stay to allow him sufficient
time to determine whether any issues overlap. Therefore, the Court
finds this factor supports the proposed stay.

20

Id. at 6.
7

2.

Status of the Criminal Proceeding

Reed has been indicted in the criminal matter.

Because a

criminal indictment has been issued, there is greater risk of
self-incrimination, and the Court should “strongly consider staying
the civil proceeding until the related criminal proceedings are
resolved.”

Whitney Nat'l Bank v. Air Ambulance ex rel. B. & C

Mgmt., No. 04–2220, 2007 WL 1468417, at *3 (S.D. Tex. May 19, 2007)
(internal citations omitted); see also Librado, 2002 WL 31495988,
at *2.

Though the indictment does not exactly parallel the

allegations in Cazaubon’s complaint, the Court finds that this
factor weighs in favor of a stay as more information regarding
Reed’s criminal activity may develop as the criminal case proceeds.
3.
Courts

Plaintiff’s Interest
usually

require

a

plaintiff

opposing

demonstrate that undue burden would result.

a

stay

to

See Whitney Nat’l

Bank, 2007 WL 1468417, at *3 (internal citation omitted). Cazaubon
does not oppose Reed’s motion, and therefore has not asserted any
undue burden that might result from a stay.

Accordingly, this

factor does not weigh against a stay.
4.

Defendant’s Burden

“If 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.”

Id. (internal citation omitted).

A defendant facing

simultaneous civil and criminal proceedings may be burdened by the
choice

between

“invoking

his

Fifth

8

Amendment

rights

[and]

jeopardiz[ing] his defense in the civil suit, where an adverse
inference may be drawn from the defendant’s silence[,]” SEC v.
AmeriFirst Funding, Inc., No. 3:07-CV-1188-D, 2008 WL 866065, at *4
(N.D. Tex. Mar. 17, 2008), and making incriminating statements that
could be used in his ongoing criminal prosecution, Agueros v.
Vargas, No. SA-07-CV-0904 XR, 2008 WL 2937972, at *2 (W.D. Tex.
July 21, 2008).

As the Court has noted, the underlying conduct in

the criminal action and the civil action may involve overlapping
issues of Reed’s financial activity relating to MR Precious Metals.
Absent a stay, Reed would be forced to choose between his civil
discovery obligations and his right against self incrimination.
Therefore, this factor weighs in favor of a stay.
5.

Interests of the Court and the Public

The Court has interests in judicial economy and expediency.
Alcala, 625 F. Supp. 2d at 407.

The Court is “obligat[ed] to move

its docket, and not let cases languish before it.”

Id. (quoting In

re Scrap Metal Antitrust Litig. No. 1:02-CV-0844, 2002 WL 31988168,
at *7 (N.D. Ohio Nov. 7, 2002)).

The public also has an interest

in resolving disputes “with minimal delay, but only to the extent
that the integrity of the defendant’s rights can be maintained.”
Id. (internal citations omitted).

The Court finds that granting a

stay would not unduly interfere with the Court’s ability to manage
its docket or the public’s interest in quickly resolving legal
disputes.

Cazaubon filed this civil suit on July 17, 2015, making

it a relatively new case.

Further, Reed asks only for a stay of

9

limited duration. See id. (denying a stay of indefinite duration).
Granting a stay of ninety days would not allow this case to
“languish before” the Court.

Thus, neither the Court’s interests

nor the public’s interest weigh against a stay.
Therefore, the Court grants Reed’s motion for a ninety-day
partial stay of this civil action as it relates to Reed.
B.

Protective Order

Reed moves the Court to enter a protective order until
February 1, 2016, following completion of his criminal trial
currently set for January 11, 2016. Reed seeks to prevent Cazaubon
from

taking

Reed’s

requests to him.

deposition

or

otherwise

issuing

discovery

Reed relies on his arguments regarding the

ninety-day stay to demonstrate good cause for a protective order.21
Cazaubon does not oppose Reed’s motion for a protective order.
The Court finds that good cause exists to issue a protective
order.

As previously discussed, the underlying conduct in the

criminal action and the civil action may involve overlapping issues
of Reed’s financial activity relating to MR Precious Metals.

If

the parties were allowed to proceed with discovery, Reed could be
forced to choose between invoking his Fifth Amendment rights and
jeopardizing

his

defense

in

the

civil

suit,

and

making

incriminating statements that could be used in his ongoing criminal
prosecution.

See AmeriFirst Funding, 2008 WL 866065, at *4;

Agueros, 2008 WL 2937972, at *2.

21

In addition, Cazaubon’s

Id. at 10-11.
10

ability

to pursue discovery would distract Reed and his counsel from
preparing for Reed’s upcoming criminal trial. Given the breadth of
criminal charges Reed faces, the potential for broad discovery in
connection with Cauzubon’s civil RICO complaint, and the potential
prejudice to Reed from the interaction of the two, the Court
concludes good cause exists to protect Reed from discovery until
his criminal trial is concluded.

See Fed. R. Civ. P. 26(c)(1).

Therefore, the Court grants Reed’s motion for a protective order
under Rule 26(c)(1).

IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS defendant Walter

Reed’s Motion to Partially Stay and for Entry of a Protective
Order.

IT IS ORDERED that this civil action is hereby partially

stayed as to Reed for a period of ninety (90) days.

IT IS FURTHER

ORDERED that no party shall conduct discovery directed to Reed
until February 1, 2016.

17th
New Orleans, Louisiana, this _____ day of August, 2015.

___________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

11