Zuppardo v. Service Cab Co., Inc, et al
ORDER: IT IS HEREBY ORDERED that the Defendant's 19 Motion to Stay is DENIED. Signed by Judge Nannette Jolivette Brown on 3/6/2017. (mmv)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SERVICE CAB CO., INC.
SECTION: “G” (3)
Before the Court is Defendant Service Cab Co., Inc.’s (“Defendant”) “Motion to Stay,”1
wherein Defendant seeks to stay the instant proceeding pending the outcome of the criminal
proceeding against it.2 Having considered the motion, the memoranda in support and in opposition,
the record, and the applicable law, the Court will deny the motion.
On March 4, 2016, Plaintiff Madelyn Faveros Zuppardo (“Plaintiff”) filed the instant action
alleging that Defendant terminated her employment as a cab driver because she reported violations
of federal and state Medicaid and Medicare laws to federal and state law enforcement authorities.3
On June 8, 2016, the State of Louisiana indicted Defendant on two counts of conspiracy to commit
theft by fraud and eleven counts of theft by fraud.4 On July 11, 2016, Defendant filed the instant
Rec. Doc. 19.
Id. at 1.
Rec. Doc. 1 at 3.
Rec. Doc. 19-2.
motion to stay the litigation pending the outcome of the criminal proceeding.5 On July 22, 2016,
Plaintiff filed an opposition to the motion.6 On August 3, 2016, with leave of Court, Defendant
filed a reply in further support of the motion to stay.7
II. Parties’ Arguments
Defendant’s Arguments in Support of the Motion to Stay
In its motion, Defendant asserts that the Court has inherent authority to stay a civil matter
pending the outcome of parallel criminal proceedings.8 According to Defendant, in making this
decision, courts measure the relative weights of the parties’ interests.9 Defendant contends that the
relevant factors weigh in favor of a stay in this case.10 Defendant asserts that the most important
factor to consider is the degree to which the criminal and civil proceedings overlap and that there
is significant overlap in this case.11 Therefore, according to Defendant, it will be forced to either
waive its Fifth Amendment rights in the criminal action or essentially forfeit the civil action
“through the adverse inference that will be drawn from its invocation of the privilege.”12
Defendant argues that the second factor, the status of the criminal case, also weighs in favor
of staying the case, because Defendant has been indicted.13 According to Defendant, a stay is more
Rec. Doc. 19.
Rec. Doc. 20.
Rec. Doc. 24.
Rec. Doc. 19-1 at 1.
Id. at 3 (citing Wehling v. CBS, 698 F.2d 1084, 1089 (5th Cir. 1979).
Id. (citing Javier H. v. Garcia-Botello, 218 F.R.D. 72, 74 (W.D.N.Y. 2003); Waste Mgmt. of Louisiana,
LLC v. River Birch, Inc., 2012 WL 520660 (E.D. La. 2012)).
Id. at 3–4.
Id. at 4.
appropriate when a defendant has been indicted, because the risk of self-incrimination is
heightened.14 Defendant next contends that the third factor, prejudice to Plaintiff, does not weigh
significantly against a stay, because the only prejudice at this point would be delay of resolution
of her claim.15 According to Defendant, the Court could ameliorate any prejudice by revisiting the
stay and lifting it should the passage of time become too problematic.16 Defendant argues that the
fourth factor, prejudice to the defendant, weighs in favor of a stay, because civil discovery would
place Defendant in the position of choosing between its Fifth Amendment rights and defending
against Plaintiff’s claim.17
Finally, Defendant argues that the fifth factor, the interest of the court, and the sixth factor,
the public interest, weigh in favor of a stay.18 Defendant asserts that this civil case is in its nascent
stages and that moving forward while the criminal case is pending could result in difficult
discovery and the need for court intervention.19 Moreover, although there is some public interest
in every civil action, Defendant argues, there is greater public interest in the criminal proceeding.20
Defendant argues that because all of the factors to be considered weigh in favor of a stay or are at
worst neutral, the Court should stay this matter pending the outcome of the criminal proceeding.21
Id. at 4–5.
Id. at 5.
Id. at 6.
Plaintiff’s Arguments in Opposition to the Motion to Stay
In opposition, Plaintiff argues that the constitution does not require a stay of civil
proceedings pending the outcome of criminal proceedings.22 Plaintiff represents that the Fifth
Circuit has held that the simultaneous prosecution of civil and criminal actions is generally
unobjectionable.23 Plaintiff contends that the United States Supreme Court has held that unlike
private individuals, corporations have no privilege against self-incrimination.24 Plaintiff further
argues that there is no need for a stay based on the factors to be considered when determining
whether to stay civil proceedings in the face of a parallel criminal proceeding.25
Regarding the first factor, overlap between the two proceedings, Plaintiff asserts that the
parallel criminal proceeding involves indictments of Defendant, as well as Defendant’s
employees.26 Plaintiff argues that she has only brought claims against Defendant, not against
Defendant’s employees.27 Moreover, Plaintiff asserts that the rights of the employees who have
been indicted will not be infringed upon and that there are other officers who have not been
indicted who will be available to testify in the civil matter.28
Rec. Doc. 20 at 2.
Id. at 3 (citing SEC v. First Financial Grp., 659 F.2d 660, 668 (5th Cir. 1981)).
Id. (citing Wilson v. United States, 221 U.S. 221 361, 384 (1911)).
Id. at 4.
Id. at 5.
Next, Plaintiff argues that she has already suffered undue delay in the litigation of this
action.29 She asserts that Defendant has yet to file a response to Plaintiff’s Complaint and that a
stay would only continue to cause undue delay.30 Plaintiff further argues that the fact that
Defendant was indicted on June 8, 2016, is irrelevant, because as a corporation, it does not share
the same Fifth Amendment protection against self-incrimination that an individual or officer
does.31 Regarding the third factor, Plaintiff asserts that she will face prejudice if the action is
delayed, because Defendant may expend a great deal of money defending the criminal prosecution
and might face a significant fine, which will decrease Plaintiff’s likelihood of recovery.32 Plaintiff
asserts that Defendant filed this motion as a means of delaying a speedy resolution of the matter
and that Plaintiff “should not have to suffer because of Defendant’s criminal activity.”33
Plaintiff next argues that the fourth factor, the burden on the Defendant, is irrelevant
because a defendant corporation cannot assert the Fifth Amendment privilege.34 Plaintiff asserts
that there are several owners/managers of Defendant who have not been indicted and are available
to testify and produce papers.35 Finally, Plaintiff argues that the final factors pertaining to the
interests of the court and the public weigh against granting a stay in this matter.36 According to
Plaintiff, the argument that denial of a stay will burden the Court with claims of privilege in
Id. at 6 (citing Hale v. Hankel, 201 U.S. 43 (1906)).
Id. at 9.
Id. at 9–10.
Id. at 10.
response to discovery requests fails because a defendant corporation is not able to assert the Fifth
Amendment privilege.37 Moreover, Plaintiff asserts that judgment against Defendant will act as a
deterrent to future violations.38 Plaintiff further argues that granting a stay would go against the
public’s interest in the swift administration of justice.39 Plaintiff avers that based on all of the
factors, the Court should deny Defendant’s request for a stay.40
Defendant’s Reply in Further Support of the Motion to Stay
In its reply, Defendant acknowledges that a company does not have a privilege against self-
incrimination.41 However, Defendant argues that the conflict between a defendant’s ability to
exercise the right against self-incrimination and the right to defend against a civil action is only
one of the factors to be considered when determining whether a stay is appropriate.42 According
to Defendant, it is a small family owned company, and all of the individuals who could possibly
speak on behalf of the company are themselves potentially subject to criminal indictment.43
Moreover, Defendant asserts that the State of Louisiana has seized thousands of documents and
that there is no guarantee that it will be able to provide discovery responses as a result.44 Thus,
Defendant argues that at this juncture, its defense is critically compromised.45 Defendant also
Id. at 11.
Rec. Doc. 24 at 1.
Id. at 2.
acknowledges that the individual employees who have been indicted are not named in Plaintiff’s
suit but argues that those individuals’ assertion of the Fifth Amendment privilege will make it
impossible for Defendant to depose them.46 According to Defendant, the interests of these
employees are properly considered in this analysis.47
Next, Defendant argues that Plaintiff offers no authority for the proposition that her right
to recovery from Defendant should be considered equal or more important than the right of the
government to prosecute.48 Defendant argues that every plaintiff bears the risk that a recovery will
be uncollectible if the defendant does not have the resources to pay a judgment.49 Defendant avers
that it may be assisted in remaining economically viable by the cessation of activity in one of the
lawsuits and the spreading of costs over time.50 Defendant maintains that it terminated Plaintiff for
lawful reasons but that Plaintiff has “plead her claim in a way so as to try to make all the facts
underlying the criminal proceeding, and all the indicted individuals, part and parcel of this
lawsuit.”51 Defendant argues that it will create “incredible prejudice” if and when no individual is
willing to testify.52 Defendant asserts that it would be open to the Court reconsidering this issue
periodically to allow the Court to consider developments in the criminal proceedings that could
impact the continuation of a stay.53
Id. (citing White v. Mapco Gas Prods., Inc., 116 F.R.D. 498, 503 (E.D. Ark. 1987)).
Id. at 3.
III. Law and Analysis
There is no question 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,”54
and that this authority includes the district court’s wide discretion to grant a stay in a pending
matter.55 When “the interests of justice seem to require such action,” a court may exercise its
discretion to stay civil proceedings, postpone discovery, or impose protective orders and
conditions.56 Although it is not required to do so, a district court “may stay a civil proceeding
during the pendency of a parallel criminal proceeding,”57 or “until the criminal case or the
likelihood of a criminal case is ended.”58 Therefore, although “[t]he simultaneous prosecution of
civil and criminal actions is generally unobjectionable,”59 a stay of a pending civil action may be
appropriate “when there is a real and appreciable risk of self-incrimination.”60
Whether to stay a civil action pending resolution of a related criminal proceeding is a matter
left to the court’s discretion,61 and the Fifth Circuit has determined that such a stay may be
warranted where “special circumstances” exist such that a party would suffer substantial and
Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).
In re Ramu Corp., 903 F.2d 312, 318 (5th Cir. 1990).
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).
S.E.C. v. First Fin. Grp. of Tex., Inc., 659 F.2d 660, 668 (5th Cir. 1981).
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))).
First Fin. Grp., 659 F.2d at 667.
Kordel, 391 U.S. at 8–9.
Id. at 12 n.27.
irreparable prejudice otherwise.62 The “mere possibility of prejudice” to the criminal defendant
arising from discovery in the civil case does not necessarily warrant a stay.63 The burden to show
that a stay is warranted rests on the movant,64 and in determining whether a civil action should be
stayed due to a criminal matter, courts within the Fifth Circuit have looked to six factors.65 These
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.66
The Court will address each of these factors in turn to determine whether a stay is
appropriate in this case.
First Fin. Grp., 659 F.2d at 668; see also United States v. Little Al, 712 F.2d 133, 136 (5th Cir. 1983).
In re Ramu Corp., 903 F.2d at 320.
Ruiz v. Estelle, 666 F.2d 854, 856 (5th Cir. 1982); Drummond v. Fulton Cty. Dep’t of Family &
Children’s Servs., 532 F.2d 1001, 1002 (5th Cir. 1976).
See Tajonera v. Black Elk Energy Offshore Operations, LLC, No. 13-366, 2015 WL 893447, at *9 (E.D.
La. Mar. 2, 2015) (Brown, J.) (citing 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)).
Id. (internal citation omitted).
Extent of Overlap between Civil and Criminal Cases
Where there exists overlap between the civil and criminal proceedings, courts often feel
compelled to grant a stay.67 Indeed, some 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.”68 Overlap between the civil and criminal proceedings is an
important factor specifically because such overlap increases the risk of a defendant’s selfincrimination in civil proceedings.69
In her civil action,70 Plaintiff alleges that she was wrongfully terminated in retaliation for
reporting Defendant’s alleged state and federal Medicaid false billing in violation of 31 U.S.C.
§ 3730 and Louisiana whistleblower protection laws.71 In the criminal proceeding, Defendant has
been indicted with two counts of conspiracy to commit theft by fraud and eleven counts of theft
Plaintiff brings claims under both federal and state whistleblower statutes, each of which
has distinct requirements.73 To prevail on her claim under 31 U.S.C. § 3730(h), Plaintiff does not
have to prove an actual violation of the law and must simply show (1) that she engaged in protected
activity, (2) that her employer knew about the protected activity, and (3) that she was retaliated
Id. (internal citation omitted).
Id. (quoting Dominguez v. Hartford Fin. Servs. Grp., 530 F.Supp.2d 902, 906–07 (S.D. Tex. 2008)).
Id. (internal citation omitted).
See Rec. Doc. 1.
See La. Rev. Stat. § 46: 440.3; La. Rev. Stat. § 23:967.
See Rec. Doc. 19-2 at 1.
See Rec. Doc. 1 at 1, 13.
against because of her protected activity.74 However, under Louisiana Revised Statute § 23:967,
which provides protection from reprisal against an employee who discloses that the employer is in
violation of the law, a plaintiff “must prove an actual violation of state law, not just a good faith
belief that the law was broken.”75 Similarly, under Louisiana Revised Statute § 46:440.3, which
provides whistleblower protection and a cause of action for employees who engage in activities to
expose fraud and abuse in medical assistance programs, a plaintiff is not entitled to recovery if the
court finds that the plaintiff instituted an action that was “frivolous, vexatious, or harassing.”76
Thus, while Plaintiff’s claim under federal law does not hinge on the veracity of Plaintiff’s
allegations of Defendant’s illegal activity, Plaintiff’s state law claims do.
As Defendant recognizes, the civil and criminal actions are distinct, because “one focuses
on whether fraud occurred while the other focuses on whether Plaintiff was terminated for
reporting that fraud.”77 Despite this significant distinction, there is still some overlap between the
two actions, because in order to prevail on one of her claims under state law, it will be necessary
for Plaintiff to establish an actual violation of the law by Defendant. Therefore, the Court finds
that there is some overlap between the two actions and this factor weighs in favor of granting a
stay. However, this factor alone is not dispositive of the issue.
See U.S. ex rel. Bias v. Tangipahoa School Bd., 816 F.3d 315, 323 (5th Cir. 2016) (“[A] plaintiff alleging
injury under Section 3730(h)(1) must show (1) that he engaged in protected activity, (2) his employer . . . knew
about the protected activity, and (3) he was retaliated against because of his protected activity.”) (internal citation
Ricdale v. Evonik Stockhausen, LLC, 16-178 (La. App. 5 Cir. 9/22/16), 202 So. 3d 548, 552, writ denied,
2016-1923 (La. 12/16/16) (citing Ross v. Oceans Behavioral Hosp. of Greater New Orleans,14-368 (La. App. 5 Cir.
11/25/14), 165 So. 3d 176, 180, writ denied, Ross v. Oceans Behavioral Hosp. of Greater New Orleans, 15-0005
(La. 3/27/15), 161 So. 3d 648).
La. Rev. Stat. § 440.3(D).
Rec. Doc. 19-1.
Status of Criminal Proceedings
Generally, a stay of a civil case is most appropriate when a party to the civil action has
already been indicted for the same conduct.78 Here, the government has indicted Defendant on two
counts of conspiracy to commit theft by fraud and eleven counts of theft by fraud.79 Plaintiff alleges
that she was wrongfully terminated in retaliation for reporting Defendant’s state and federal
Medical false billing.80 Therefore, Defendant has not been indicted for the same conduct at issue
in Plaintiff’s action, i.e. unlawful termination in retaliation for Plaintiff’s reporting of illegal
activity. Thus, this factor weighs against the grant of a stay.
Defendant requests a stay of this matter pending the outcome of the parallel criminal
proceeding.81 Plaintiff contends that she would be prejudiced by an indeterminate delay because
she is entitled to a speedy resolution of this matter and her chances of recovery will decrease if she
is forced to wait until the criminal prosecution has been resolved before pursuing her civil action.82
The Court finds that Defendant’s requested stay presents a high risk of prejudice to Plaintiff, who
has a strong interest in resolution of this matter. At this point, it is unclear how long the criminal
proceeding may last and when it may be resolved. A complete stay of this matter would not only
delay Plaintiff’s case indefinitely but would also prevent her from requesting discovery from
See Tajonera, 2015 WL 893447, at *9 (internal citation omitted).
See Rec. Doc. 19-2 at 1.
See Rec. Doc. 1 at 3.
See Rec. Doc. 19-1 at 6.
See Rec. Doc. 20 at 5.
Defendant and its employees—even those who have not been indicted. Therefore, the Court finds
that this factor weighs against the grant of a stay.
Plaintiff argues that Defendant does not have a strong interest in the grant of a stay, because
as a corporation, it does not have a Fifth Amendment right against self-incrimination.83 Defendant
agrees that, as a corporation, it does not have a right against self-incrimination.84 It nevertheless
argues that it will be prejudiced by the simultaneous defense of the civil and criminal proceedings,
because the individuals who could speak on behalf of the company are themselves potentially
subject to criminal indictment and many of the company’s records have been seized by law
enforcement.85 Defendant also argues that it will be unable to present an adequate defense, because
the three employees who were indicted along with Defendant, though not named as defendants in
Plaintiff’s civil suit, will nevertheless assert their Fifth Amendment privilege and prevent
Defendant from deposing them.86
As an initial matter, the Court notes, and the parties agree, that Defendant, as a corporation,
does not have a Fifth Amendment right against self-incrimination.87 The Court further notes that
Rec. Doc. 20 at 3.
Rec. Doc. 24 at 1.
Id. at 2.
See Braswell v. U.S., 487 U.S. 99, 105 (1988) (citing Hale v. Henkel, 201 U.S. 43 (1906) (“Hale settled
that a corporation has no Fifth Amendment privilege . . . .”)). See also Wilson v. U.S., 221 U.S. 361, 384 (1911)
(“While an individual may lawfully refuse to answer incriminating questions . . . it does not follow that a corporation,
vested with special privileges and franchises, may refuse to show its hand when charged with an abuse of such
privileges.”); U.S. v. Le Beouf Bros. Towing Co., Inc., 537 F.2d 149, 152 (5th Cir. 1976) (“The fifth amendment
privilege against self-incrimination does not extend to corporations.”).
the manager who is alleged to have terminated Plaintiff has not been indicted.88 While it is possible
that some of the individual witnesses who are expected to be called in the civil matter will choose
to assert their Fifth Amendment right against self-incrimination, it is far from certain that they will
do so or that Defendant will be unable to fulfill its civil discovery obligations or mount a defense
to the civil action without the testimony of those witnesses.89 As Plaintiff points out, and Defendant
does not dispute, there are several supervisory employees of Defendant who have not been
indicted, including the manager who terminated Plaintiff.90 Defendant has not demonstrated that
those employees are likely to be indicted or even that they are under a criminal investigation.
Likewise, Defendant has not shown how the unavailability of the records that it asserts were seized
by law enforcement is likely to create a real risk of prejudice against it.
Although Defendant speculates that it will be hindered in its ability to present its defense
against Plaintiff’s civil action due to the ongoing criminal proceeding against it, it has not
demonstrated a real risk of prejudice to its defense, much less “a real and appreciable risk of selfincrimination.”91 Moreover, the “mere possibility of prejudice” to the criminal defendant arising
from discovery in the civil case does not necessarily warrant a stay.92 Thus, the Court finds that
this factor weighs against the grant of a stay.
See Rec. Doc. 1 at 9.
Compare Waste Mgmt. of Louisiana, LLC v. River Birch, Inc., No. 11-2405, 2012 WL 520660, at *4
(E.D. La. Feb. 15, 2012) (Brown, J.) (finding prejudice to entity defendant where it would be left with no way to
defend itself without the testimony of its principals).
See Rec. Doc. 20 at 9.
See Tajonera, 2015 WL 893447, at *9 (E.D. La. Mar. 2, 2015) (“[A]lthough the simultaneous
prosecution of civil and criminal actions is generally unobjectionable, a stay of a pending civil action may be
appropriate when there is a real and appreciable risk of self-incrimination.”) (internal citations and quotation marks
In re Ramu Corp., 903 F.2d at 320.
The Court’s Interest
The Court has interests in judicial economy and expediency.93 “Further, before granting a
stay pending the resolution of another case, the court must carefully consider the time reasonably
expected for resolution of the ‘other case,’ in light of the principle that ‘stay orders will be reversed
when they are found to be immoderate or of an indefinite duration.’”94
The Court has an interest in moving this case forward in an efficient manner. It is possible
that the criminal proceeding could last for an extended period of time, thus delaying the efficient
administration of the Court’s docket. Moreover, because Defendant has only speculated that
individual potential witnesses may assert their Fifth Amendment privilege against selfincrimination, it is possible that a stay would result in a needless delay of discovery that could
have been conducted without issue. Thus, the Court finds that its interests are best served by
proceeding with the instant action and this factor weighs against a stay.
The Public Interest
Although the public interest in law enforcement sometimes weighs in favor of prioritizing
criminal proceedings over civil matters,95 the public also has an interest in the prompt resolution
of civil cases. Here, it does not appear that the public interest would be disserved by moving
forward with the civil case, and Defendant has not offered any specific reason as to why the public
has an interest in staying the civil case pending the outcome of the criminal proceeding. Thus, this
factor also weighs against a stay.
See Tajonera, 2015 WL 893447, at *10 (internal citation and quotation marks omitted).
Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983) (quoting McKnight v. Blanchard,
607 F.2d 477, 479 (5th Cir. 1982) (vacating an indefinite and protracted stay where the court had not weighed
competing interests in ordering the stay)).
See Campbell v. Eastland, 307 F.2d 478, 487 (5th Cir. 1962).
For the reasons stated above, the Court finds that only one of the six factors considered on
a motion to stay weighs in favor of granting a stay. On a motion to stay a proceeding, the moving
party bears the burden to show that a stay is warranted.96 Here, Defendant has failed to meet its
burden to show that “special circumstances” exist such that it would suffer substantial and
irreparable prejudice if a stay is not granted.97
IT IS HEREBY ORDERED that the Defendant’s Motion to Stay98 is DENIED.
NEW ORLEANS, LOUISIANA, this 6th day of March, 2017.
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE
See Ruiz v. Estelle, 666 F.2d 854, 856 (5th Cir. 1982); Drummond v. Fulton Cty. Dep’t of Family &
Children’s Servs., 532 F.2d 1001, 1002 (5th Cir. 1976).
SEC v. First Fin. Grp. of Tex., Inc., 659 F.2d 660, 668 (5th Cir. 1981).
Rec. Doc. 19.
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