UNITED STATES OF AMERICA v. ALL ARTICLES OF OTHER-SONIC GENERIC ULTRASOUND TRANSMISSION GEL, WHETHER LABELED OR UNLABELED, IN ANY SIZE OR TYPE OF CONTAINER, THAT ARE IDENTIFIED BY LOT NUMBER, OR BY OTHER MEANS, AS HAVING BEEN MA

Filing 25

OPINION/ORDER granting 21 Motion to Stay Discovery. Signed by Magistrate Judge Steven C. Mannion on 3/25/13. (DD, )

[D.E. 21]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
NEWARK VICINAGE
UNITED STATES OF AMERICA,
Plaintiff,
Civil No. 12-2264-ES-SCM
v.
OPINION AND ORDER
ALL ARTICLES OF OTHER-SONIC
GNERIC ULTRASOUND TRANSMISSION
ON MOTION TO STAY DISCOVERY
GEL, WHETHER LABELED OR
UNLABELED, IN ANY SIZE OR TYPE OF
CONTAINER, THAT ARE IDENTIFIED
BY LOT NUMBER, OR BY OTHER MEANS,
AS HAVING BEEN MANUFACTURED BY
PHARMACEUTICAL INNOVATIONS,
INC., NEWARK, NEW JERSEY,
BETWEEN JUNE 2011 AND DECEMBER
2011, AND ARE LOCATED ANYWHERE ON
THE PREMISES OF PHARMACEUTICAL
INNOVATIONS, INC.,
FRELINGHUYSEN AVENUE, NEWARK,
NEW JERSEY 07114-2122,
Defendant.

I.

INTRODUCTION
This matter comes before the Court on the motion of the United

States to stay discovery for 180 days [D.E. 21].

Claimant

Pharmaceutical Innovations, Inc., opposes the motion.

For the

reasons set forth below, the Court will grant the United States’
motion.
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II.

BACKGROUND

This case arises from a February 2012 report from the U.S. Food
and Drug Administration (“FDA”) alleging that patients in a Michigan
hospital were infected by a bacterial pathogen from an ultrasound
gel manufactured by Claimant Pharmaceutical Innovations
(“Claimant”).

(See D.E. 22, Claimant’s Brief in Opposition, at *7).

Upon learning of the Michigan hospital incident, Claimant allegedly
requested information from the FDA relating to the allegation that
it had distributed contaminated ultrasound gel.

Id. at *8.

The FDA

allegedly denied most of Claimant’s requests for information, but
did supply Claimant with a limited number of documents, including
a Health Risk Assessment indicating that the FDA believed that there
had been a similar incident in 2006 involving ultrasound gel that
had also originated from Claimant Pharmaceutical Innovations.

Id.

On April 16, 2012, the United States filed a Verified Complaint
for Forfeiture In Rem under the Federal Food, Drug, and Cosmetic Act
(“FDCA”), 21 U.S.C. §§ 301-399d, alleging that devices manufactured
by Pharmaceutical Innovations identified as Other-Sonic Generic
Ultrasound Transmission Gel (“Other-Sonic Gel” or “Claimant’s in
rem”) were contaminated with bacterial pathogens and thus subject
to seizure, forfeiture, and condemnation.

(See D.E. 21-1,

Plaintiff’s Brief in Support of Motion, at *5) (citing D.E. 1, Compl.
¶¶ 7-8).

Pursuant to a Warrant for Arrest In Rem, the United States
2

Marshalls for the District of New Jersey seized Claimant’s in rem
on April 17, 2012.

Id.

Claimant filed a claim to its in rem on May 17, 2012 [D.E. 6],
and an Answer on June 7, 2012 [D.E. 11].

Claimant then served the

government with requests for the production of thirteen categories
of documents, including: 1) documents relating to the allegation that
the seized products are contaminated with bacterial pathogens; 2)
documents relating to FDA administrative inspections in 2012 in which
the FDA gathered evidence underlying this seizure case; 3) documents
relating to the Michigan hospital incident that led to this seizure
case; 4) documents relating to Pharmaceutical Innovations’
withdrawal of products from the market following the report by the
FDA of the Michigan hospital incident; 5) documents relating to the
Health Risk Assessment provided by the FDA to Pharmaceutical
Innovations as support for its concerns about the Michigan hospital
incident; 6) documents relating to the New Jersey state embargo that
was the prelude to the seizure action; and other documents relating
to this seizure case and Pharmaceutical Innovations.
Claimant’s Brief in Opposition, at *9).

(See D.E. 22,

Before its responses were

due, the United States filed the instant motion to stay this case
for 180 days in light of a pending related criminal investigation.
(See D.E. 21-1, Plaintiff’s Brief in Support).

Specifically, the

United States Attorney’s Office and the FDA Office of Criminal
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Investigations have allegedly been investigating whether
Pharmaceutical Innovations and its officers and employees committed
crimes in selling devices, such as Other-Sonic Gel, contaminated with
bacterial pathogens.

(See D.E. 21-1, Plaintiff’s Brief in Support

of Motion, at *7).

The ongoing criminal investigation allegedly

seeks to determine the extent to which the devices are contaminated,
and the knowledge of Claimant and its officers and employees
regarding the contamination.
III.

Id.

DISCUSSION

The United States Supreme Court acknowledged a district court’s
inherent power to stay a proceeding in Landis v. North American Co.,
299 U.S. 248, 254-55 (1936).

“[T]he power to stay proceedings is

incidental to the power inherent in every court to control the
disposition of the cases on its docket with economy of time and effort
for itself, for counsel, and for litigants.

How this can best be

done calls for the exercise of judgment, which must weigh competing
interests and maintain an even balance.”

Id.

While courts are not

required to stay civil proceedings where there is a pending, related
criminal action, a stay may be warranted in some circumstances.
Walsh Securities, Inc. v. Cristo Property Management, Ltd., 7
F.Supp.2d 523, 526 (D.N.J. 1998).

The scope of a stay may encompass

all of the proceedings in a civil action, or may be limited to
particular parts of them, based on the sound discretion of the court.
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See United States v. Mellon Bank, 545 F.2d 869, 872-73 (3d Cir. 1976)
(finding that it was within the power of the district court to stay
civil actions completely pending the resolution of related criminal
proceedings).
A stay of a civil case is an “extraordinary remedy.”
Markowitz, 829 F.2d 166, 174 n. 17 (D.C. Cir. 1987).

Weil v.

In determining

whether to grant a stay, courts consider the following factors:

(1)

the extent to which the issues in the criminal and civil cases
overlap; (2) the status of the case, including whether the defendants
have been indicted; (3) the plaintiff’s interest in proceeding
expeditiously weighed against the prejudice to plaintiff caused by
a delay; (4) the private interests of and burdens of the defendants;
(5) the interest of the court; and (6) the public interest.

Walsh

Securities, 7 F.Supp.2d at 527 (citing Trustees of Plumbers and
Pipefitters Nat’l Pension Fund v. Transworld Mechanical, Inc., 886
F.Supp. 1134, 1139 (S.D.N.Y. 1995).

The Court will address each of

the relevant factors in turn.
1. The Extent to Which the Issues in the Criminal & Civil Cases
Overlap
The similarity of the issues presented in a criminal and civil
case is the most important factor in determining whether or not to
grant a stay of the civil case.
527.

Walsh Securities, 7 F.Supp.2d at

Here, it is evident that the civil and criminal cases share
5

common issues arising from the same set of facts and occurrences.
The civil case and the government’s criminal investigation both arise
from the sale of allegedly contaminated medical devices, including
the Claimant’s in rem.

Therefore, it stands to reason that the same

conduct and products will be relevant to both cases, and that the
civil and criminal cases are likely to share common witnesses and
documents.

Accordingly, the Court finds that this factor weighs in

favor of a stay.
2. Stage of Parallel Criminal Proceeding
The strongest case for a stay of discovery in a civil case occurs
during a criminal prosecution after an indictment is returned, as
it is then that the potential for self-incrimination is greatest.
See Walsh Securities, 7 F.Supp.2d at 527 (citing Milton Pollack,
Parallel Civil and Criminal Proceedings, 129 F.R.D. 201, 203 (1989)).
However, it is still possible to obtain a stay, even though an
indictment or information has not yet been returned, if the
government is conducting an active parallel investigation.

Id.

(granting stay where search warrants had been executed and subpoenas
issued); Kashi v. Gratos, 790 F.2d 1050, 1057 (2d Cir. 1986) (stay
of civil proceedings granted pending U.S. Attorney’s decision
whether to indict).
Here, no indictment has issued, but the government has indicated
that it is actively conducting a parallel criminal investigation.
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(See D.E. 21-1, Plaintiff’s Brief in Support of Motion, at *7).
While Claimant has represented that its document requests are
narrowly tailored, the Court notes that the government contends that
those same document requests encompass evidence that is critical to
the ongoing investigation.
Reply, at *7).

(See D.E. 23, Plaintiff’s Brief in

In light of the above, the Court finds that this

factor does not weigh against staying the civil proceedings.
3. Prejudice to Non-Moving Party & Burden to Moving Party
Pharmaceutical Innovations asserts that it will be prejudiced
by a delay of 180 days because “the government has already obtained
its sought-after remedy” in this forfeiture action.
Claimant’s Brief in Opposition, at *15).

(See D.E. 22,

However, the Court notes

that a delay of 180 days is not uncommon in civil cases.

Furthermore,

the Court is not persuaded that only permitting the discovery of
documents to proceed while staying all other discovery, as suggested
by Claimant, would significantly advance the civil case.

As such,

the Court finds that a 180 day stay of civil discovery would not
ultimately impede Claimant’s litigation of this civil matter, but
merely delay it.
In contrast, denying a stay of the proceedings would potentially
burden the government’s investigation in the ongoing criminal
investigation.

Other courts have recognized that where, as here,

there is significant similarity between parallel civil and criminal
7

proceedings, the target of a criminal investigation “may exploit
civil discovery for the advancement of his criminal case.”
v. Mellon Bank, N.A., 545 F.2d 869, 873 (3d Cir. 1976).

See U.S.

Accordingly,

the Court is mindful that, in light of the inherent differences
between civil and criminal discovery, cases such as this present the
potential hazard of criminal discovery limitations being
circumvented via civil discovery.

See Campbell v. Eastland, 307

F.2d 478, 487 (5th Cir. 1962) (noting that judicial discretion should
be exercised in harmonizing conflicting civil and criminal rules,
and “preventing rules and policies applicable to one suit from doing
violence to those pertaining to another”).
Here, permitting Claimant to take its requested discovery could
potentially compromise the government’s ongoing criminal
investigation.

In light of the fact that the criminal investigation

is focused on Claimant’s contaminated devices, the requested
documents are likely to encompass materials gathered in the course
of the criminal investigation.

Thus, Claimant would ostensibly be

provided with an opportunity to evaluate evidence relevant to the
ongoing criminal investigation that it would not otherwise have
access to.

Therefore, the Court finds the burden that not granting

the government’s motion to stay would cause outweighs any potential
prejudice to Claimant that may result from a 180 day stay of the civil
proceedings.
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4. Interests of the Court
The Court has an interest in ensuring that its caseload is
managed efficiently.

Walsh Securities, 7 F. Supp. 2d at 528.

Here,

the government is not requesting an indefinite stay of the
proceedings, but is instead only requesting a stay of 180 days.
Additionally, while a stay will delay civil proceedings for a period
of time, the advancement of criminal proceedings may narrow issues
pertinent to the instant matter and ultimately streamline the
proceedings.
1967).

See Texaco Inc. v. Borda, 383 F.2d 607, 609 (3d Cir.

Considering that the United States does not request an

indefinite stay of the proceedings, the Court finds that this factor
does not weigh against granting the government’s motion.
5. Public Interest
Finally, the Court must consider the public interest.

The

public interest in a criminal case is entitled to precedence over
a civil litigant, and substantial weight should be given to the public
interest in balancing the policy against the right of a civil litigant
to a reasonably prompt determination of his civil claims or
liabilities.

In re Ivan F. Boesky Sec. Litig., 128 F.R.D. 47, at

49 (S.D.N.Y. 1989) (citing Campbell v. Eastman, 307 F.2d at 487).
The United States asserts that the public has an interest in the
government’s unimpeded investigation into potential criminal
activities of Claimant, its officers and employees, and others
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regarding the seized devices.
Support of Motion, at *6).

(See D.E. 23, Plaintiff’s Reply in

The United States further argues that,

“ascertaining […] knowledge regarding the contaminated articles and
the extent of contamination is critically important to the public,
which cannot determine that information itself.”
Court agrees.

Id. at *7.

This

A six month postponement of civil discovery will have

no effect on the public, aside from potentially benefiting the public
by allowing the government to pursue its criminal investigation
unimpeded by responding to potentially compromising civil discovery
requests.
IV.

CONCLUSION

In light of all of the above, the United States’ motion to stay
civil discovery for 180 days is hereby granted.
IT IS on this 25th day of March, 2013,
ORDERED that the United States’ motion for a stay of discovery
for 180 days is granted; and it is
FURTHER ORDERED that discovery in this matter is stayed for a
period of 180 days from the date of this Order.

s/ Steven C. Mannion
HONORABLE STEVEN C. MANNION
UNITED STATES MAGISTRATE JUDGE
3/26/2013 8:40:21 PM

Date:

March 26, 2013
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