Blanda v. Martin & Seibert, L.C. et al
Filing
16
MEMORANDUM OPINION AND ORDER granting the 8 MOTION to stay civil proceedings as to the individual defendants, Walter Jones, III, Geoffrey Haddad, Michael Stevens, E. Kay Fuller, Susan Snowden, and Nikki Moore Gress; plaintiff may not acquire evi dence from the individual defendants involuntarily during the pendency of the stay, unless otherwise ordered by the court; and the motion to stay civil proceedings is denied with respect to defendant Martin & Seibert, L.C. Signed by Judge John T. Copenhaver, Jr. on 1/5/2017. (cc: counsel of record) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
CHRISTINE BLANDA,
Plaintiff,
v.
Civil Action No. 2:16-0957
MARTIN & SEIBERT, L.C.,
and WALTER M JONES, III, ESQ.,
and GEOFFREY A. HADDAD, ESQ.,
and MICHAEL M. STEVENS, ESQ.,
and E. KAY FULLER, ESQ., and
SUSAN R. SNOWDEN, ESQ., and
NIKKI MOORE GRESS, individually,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is a motion to stay civil proceedings pending
conclusion of related criminal proceedings, filed by defendants
on February 24, 2016.
I.
Background
The following facts are taken from plaintiff’s
complaint.
Plaintiff Christine Blanda worked as an accounts
receivable clerk at the defendants’ law firm, Martin & Siebert,
L.C. (“Martin & Seibert”), in Martinsburg, West Virginia, from
2005 until January 26, 2015.
Pl. Compl. ¶ 4.
She claims that,
on January 26, 2015, defendants fired her because she complained
to her supervisor about the firm’s “excessive and unjustified
billings to publicly traded companies,” and because she
1
“cooperat[ed] with other professionals to bring to the attention
of the FBI the mail and wire fraud being committed by Defendant
in the course of its billing practices.”
Id. at ¶ 5.
She
helped “non-law-enforcement professionals” in their
investigation of the firm’s billing practices during her
employment there.
Id. at ¶ 8.
On November 17, 2015, several
months after she had been fired, the FBI executed a search
warrant “to determine whether and the extent to which the
Defendant had violated the mail and wire fraud statutes by
billing publicly traded companies for hours that were not
actually worked.”
Id. at ¶ 7.
Plaintiff also claims that some
of the defendants have threatened her, along with other
whistleblowers, by telling third parties of a plan to “mount a
campaign to destroy them.”
Id. at ¶ 9.
Plaintiff’s claims arise from several federal statutes
and state tort law.
In particular, she sued under 15 U.S.C. §
78u-6(h)(1)(A)i-iii, which protects whistleblowers from being
fired for giving lawful assistance to the Securities and
Exchange Commission;1 under 18 U.S.C. § 1513(e), which prohibits
1
(h) Protection of whistleblowers
(1) Prohibition against retaliation
(A) In general
No employer may discharge, demote, suspend, threaten,
harass, directly or indirectly, or in any other manner
discriminate against, a whistleblower in the terms and
2
any harmful retaliation against persons for “providing to a law
enforcement officer any truthful information relating to the
commission or possible commission of any Federal offense”;2 and
under 18 U.S.C. § 1514A(a), which prohibits public companies or
their contractors and agents from retaliating against an
employee who provides information or assistance to an
investigation when the employee reasonably believes there has
been a violation of any of several enumerated laws, including
the Wire Fraud statute.3
She also sues for a violation of the
conditions of employment because of any lawful act
done by the whistleblower—
(i) in providing information to the Commission in
accordance with this section;
(ii) in initiating, testifying in, or assisting
in any investigation or judicial or
administrative action of the Commission based
upon or related to such information; or
(iii) in making disclosures that are required or
protected under [various legal sources].
15 U.S.C. § 78u-6. The term “Commission” here refers to the
Securities and Exchange Commission. See 15 U.S.C. § 78c(a)(15).
2
“Whoever knowingly, with the intent to retaliate, takes any
action harmful to any person, including interference with the
lawful employment or livelihood of any person, for providing to
a law enforcement officer any truthful information relating to
the commission or possible commission of any Federal offense,
shall be fined under this title or imprisoned not more than 10
years, or both.” 18 U.S.C. § 1513(e).
3
“No company with a class of securities registered under section
12 of the Securities Exchange Act of 1934 . . . or any . . .
contractor, subcontractor, or agent of such company . . . may
discharge, demote, suspend, threaten, harass, or in any other
manner discriminate against an employee in the terms and
3
common-law prohibition on retaliatory discharge, citing Harless
v. First Nat’l Bank in Fairmont, 169 W. Va. 673, 289 S.E.2d 692
(1982).4
Defendants have moved to stay the case pending
conclusion of the related criminal proceedings.
In their
motion, defendants acknowledge that the FBI seized “electronic
conditions of employment because of any lawful act done by the
employee—
(1) to provide information, cause information to be
provided, or otherwise assist in an investigation regarding
any conduct which the employee reasonably believes
constitutes a violation of section 1341, 1343, 1344, or
1348, any rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to
fraud against shareholders, when the information or
assistance is provided to or the investigation is conducted
by—
(A) a Federal regulatory or law enforcement agency;
(B) any Member of Congress or any committee of
Congress; or
(C) a person
employee (or
employer who
discover, or
with supervisory authority over the
such other person working for the
has the authority to investigate,
terminate misconduct) . . . .”
18 U.S.C. § 1514A(a).
4
Plaintiff may have intended to rely on a different opinion from
the same action, Harless v. First Nat. Bank in Fairmont, 162 W.
Va. 116, 246 S.E.2d 270 (1978), which held that “The rule that
an employer has an absolute right to discharge an at will
employee must be tempered by the principle that where the
employer's motivation for the discharge is to contravene some
substantial public policy principle, then the employer may be
liable to the employee for damages occasioned by this
discharge.”
4
records” and “numerous documents” from their office on November
17, 2015, but they note that “the FBI and U.S. Attorney’s Office
have declined to provide Defendants with information regarding
the status or scope of the investigation.”
2.
Def. Mot. to Stay at
They go on to state that, “[t]o the best of Defendants’
knowledge, the investigation involves allegations of mail and
wire fraud in connection with their billing practices.”
Id.
Further, they allege that if a stay is not granted, the
individual defendants “would be faced with the impossible choice
of either asserting their Fifth Amendment privilege against
incrimination in this matter[,]” from which an adverse inference
may be drawn in this civil action, “or waiving that privilege
and risking criminal repercussions.”
Mot. to Stay at 2.
Def. Memo. in Supp. of
Plaintiff opposes the stay, arguing that it
would unduly prejudice her and, if her lawsuit is successful, an
indefinite stay would make it more difficult to recover from
defendants in the future.
Pl. Resp. to Mot. to Stay at 7-8.
On August 19, 2016, the court held a telephone
conference with the parties and requested that they engage in
discussions to determine whether they could agree on any
discovery matters.
The parties filed a joint report with the
court on September 7, 2016.
(ECF Doc. No. 14).
See Joint Report of the Parties
The court held a second telephone conference
5
with the parties on September 9, 2016, during which they
confirmed that they were unable to come to an agreement as to
any discovery matters.
II.
Legal Standard
“‘[T]he power to stay proceedings is incidental to the
power inherent in every court to control the disposition of the
causes on its docket with economy of time and effort for itself,
for counsel, and for litigants.’”
Maryland v. Universal
Elections, Inc., 729 F.3d 370, 379 (4th Cir. 2013) (quoting
Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)).
“The
determination by a district judge in granting or denying a
motion to stay proceedings calls for an exercise of judgment to
balance the various factors relevant to the expeditious and
comprehensive disposition of the causes of action on the court's
docket.”
United States v. Georgia Pac. Corp., 562 F.2d 294, 296
(4th Cir. 1977) (citing Landis, 299 U.S. at 254).
“‘Because of the frequency with which civil and
regulatory laws overlap with criminal laws, American
jurisprudence contemplates the possibility of simultaneous or
virtually simultaneous parallel proceedings and the Constitution
does not mandate the stay of civil proceedings in the face of
criminal proceedings.’”
Universal Elections, 729 F.3d at 370
6
(quoting Ashworth v. Albers Med., Inc., 229 F.R.D. 527, 530
(S.D.W.V. 2005)).
“Stays generally are not granted before an
indictment has issued.”
Id.
But “[i]t 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 criminal investigation.”
Walsh Sec. v. Cristo Prop.
Mgmt., 7 F. Supp. 2d 523, 527 (D.N.J. 1998) (citation and
internal quotation marks omitted).
Several district courts have
indeed granted stays even though no indictment has yet issued,
where the civil defendant is a target of the criminal
investigation or is about to be indicted.
See Walsh, 7 F. Supp.
2d 523 (granting a stay when search warrants and subpoenas had
been issued to several of the civil defendants, the civil
defendants were informed that they were targets of the
investigation, and the government had indicated to the court
that the investigation was continuing); SEC v. Healthsouth
Corp., 261 F. Supp. 2d 1298 (N.D. Ala. 2003) (granting a stay
when others involved in the criminal scheme had pled guilty, the
FBI had raided a defendant’s office, and “everyone assume[d]”
the civil defendants would be indicted “in the near future”);
Brumfield v. Shelton, 727 F. Supp. 282 (E.D. La. 1989) (granting
a stay when the civil defendant was a target of a grand jury
investigation).
7
Federal courts have applied a variety of tests to
decide whether to stay civil actions pending criminal
proceedings.
The Fourth Circuit has not explicitly endorsed any
particular test.
In Ashworth, this court relied on the Ninth Circuit’s
test articulated in Keating v. OTS that considered five factors
in determining whether to grant a stay:
(1) the interest of the plaintiffs in proceeding
expeditiously with [the] litigation or any particular
aspect of it, and the potential prejudice to
plaintiffs of a delay, (2) the burden which any
particular aspect of the proceedings may impose on
defendants; (3) the convenience of the court in the
management of its cases, and the efficient use of
judicial resources; (4) the interests of persons not
parties to the civil litigation; and (5) the interest
of the public in the pending civil and criminal
litigation.
Ashworth, 229 F.R.D. at 530 (citing Keating, 45 F.3d 322, 325
(9th Cir. 1995)).
The court in Ashworth considered, in addition
to these five factors, the “relatedness” of the criminal and
civil proceedings, asking whether they “involve substantially
similar issues.”
229 F.R.D. at 531.
guide the analysis in this matter.
8
These six factors will
III. Discussion
A. Application of the Relevant Factors
1. Relatedness
“As a preliminary matter, the requirement of the
existence of a nexus between the parallel proceedings sufficient
to show that such proceedings are related and involve
substantially similar issues is the threshold factor for a
stay.”
Ashworth, 229 F.R.D. at 531.
Without this nexus, “the
myriad of tangible concerns in favor of a stay, including the
protection of a defendant’s Fifth Amendment interest and the
deleterious effect of civil discovery on the prosecution or
defense, dissipates.”
Id.
Defendants argue that the civil and criminal
proceedings are sufficiently related and involve substantially
similar issues, warranting a stay.
to Stay at 4-5.
Def. Memo. in Supp. of Mot.
According to them, “[w]hether fraudulent
practices took place (or whether Plaintiff had a good-faith
basis to believe they did) and whether Plaintiff did, in fact
report those practices to the FBI go to the heart of her
retaliatory discharge claim.”
Id. at 5.
Further, they state
that plaintiff’s claim that defendants’ conduct amounts to
9
threatening a witness in an ongoing federal criminal
investigation “clearly relates directly to the government’s
criminal investigation.”
Id.
Plaintiff’s claims, as noted, are pursuant to 15
U.S.C. § 78u-6(h)(1)(A)i-iii, 18 U.S.C. § 1513(e), and 18 U.S.C.
§ 1514A(a) for “retaliatory discharge as an employee of an agent
and/or contractor of [a] publicly traded corporation.”
Compl. at 1.
Pl.
In addition, she alleges violation of the common-
law prohibition on retaliatory discharge.
Id. at 1-3.
Plaintiff also alleges that defendants threatened her, which she
states amounted to the threatening of a federal witness, in
violation of 18 U.S.C. § 1514(e) and 18 U.S.C. § 1503.5
Id. at
3.
As to the potential criminal charges against
defendants, plaintiff alleges in her complaint that she
participated in helping “non-law-enforcement professionals”
5
Although plaintiff cites to 18 U.S.C. §§ 1514(e) and 1503 for
the prohibition against tampering with a federal witness, there
is no section 1514(e), and while the prohibition against
tampering with a witness was once contained in section 1503, it
is now contained in section 1512(b)(1). In addition, under
section 1512(d), it is unlawful to “intentionally harass[]
another person and thereby hinder[], delay[], prevent[] or
dissuade[] any person from (1) attending or testifying in an
official proceeding.” 18 U.S.C. § 1512(d)(1).
10
investigate defendants’ excessive and unjustified billing
practices, which constituted mail or wire fraud.
Id. at 2.
Some of plaintiff’s causes of action may be unrelated,
or minimally related, to whether defendants committed mail or
wire fraud.
The claim under § 1514A(a), however, turns on
whether the employee has acted “to provide information, cause
information to be provided, or otherwise assist in an
investigation regarding any conduct which the employee
reasonably believes constitutes a violation of” various
statutes, including the Wire Fraud Act.
(emphasis added).
18 U.S.C. § 1514A
It is difficult to imagine how the litigants
will develop the case as to whether the employee “reasonably
believed” that the defendants were engaged in criminal activity
without confronting the core question of whether they were
engaged in the criminal activity proscribed by 1514A(a).
The
claim under § 1513(e) similarly turns on whether defendants took
“any action harmful to [plaintiff]” for plaintiff’s “providing
. . . [of] any truthful information relating to the commission
or possible commission of any Federal offense.”
1513(e) (emphasis added).
18 U.S.C. §
Proving a violation thereof will
require showing that the information plaintiff provided to the
government was truthful.
Much of the same testimony regarding
their actions, and the same documentary evidence, will be
11
required in dealing with those same issues.
The two proceedings
are plainly related.6
2. Prejudice to plaintiff of a delay
Plaintiff argues that she has a “very substantial
interest in expeditious litigation of her case.
If there is a
criminal indictment, the Defendant law firm could well go
bankrupt, and the individual Defendants could well go to jail.”
Pl. Resp. to Def. Mot. to Stay at 7.
Defendants call
plaintiff’s bankruptcy argument “a baseless speculation” and
state that plaintiff “is in no different a situation than any
Plaintiff cites United States v. Kordel, 397 U.S. 1 (1970), for
the proposition that “[i]f the civil proceeding involves alleged
violations of a different statute than does the criminal
proceeding, then it cannot be said that the proceedings will
vindicate the same public interest and a pre-indictment stay is
not warranted.” Pl. Resp. to Def. Mot. to Stay at 1-2.
However, the posture of Kordel was very different than that of
the present case, in that the government there concurrently
instituted both the civil and the criminal proceedings against
the defendants, who did not challenge the parallel proceedings
until after some of them had already answered questions in a
civil proceeding, that were then used against them at the
criminal trial. Unlike Kordel, Blanda, not the government
instituted this civil proceeding and the defendants have not
been convicted or even been indicted of any criminal charges.
And the Kordel opinion noted that the petitioners had moved for
a stay in the parallel civil case, but had expressly declined to
make any argument based on their Fifth Amendment rights. Id. at
1. As discussed more thoroughly below, defendants here have
raised the Fifth Amendment argument rather than waiving it.
6
12
other plaintiff in any other civil litigation matter.”
Reply Memo. at 6.
Def.
Defendants also argue that plaintiff will not
be prejudiced because she has a new job where her salary is
higher than it was at Martin & Seibert.
Id. at 5.
In support
of this, defendants have submitted the affidavit of Morgan
Boyer, a former employee of Martin & Seibert, which states that
plaintiff told her that since being fired by defendants,
plaintiff has a new job where she is making more money than she
did at Martin & Seibert.
See Exhibit 1 to Def. Reply Memo.
Because plaintiff has asked, as part of her relief,
that she be reinstated at work, she may be prejudiced by a
delay.
If plaintiff has in fact found a new job where she is
making more money than she did at Martin & Seibert, this
eliminates some of the prejudice in any delay in being
reinstated to her previous position.
See id.
Even if plaintiff
does not currently have a higher paying job, the court can
confront this problem by awarding back pay to plaintiff for the
entire period beginning with her discharge, which is the relief
she has requested in her complaint.
Pl. Compl. at ¶¶ 11, 12.
Defendants also argue that this would alleviate any prejudice to
plaintiff caused by the delay.
Def. Mem. in Supp. of Mot. to
Stay at 6.
13
However, plaintiff’s ability to collect back pay may
be seriously hampered by her concern that the individual
defendants could go to jail and the defendant law firm could go
bankrupt.
Given that the government has not pursued charges,
this stay could last for an extended period.
This is supported
by plaintiff’s statement that Michael Stein, Esq., the Assistant
U.S. Attorney in charge of the investigation stated that, “the
criminal proceedings will not be completed anytime in the
foreseeable future . . . because of lack of adequate staff for
the ‘privilege team,’” who is responsible for sorting through
the documents seized from defendants to determine which
documents are protected by attorney-client privilege.
Report of the Parties at 2.
Joint
A stay would therefore delay
plaintiff’s ability to recover until the government musters
adequate manpower to sort through the some 500,000 documents
said to have been seized and decides whether to pursue charges
against defendants.
It is also possible that the defendants are
never indicted, of which this court and plaintiff will likely be
unaware unless and until the statute of limitations has run on
the criminal charges.
Further, whether defendants will be
available to pay a judgment to plaintiff is more worrisome given
that plaintiff does not yet know the extent of Martin &
Seibert’s insurance coverage.
Pl. Resp. to Def. Mot. to Stay at
14
7; Joint Report of the Parties at 2.
Thus, this factor weighs
against a stay.
3. Burden on defendants
Defendants contend that the court would infringe upon
their Fifth Amendment rights by declining to order a stay, as
there is a “very real fear for a penalty in the form of an
adverse inference should Defendants invoke their Fifth Amendment
privilege during the course of this litigation.”
Supp. of Mot. to Stay at 6-7.
Def. Mem. in
They note that refusal to answer
questions may be used as an adverse inference against them in a
civil proceeding, and invocation of the privilege would damage
their ability to prevail in this case.
F.2d 1006, 1012 (4th Cir. 1989).
See Morley v. Cohen, 888
Further, because defendants do
not know the scope of any possible criminal charges, they state
that almost any testimony could help the prosecutors build a
case against them.
For this reason, they have declared an
intention to invoke their Fifth Amendment rights extensively
during discovery.
Def. Mem. in Supp. of Mot. to Stay at 6-7.
Plaintiff responds that defendants “will need to take the Fifth
Amendment in the civil trial regardless of when it occurs.”
Pl. Resp. to Mot. to Stay at 8.
15
In Ashworth, in considering the burden on the
defendants, this court examined whether the defendants had yet
to be indicted by the government on criminal charges.
at 531.
229 F.R.D
As the Circuit Court for the District of Colombia
explained:
Other than where there is specific evidence of agency bad
faith or malicious governmental tactics, the strongest case
for deferring civil proceedings is where a party under
indictment for a serious offense is required to defend a
civil or administrative action involving the same matter.
The noncriminal proceeding, if not deferred, might
undermine the party’s Fifth Amendment privilege against
self-incrimination, expand rights of criminal discovery
beyond the limits of Federal Rule of Criminal Procedure
16(b), expose the basis of the defense to the prosecution
in advance of criminal trial, or otherwise prejudice the
case.
SEC v. Dresser, 628 F.2d at 1375-76.
These concerns are not the
same before an indictment has been issued.
Preindictment,
it is inherently unclear to the Court just how much the
unindicted defendant really has to fear. . . . There is no
telling how complicated the government’s investigation may
be, whether the allegations of the particular civil
plaintiff are merely the tip of an iceberg that will result
in a lengthy and open-ended investigation, what priority
the government assigns to the investigation, whether it
will result in charges that will have to be litigated, or
how time-consuming the resulting criminal case will be.
Sterling Nat. Bank v. A-1 Hotels Intern., Inc., 175 F. Supp. 2d
573, 577 (S.D.N.Y. 2001).
Although in Ashworth, the defendants
had yet to be indicted on criminal charges, the government had
informed the court that not only were three of the defendants
16
targets of a criminal investigation, but also that indictments
would be forthcoming by a specific date, within two months of
the date of the court’s opinion.
229 F.R.D. at 531; see also
229 F.R.D. at 531, n. 3 (“Under the circumstances, the fact that
an indictment has not issued is not fatal to the stay request
inasmuch as any uncertainty has been displaced by the
representation that indictments will be forthcoming . . . which
representation is fortified by the other indictments and
convictions that have already occurred.”).
Here, however, there are no indictments and there is
no information that indictments will be forthcoming against
defendants.
Further, based on information provided by the
parties, it appears that the criminal investigation has been
delayed by the lack of personnel tasked with determining
attorney-client privilege issues relating to the large quantity
of documents taken from defendants by the government.
Report of the Parties at 2.
Joint
Because it is unclear when, if
ever, the defendants will be indicted, the potential burden on
defendants if the stay is not issued is somewhat lessened.
The individual defendants, Walter Jones, III, Geoffrey
Haddad, Michael Stevens, E. Kay Fuller, Susan Snowden, and Nikki
Moore Gress, are free to assert their Fifth Amendment privilege
in response to questions during discovery or at trial.
17
Despite
the fact that they have not been indicted and may not be
indicted in the foreseeable future, because the individual
defendants do not know the extent of the government’s criminal
investigation against them, they will likely assert their Fifth
Amendment privileges extensively, and they have expressed their
intentions to do so.
6-7.
See Def. Memo. in Supp. of Mot. to Stay at
This weighs in favor of a stay for the individual
defendants.
The issue of Fifth Amendment privileges changes when
applied to the defendant law firm, Martin & Siebert, which does
not itself have such a privilege.
See George Campbell Painting
Corp. v. Reid, 392 U.S. 286, 288-89 (1968).
Because Martin &
Siebert is a law firm, and many of its owners and managers will
likely be implicated in any criminal investigation for the
firm’s overbilling, it is reasonable to assume that some of its
employees and owners could not answer questions about this
lawsuit without risking exposure to criminal prosecution.
Thus,
at least some of them could be expected to assert the Fifth
Amendment privilege.
Despite the possibility that some employees and owners
of the law firm may assert their own individual Fifth Amendment
privileges, this does not give Martin & Seibert that same Fifth
Amendment privilege.
See Fidelity Funding of California v.
18
Reinhold, 190 F.R.D. 45, 52 (E.D.N.Y. 1997) (finding that “[a]ny
use [a] corporate defendant[] may have made of individual
defendant’s exercise of the Fifth Amendment privilege is merely
a windfall.
[The company] cannot . . . interpose the
willingness to provide future testimony by a defendant
legitimately asserting the Fifth Amendment in an effort to
collect yet another windfall through a stay of any pre-trial
proceedings.”).
Further, there is no evidence that every Martin
& Seibert employee will raise a Fifth Amendment privilege.
This
weighs against a stay for defendant Martin & Seibert.
Defendants have also stated that they would be further
prejudiced if there is no stay because the FBI has seized
numerous records, but they do not know exactly which records are
missing.
Def. Memo. in Supp. of Mot. to Stay at 8-9.
Defendants believe that the government seized some documents,
such as documents from plaintiff’s personnel file, which are
crucial to their defense in this action.
Mot. to Stay at 8-9.
Def. Memo. in Supp. of
Thus, defendants’ ability to defend
themselves may be hampered by the government’s possession of
exculpatory material.
Id.
In response, plaintiff states that she does not need
access to any of the documents seized by the FBI for her case.
Pl. Resp. to Mot. to Stay at 7-8.
19
To the extent that defendants
need documents in possession of the FBI for their defense,
plaintiff asserts that defendants can ask the FBI for copies or
obtain a court order.
Id. at 8.
Defendants also express concern that an effort to
settle the case will be seen as an attempt to bribe plaintiff,
who would presumably be a witness in any forthcoming
prosecution.
Def. Memo in Supp. of Mot. to Stay at 10.
Defendants cite to none, and the court is unaware of any cases
that would implicate defendants in bribery or other criminal
wrongdoing for engaging in settlement negotiations of
plaintiff’s claims where plaintiff initiated the settlement
discussions and the process was pursued with some degree of
judicial oversight.
4. Convenience to the court
Granting the stay may be convenient for the court
inasmuch as “the resolution of the criminal case may later
streamline discovery in the civil case.”
Ashworth, 229 F.R.D.
at 532 (quoting Bridgeport Harbour Place I, LLC v. Ganim, 269 F.
Supp. 2d 6, 9 (D. Conn. 2002)).
However, unlike Ashworth, where
the court knew that the investigation was proceeding and that
indictments were forthcoming, in this case the court does not
know whether indictments will ever be issued, and if issued, it
20
does not appear that it will occur in the near future.
Thus, a
stay would burden the court inasmuch as it “would substantially
halt the civil litigation indefinitely, without any
predictability as to when the case would return to the court’s
active docket.”
See Sterling Nat. Bank, 175 F. Supp. 2d 573;
see also Digital Equip. Corp. v. Currie Enters., 142 F.R.D. 8,
13 (D. Mass. 1991) (finding that a stay would require the court
to “rely upon fortuitous events to manage its docket”).
This
factor, which the court regards in this case to be the least in
consequence, does not weigh heavily in favor of or against a
stay.
5. Interests of persons not parties to litigation
Defendants note that third parties who are not
defendants in this lawsuit may also be asked to submit evidence
that the government could use against them in any contemplated
criminal proceeding.
11.
Def. Memo. in Supp. of Mot. to Stay at 10-
Plaintiff disputes that there is anyone other than
defendants who will be asked to submit evidence in this matter.
Pl. Resp. to Def. Mot. to Stay at 8.
Nevertheless, it seems
likely that if access to the individual defendants is stayed,
information may be sought from employees or others with
knowledge of the events.
In the event that this occurs, the
21
witnesses may assert their Fifth Amendment privilege to the
extent it is available.
Defendants further argue that the government has a
strong interest in an unimpeded criminal investigation.
Memo. in Supp. of Mot. to Stay at 11.
Def.
This argument is weakened
by the fact that unlike Ashworth, the government could have and
chose not to intervene and join in defendants’ motion to stay
the proceedings.7
See Ashworth, 229 F.R.D. at 531-32.
Thus,
this factor weighs against a stay.
6. Public’s interest
The public does not have any specific interest in the
outcome of this civil case.
The public has generalized
interests in the speedy and fair resolution of both civil and
criminal cases.
See Digital Equip. Corp., 142 F.R.D. at 14.
This factor weighs slightly against a stay.
7
Defendants assert that “it is not clear that [the FBI or the
U.S. Attorney’s Office] is aware of this litigation or of the
pending motion.” Def. Reply Memo. at 9. Inasmuch as it appears
that at least plaintiff’s counsel has been in contact with an
Assistant U.S. Attorney about the status of the investigation,
see Joint Report of the Parties at 2, it is likely that the
government is aware of this litigation and could have intervened
to join defendants’ motion to stay the proceedings.
22
B. Balancing the Factors
Because the individual defendants are placed in the
difficult position of choosing whether to defend this action or
invoke the Fifth Amendment and remain silent, and because they
have indicated their intention to do this broadly given they do
not know exactly what charges may be brought against them, the
weight of the governing factors at this early stage of the case
where no discovery has occurred and no other motions have been
filed favors an issuance of a stay against the individual
defendants.
Although this may impede the ability of plaintiff
to collect against defendants if her lawsuit is successful,
plaintiff’s interests are still protected because the case may
go forward against Martin & Seibert, as more fully discussed
below.
Thus, the court grants defendant’s motion for a stay
with respect to defendants Walter Jones, III, Geoffrey Haddad,
Michael Stevens, E. Kay Fuller, Susan Snowden, and Nikki Moore
Gress, until such time as their involvement in the criminal
proceedings end, or until plaintiff can demonstrate that a stay
is no longer appropriate.
Balancing the factors discussed previously, granting a
stay to defendant Martin & Seibert would prejudice plaintiff
without advancing any opposing Fifth Amendment concerns.
Because of this, the court must deny a stay as to defendant
23
Martin & Seibert.
In order to fully protect the Fifth Amendment
privilege of the individual defendants while discovery with
Martin & Seibert is ongoing, the court additionally bars the
acquisition of evidence from the individual defendants on an
involuntary basis until further order of the court.
Although counsel for defendants has suggested that any
individuals who could answer discovery requests on behalf of
Martin & Seibert are either named in this action or may assert a
Fifth Amendment privilege, the court will permit the case to
proceed as limited herein, which may allow settlement through
any available insurance that may cover the defendants in a
matter such as this.
In the event that progress in the case is
frustrated by the inability to involve the individual
defendants, coupled with the invocation of the Fifth Amendment
by employees with knowledge of facts in issue, a request for a
full or partial lifting of the stay could be the subject of a
motion to that end.
An accompanying Order and Notice, applicable to
plaintiff and Martin & Seibert, will be issued this same day.
24
v.
Civil Action No. 15-14025
THE DOW CHEMICAL COMPANY LONG TERM DISABILITY PROGRAM,
an Employee Welfare Benefits Plan,
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON,
IV. Conclusion
a Massachusetts Corporation, and
DOES 1 THROUGH 10, inclusive,
For the reasons set forth herein, it is accordingly
Defendants.
ORDERED that:
ORDER AND NOTICE
Pursuant to L.R. Civ. P. 16.1, it is ORDERED that the
following dates are hereby fixed as the be, by it hereby
1. The motion to stay civil proceedings time and or on which
certain events must occur:
is, granted as to the individual defendants, Walter Jones, III,
01/28/2016
Motions under F.R. Civ. P. 12(b), together with
supporting briefs, memoranda, affidavits, or other
Geoffrey Haddad, Michael matter in E. Kay Fuller, Susan Snowden,
such Stevens, support thereof. (All motions
unsupported by memoranda will be denied without
and Nikki Moore Gress;
prejudice pursuant to L.R. Civ. P. 7.1 (a)).
02/08/2016
Last day for Rule 26(f) meeting.
2. Plaintiff may not acquire evidence from the individual
02/15/2016
Last day to file Report of Parties= Planning
Meeting. See L.R. Civ. P. 16.1.
defendants involuntarily during the pendency of the stay, unless
otherwise ordered by the court; and
02/22/2016
Scheduling conference at 4:30 p.m. at the Robert C.
Byrd United States Courthouse in Charleston, before
the undersigned, unless canceled. Lead counsel
3. The motion directed civil proceedings be, and it hereby
to stay to appear.
02/29/2016
Entry of scheduling order.
is, denied with respect to defendant Martin & Seibert, L.C.
03/08/2016
Last day to serve F.R. Civ. P 26(a)(1) disclosures.
The Clerk is directed to forward copies of this
The Clerk is requested to transmit this Order and
written opinion all all counsel record and to any unrepresented
Notice to to counsel of of record.
parties.
Entered: January 5, 2016
DATED: January 5, 2017
John T. Copenhaver, Jr.
United States District Judge
25
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