Opinion
98 Civ. 8408 (SWK)
February 6, 2001
MEMORANDUM ORDER AND OPINION
The New York County District Attorney ("District Attorney") moves, pursuant to Federal Rule of Civil Procedure 24(b), to intervene for the sole purpose of moving to stay certain discovery in the above-captioned action. For the reasons set forth below, the motion is granted in part.
BACKGROUND
On November 30, 1998, plaintiffs, who are union members and local unions affiliated with regional union body District Counsel 37, American Federation of State, County and Municipal Employees ("DC-37"), filed the above-captioned complaint alleging, inter alia, that individual defendants participated in a scheme to operate DC-37 in a manner which allowed the defendants to steal large sums of money from the treasury of DC-37 and its constituent locals. See First Amended Complaint at 2-3. Specifically, plaintiffs claim that the defendants laundered money, breached their fiduciary duties, fraudulently manipulated local union elections and fraudulently manipulated a ratification vote on a union-wide collective bargaining agreement with New York City ("the City"). See id. Plaintiffs also sue the City, alleging it was on notice of the alleged ratification fraud and that it failed to make proper inquiries concerning that fraud. See id.
Starting in April of 1999, seventeen officers at DC-37 and its affiliated local unions were indicted by a New York County grand jury. Many of those indicted were named defendants in this action. See Affirmation in Support of Motion to Intervene at 4. On October 27, 1999, the District Attorney moved this Court, pursuant to Federal Rule of Civil Procedure 24(b)(2), to intervene and stay discovery relating to the action pending disposition and resolution of the criminal charges. See Affirmation in Support of a Motion to Intervene at 7. On October 5, 1999, this Court issued an order staying the action until further notice.
On January 16, 2001, the District Attorney withdrew their motion to intervene because — with the exception of defendant Albert Diop ("Diop") — all of the criminal prosecutions have been completed. See Request to Withdraw Motion to Intervene at 2. Therefore, the District Attorney now moves only to intervene to stay civil discovery as it relates to Diop. See id.
Diop was convicted after a jury trial on one of two counts against him and is awaiting sentencing. The sentencing, as well as further proceedings on the second charge, were stayed in New York County Supreme Court after a finding, on December 22, 2000, that Diop was mentally unfit to proceed.
DISCUSSION
A. District Attorney's Motion to Intervene
The District Attorney moves to intervene pursuant to Rule 24(b)(2) of the Federal Rules of Civil Procedure, which provides for permissive intervention when "an applicant's claim or defense and the main action have a question of law or fact in common." Fed.R.Civ.P. 24(b)(2). It is well-established that the Government may intervene in a federal civil action to stay discovery when there is a parallel criminal proceeding, which is anticipated or already underway, that involves common questions of law or fact. See Securities and Exchange Commission v. Downe, No., 92 Civ. 4092, 1993 WL 22126, 11 (S.D.N.Y. 1993); see also Board of Governors of the Federal Reserve System v. Pharaon, 140 F.R.D. 634, 638 (S.D.N.Y. 1991) (allowing District Attorney to intervene in civil action for purpose of seeking stay of discovery); First Merchants Enterprise, Inc. v. Shannon, No. 88 Civ. 8254, 1989 WL 25214, 2 (S.D.N.Y. March 16, 1989) (allowing United States Attorney to intervene in civil action).
In the instant case, the District Attorney seeks to intervene in order to stay discovery as it relates to Diop, a named defendant who presently faces criminal charges. Because the instant action and corresponding criminal proceedings arise out of common questions of law and fact, the Court finds that the District Attorney has demonstrated a sufficient interest in the present action to permit intervention under Rule 24(b)(2).
B. Motion to Stay Discovery
It is well-settled that a court has the discretionary authority to stay a case if the interests of justice so require. See United States v. Kordel, 397 U.S. 1, 12 n. 27 (1970); Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d Cir. 1986) (citing SEC v. Dresser Indus., 628 F.2d 1368, 1375 (D.C. Cir.) (en banc)). Depending on the particular facts of the case, the court may decide to stay civil proceedings, postpone civil discovery, or impose protective orders. See SEC v. Dresser Indus., 628 F.2d at 1375.
When deciding whether to grant a stay, courts consider five factors: (1) the private interests of the plaintiff in proceeding expeditiously with the civil litigation as balanced against the prejudice to the plaintiff if delayed; (2) the private interests of and burden on the defendants; (3) the interests of the courts; (4) the interests of persons not parties to the civil litigation; and (5) the public interest. See Arden Way Assoc. v. Boesky, 660 F. Supp. 1494, 1497 (S.D.N.Y. 1987).
These factors clearly counsel in favor of granting the District Attorney's motion. The public has an interest in ensuring the criminal discovery process is not subverted. Denying a stay may undermine a defendant's Fifth Amendment privilege against self-incrimination, see Dresser Indus., 628 F.2d at 1375-76, expand the rights of criminal discovery beyond its limits, and expose the basis of the defense to the prosecution in advance of trial. See Volmar v. New York Post Co. Inc., 152 F.R.D. 36, 39 (S.D.N Y 1993). Moreover, a stay in the action will streamline later civil discovery since transcripts from the criminal case will be available to the civil parties. Finally, courts are more likely to grant stays when an indictment has already been issued, as is the case here. See Par Pharmaceutical, Inc. Securities Litigation, 133 F.R.D. 12, 13 (S.D.N.Y. 1990) (citing cases for proposition that courts in this Circuit regularly stay civil proceedings when a "criminal investigation has ripened into an indictment.") Accordingly, and for the reasons set forth above, the District Attorney's motion is granted. Therefore, it is hereby
ORDERED that, with the exception of all material relating to Diop, discovery in the above-captioned matter shall commence immediately and close on May 31, 2001. It is further
ORDERED that the parties attend a pre-trial conference on June 13, 2001 at 2 PM in Room 906, 40 Centre Street, New York, New York.
Various defendants have moved for permission to file motions pursuant to Federal Rule of Civil Procedure 12(b)(6). It is hereby
ORDERED that the parties brief the motions in accordance with the following schedule:
Defendants motions due: March 7, 2001;
Plaintiffs responses due: March 28, 2001;
Defendants replies due: April 11, 2001.
CONCLUSION
For the reasons set forth above, the District Attorney's motion for a stay pending final resolution of the state criminal proceedings against Diop is granted. All other discovery in this matter shall commence immediately and close on May 31, 2001.
SO ORDERED.