Opinion
Case No.: 3:08-cv-136-RV-EMT.
September 11, 2008
ORDER
Now pending is the defendants' motion to stay or abate pending resolution of criminal investigation (doc. 107), and their "Expedited Joint Motion" to stay (doc. 114).
I. Background
II. Discussion
See, e.g., S.E.C. v. Healthsouth Corp., 261 F. Supp. 2d 12981326S.E.C. v. Tandem Management,2001 WL 1488218see also Ostrow v. United States,1986 WL 6855Texaco Inc. v. Borda, 383 F.2d 607608accord Landis v. North American Co.,299 U.S. 24857 S. Ct. 16381 L. Ed. 153 United States v. Lot 5, Fox Grove, Alachua County, Fla., 23 F.3d 359364United States v. Kordel, 397 U.S. 11290 S. Ct. 76325 L. Ed. 2d 1
The decision whether to stay civil proceedings in the face of a parallel criminal proceeding should be made "in light of the particular circumstances and competing interests involved in the case." This means the decisionmaker should consider "the extent to which the defendant's fifth amendment rights are implicated." In addition, the decisionmaker should generally consider the following factors: (1) the interest of the plaintiffs in proceeding expeditiously with this 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.Keating v. Office of Thrift Supervision, 45 F.3d 322, 324-25 (9th Cir. 1995) (citations omitted); see also Scheuerman v. City of Huntsville, AL, 373 F. Supp. 2d 1251, 1257 (N.D. Ala. 2005) (noting same factors); Healthsouth Corp., supra, 261 F. Supp. 2d at 1326 (same). Some courts consider additional factors such as the extent to which the issues in the criminal and civil cases overlap, the status of the cases, including whether the defendant has been indicted. Walsh Securities, Inc. v. Cristo Property Management, Ltd., 7 F. Supp. 2d 523, 526-27 (D.N.J. 1998). "The degree to which the issues in the simultaneous civil and criminal proceedings overlap is the most important threshold issue in deciding whether the court should stay the civil proceeding." Healthsouth Corp., supra, 261 F. Supp. 2d at 1326.
After applying all of the above factors, I easily conclude that a stay is appropriate. Briefly, as for the "most important threshold issue," it appears to be undisputed that there is significant overlap between the two cases. Compare Complaint in 3:08cv136 (doc. 1) with Indictment in 3:08cr79 (doc. 4). The cases share the same operative facts, arise out of the same general allegations, and involve many of the same defendants. The criminal case is underway and arrests have already been made. Because testimony and other information in the civil case may be used in the criminal case, it is plain that the defendants fifth amendment rights are implicated. As for the five additional factors, they, too, weigh in favor of a stay. There is no discernable prejudice to the government in staying this case. As noted, the defendants are already enjoined from engaging in the offending conduct. The offending audio CDs have been removed from the "Q1 course," for example, and the defendants are not allowing any presenters to speak who may promote or sell abusive tax shelters. Further, given the very real potential for a fifth amendment violation, the burden imposed on the defendants is significant. It would also be the most efficient use of judicial resource to stay this case given that, inter alia, the injunction is being considered on an expedited appeal in the Eleventh Circuit (briefing is already underway) and, if the defendants prevail in that appeal, that may well end the civil case. And finally, in light of the injunction, neither the parties nor the public has a special or particular interest in having the civil case decided before or contemporaneously with the criminal case.
The government argues that Claudia Hirmer waived her fifth amendment rights when she testified at the preliminary injunction hearing. Assuming arguendo that Hirmer completely waived her privilege against self incrimination by taking the stand and testifying as to the specific and limited facts that were relevant to the injunction issue, none of the other twelve defendants in the criminal case testified at the hearing, and thus they did not waive their fifth amendment rights.
III. Conclusion
For these reasons, the motions to stay or abate (docs. 107, 114) are GRANTED. This case is hereby STAYED until resolution of the criminal case (3:08-cr-79/MCR), assuming the appeal pending in the Eleventh Circuit does not dispose of this case before that time.
DONE and ORDERED.