resolution of this case involving alleged union corruption. Gov. Mem. at 14-19.
The standards for a stay of civil discovery because of a parallel criminal proceeding are well-established. As the Second Circuit has held,
'The Constitution . . . does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings . . . Nevertheless, a court may decide in its discretion to stay civil proceedings . . . "when the interests of justice seem . . . to require such action."'
Kashi v. Gratsos, 790 F.2d at 1057 (citing and quoting S.E.C. v. Dresser Industries, 202 App. D.C. 345, 628 F.2d 1368, 1372 (D.C.Cir.) (en banc), cert. denied, 449 U.S. 993, 66 L. Ed. 2d 289, 101 S. Ct. 529 (1980) and Kordel, 397 U.S. at 12 n. 27). "It would stultify enforcement of federal law to require a governmental agency . . . invariably to choose either to forgo recommendation of a criminal prosecution once it seeks civil relief, or to defer civil proceedings pending the ultimate outcome of a criminal trial." Kordel, 397 U.S. at 11.
In Dresser, the D.C. Circuit held:
Other than where there is specific evidence of agency bad faith or malicious government tactics, the strongest case for deferring civil proceedings until after completion of criminal 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. If delay of the noncriminal proceeding would not seriously injure the public interest, a court may be justified in deferring it.
628 F.2d at 1376.
The Second Circuit has rejected the proposition that a witness under indictment is automatically excused from civil proceedings. Simon, 373 F.2d at 653. In the absence of undue prejudice or constitutional deprivation district courts have not imposed stays even where criminal indictments are pending against a defendant in a parallel civil suit. Paine, Webber, Jackson & Curtis Inc. v. Malon S. Andrus, Inc., 486 F. Supp. 1118, 1119 (S.D.N.Y. 1980); see Arden Way Assocs. v. Boesky, 660 F. Supp. 1494, 1496-1500 (S.D.N.Y. 1989) (civil defendant facing sentencing in criminal proceeding). In the case of pre-indictment requests for a stay, courts in this district "will deny a stay of the civil proceeding where no indictment has issued." In re Par Pharmaceutical, Inc. Securities Litigation, 133 F.R.D. 12, 14 (S.D.N.Y. 1990); see S.E.C. v. Gilbert, 79 F.R.D. 683, 686 (S.D.N.Y. 1978) and United States v. Sloan, 388 F. Supp. 1062, 1064 (S.D.N.Y. 1975); see also Waldbaum v. Worldvision Enterprises, Inc., 84 F.R.D. 95, 96 (S.D.N.Y. 1979) (civil plaintiff not entitled to stay); but see United States v. Certain Real Property, 751 F. Supp. 1060, 1063 (E.D.N.Y. 1989) and Brock v. Tolkow, 109 F.R.D. 116, 120-21 (E.D.N.Y. 1985).
In the case at bar defendants Devine and McHale have not been indicted and defendant McGuinness, who was indicted, has been acquitted. Defendants' only complaint is that the government refuses to state whether or not they are under criminal investigation. The policy of the United States Attorney's Office in this regard does not deprive defendants of the right to due process. Defendants are simply faced with the familiar choice of testifying or asserting the fifth amendment privilege. As this Court has held, "the discomfort of the defendant's position does not rise to the level of a deprivation of due process. Others have faced comparable circumstances; the choice may be unpleasant, but it is not illegal, and must be faced." Musella, 38 Fed. R. Serv. 2d (Callaghan) 426. The fact that defendants face a potentially unpleasant choice is no reason to stay discovery.
Defendants are not entitled to a stay of discovery based on the contention that the government is trying to force them to invoke their fifth amendment privileges. If defendants choose to remain silent, "the adverse inference that may be drawn will be only one of a number of factors the factfinder will consider . . . and will be given no more evidentiary value than the facts of the case warrant." S.E.C. v. Grossman, 121 F.R.D. 207, 210 (S.D.N.Y. 1987) (citations omitted); see Gilbert, 79 F.R.D. at 686. Defendant's argument that the United States Attorney's Office is seeking to force assertions of the privilege might carry more weight if there were pending criminal indictments against them.
Of course, if indictments do become a reality, defendants could again move for a stay of discovery. As the case now stands I see no need for a hearing on the conduct of the Civil and Criminal Divisions.
Defendant District Council's motion to vacate that portion of Magistrate Judge Katz's Order and Opinion denying the motion to compel is denied. The motions of defendants Devine, McHale and McGuinness to vacate that portion of the Order and Opinion denying the motion for a stay is denied. The case remains before Magistrate Judge Katz for supervision of pretrial matters.
Dated: New York, New York
February 3, 1992
CHARLES S. HAIGHT, JR.
U. S. D. J.