performed, . . . agreed to confer a benefit, to wit: Political contributions upon Anthony [sic] Romersa and Vito Biondi, public servants, upon the understanding that their vote, opinion and action would be influenced as public servants.
McCormick Declaration at P 57; Plea Transcript at p. 18.
The government now moves for partial summary judgment against Avellino contending that there are no genuine factual issues in dispute to preclude granting that motion as a matter of law because all the requisite elements of civil RICO liability have been established by Avellino's guilty pleas, the testimony of various government informants in the course of other proceedings, and through transcripts of intercepted communications involving Avellino and others. In addition, the government seeks injunctive relief and disgorgement of profits against Avellino.
In lieu of submitting affidavits in opposition to the government's partial summary judgment motion, defendant Avellino cross-moves to stay this civil action while two grand jury investigations in the Eastern District of New York are pending, and, alternatively, if that motion to stay is denied, additional time to respond to the government's motion. In support of his motion to stay, Avellino submits subpoenas from the two grand juries. He also speculates that a Suffolk County grand jury may also be investigating his role in the murder of Robert Kubecka, a rebel carter in Long Island.
This motion to stay civil proceedings pending the outcome of the ongoing grand jury investigations is premised on the ground that defendant Avellino will have to choose between opposing the government's summary judgment notion or asserting his Fifth Amendment privilege against self-incrimination.
"A federal district court has the inherent power, in the exercise of its discretion, to stay an action." John's Insulation, Inc. v. Siska Constr. Co., 671 F. Supp. 289, 297 (S.D.N.Y. 1987) (citing Landis v. North American Co., 299 U.S. 248, 81 L. Ed. 153, 57 S. Ct. 163 (1936)). Granting a stay of a civil proceeding to await the outcome of a pending parallel criminal investigation is appropriate "'when the interests of justice seem . . . to require such action.'" Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d Cir. 1986) (quoting United States v. Kordel, 397 U.S. 1, 12, 25 L. Ed. 2d 1, 90 S. Ct. 763 n.27 (1970)). In making this determination, the court should balance:
(1) the private interest of the plaintiffs in proceeding expeditiously with the civil litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private interests of and burden on the defendant; (3) the convenience to the courts; (4) the interest of persons not parties to the civil litigation; (5) the public interest.
Arden Way Assocs. v. Boesky, 660 F. Supp. 1494, 1497 (S.D.N.Y. 1987); see also Milton Pollack, Parallel Civil and Criminal Proceedings, E129 F.R.D. 201, 203-04F (1989).
Motion to Stay
As a preliminary matter, since Avellino has yet to be indicted by any grand jury, his motion to stay may be denied on that ground alone. Pre-indictment requests for a stay of civil proceedings are generally denied. See, e.g., United States v. District Council of New York City, 782 F. Supp. 920, 925 (S.D.N.Y. 1992) (collecting cases) ; In re Par Pharmaceutical, Inc. Securities Litigation, 133 F.R.D. 12, 14 (S.D.N.Y. 1990) (collecting cases);
see also S.E.C. v. Dresser Indus., Inc., 202 U.S. App. D.C. 345, 628 F.2d 1368, 1376 (D.C. Cir. 1980) (where no indictment has issued, the purpose of staying civil proceedings during pending criminal proceedings is "a far weaker one") (en banc), cert. denied, 449 U.S. 993, 66 L. Ed. 2d 289, 101 S. Ct. 529 (1980). Therefore, Avellino is not entitled to a pre-indictment stay of this civil Rico action.
Defendant Avellino cites two cases for the proposition that a pre-indictment stay of this civil action is warranted. However, neither of those cases compels the conclusion that this Court dissent from the general rule that "the Constitution . . . does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings. . . ." Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d Cir. 1986) (quoting Dresser, 628 F.2d at 1372).
Avellino first cites United States v. Certain Real Property Known as 1344 Ridge Rd., 751 F. Supp. 1060 (E.D.N.Y. 1989), where this Court stayed discovery in a civil forfeiture action against the claimants of the property where they argued that they would be forced to invoke their Fifth Amendment privilege to avoid prejudicing their rights in an anticipated criminal proceeding. However, in that case, one of the two claimants had already been indicted before the commencement of the forfeiture action, making it appropriate to stay the action even against the unindicted co-defendant. See id. at 1063; United States v. Certain Real Property Known as 63-29 Trimble Rd., No. CV-88-1453, slip op. at 3 (E.D.N.Y. Sept. 9, 1992) (Glasser, J.) (distinguishing 1344 Ridge Rd. because it "involved [a] claimant against whom criminal charges were pending at the time the stay was granted").
A more relevant case cited by defendant is Brock v. Tolkow, 109 F.R.D. 116 (E.D.N.Y. 1985). In Brock, trustees of an employment benefits plan sought pre-indictment stay of discovery in civil proceeding where they were potentially subject to both civil and criminal liability under ERISA. Id. at 117-18. The defendant trustees argued that they were facing a Hobson's choice of (1) repeatedly asserting their Fifth Amendment privilege and failing to defend the civil action or (2) defending the civil action with the likelihood of self-incrimination in a later criminal case. Id. at 118.
In granting the pre-indictment stay, the court noted that a stay is most appropriate where the subject matter of the parallel civil and criminal proceeding or investigation is the same and where the government is prosecuting both proceedings. Id. at 119 & n.2 (citing Dresser, 628 F.2d at 1375-76). The Brock court then proceeded to weigh the public and private interests involved and determined that a stay was appropriate. The court noted that
"a stay of discovery would cause no serious damage to the public interest . . . [because] possible mismanagement of a pension fund simply does not present the same danger to the public interest as violations that . . . warrant denial of a motion for a stay . . . involving a tangible threat of immediate and serious harm to the public at large."
Id. at 120.
In contrast, the Brock court noted the potential quandary that the defendants would face if discovery proceeded. The court stated:
If the defendants are served with interrogatories in the civil case, they must decide whether to respond or to assert their rights under the fifth amendment. If they choose the former, they risk providing the government with leads or evidence that may be used against them in the criminal case. If they choose the latter course, they greatly increase the chance that they be found liable in [the] civil case for substantial sums of money.
Id. at 120. Therefore, notwithstanding that the defendants' "unpalatable choice" was "concededly" not offensive to the Constitution, the court exercised its discretion and stayed discovery because "to do so would not seriously hamper the public interest." Id. at 120-21.
In this case, even if this Court were to follow Brock, which it declines to do, a pre-indictment stay is unwarranted once one weighs the various interests involved -- the government's interest, the interest of non-parties, and the public interest -- against the interest of, and burden on, defendant Avellino. This is particularly so based upon his conduct in this proceeding and earlier proceedings involving allegations of corruption in the solid waste industry on Long Island.
First, the interests of the government, individuals and corporations that are not parties to this action, and the public at large, in a speedy resolution of this civil action are manifest. In supporting its notion for summary judgment against Avellino, the government aptly demonstrates the toll that corruption in the solid waste industry has exacted on Long Island residents and corporations. According to a study conducted at the behest of the Rand Corp., Long Island consumers are paying 50% higher rates for commercial garbage collection and 15% higher rates for residential collection by virtue of the collusive bidding and anti-competitiveness in that industry. See Reuter, Racketeering in Legitimate Industries: A Study in the Economics of Intimidation, RAND Corp. (1987), at pp. 48-51 (Exhibit 5 to McCormick Declaration). Thus, all Long Island consumers have a substantial economic interest in seeing that the solid waste industry be rid of corruption.
Similarly, the government maintains approximately 200 facilities on Long Island that are affected by the artificial rate increases in commercial garbage collection. Thus, the government has a proprietary interest in the speedy and just resolution of this civil RICO case.
Avellino's countervailing interest in avoiding the use of his Fifth Amendment privilege, as well as any burden he faces if his motion to stay is denied, is minimal. First, as the court itself noted in Brock, forcing a defendant to assert his or her privilege in a civil action is constitutional. 109 F.R.D. at 120; see also Arden Way Assocs. v. Boesky, 660 F. Supp. 1494, 1498 (S.D.N.Y. 1987) (denying stay on same ground because the prosecution may constitutionally draw an adverse inference where the privilege is invoked in a civil case under Baxter v. Palmigiano, 425 U.S. 308, 47 L. Ed. 2d 810, 96 S. Ct. 1551 (1976)); Paine, Webber, Jackson & Curtis Inc. v. Malon S. Andrus, Inc., 486 F. Supp. 1118, 1118-19 (1980) (denying stay of discovery where defendant sought to avoid invocation of Fifth Amendment privilege). Furthermore, because the government may commence and prosecute parallel civil and criminal proceedings, any interest of Avellino in preventing such parallel prosecutions is diminished. As the Supreme Court stated in United States v. Kordel:
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.
397 U.S. 1, 11, 25 L. Ed. 2d 1, 90 S. Ct. 763 (1970). Thus, Avellino's interest in staying this case is, at best, nominal.
Moreover, the record belies the fact that Avellino will even be prejudiced should he be compelled to invoke the privilege in opposition to the government's motion. Avellino has continually invoked the Fifth Amendment privilege in responding to the government's interrogatories in this case and in answering questions during his deposition in an earlier proceeding, State of New York v. Salem Sanitary Carting, CV-85-0208 (E.D.N.Y. 1985) (Glasser, J.). Declaration of Joseph D. McCann in Support of Plaintiff's Partial Summary Judgment Motion at P 3. Thus, it is disingenuous for Avellino to now argue that he will be prejudiced by exercising the privilege which he has repeatedly invoked in the past.
Avellino's felt need to invoke the privilege may inhibit his effective opposition to the government's summary judgment motion, but that consequence is not unprecedented. See, e.g., F.S.L.I.C. v. Molinaro, 889 F.2d 899, 901-903 (9th Cir. 1989) (simultaneously denying one defendant's renewed motion to stay civil proceedings and granting government's partial summary judgment motion against that defendant despite failure to file counter-affidavits because of an ongoing grand jury investigation); but see Vardi Trading Co. v. Overseas Diamond Corp., 1987 WL 176222, at *2 (S.D.N.Y. 1987) (where civil case and criminal case required that defendant take contradictory positions, court stayed civil action after issuance of information in Florida and denied plaintiff's summary judgment motion for it would lead to default). Therefore, a balancing of the competing interests involved militates against granting Avellino a stay of this proceeding.
Finally, convenience of the courts is best served when motions to stay proceedings are discouraged. The courts must be mindful that "a policy of issuing stays 'solely because a litigant is defending simultaneous lawsuits would threaten to become a constant source of delay and an interference with judicial administration.'" Arden Way Assocs., 660 F. Supp. at 1497 (quoting Paine, Webber, 486 F. Supp. at 1119). After considering the five criteria for informing the Court's judgment in determining whether a stay is appropriate, this Court is drawn to conclude that defendant Avellino's notion should be denied.
For all the foregoing reasons, Avellino's motion for a stay is denied. He is hereby granted 20 days from the date of this order to file and serve a response to the motion for partial summary judgment.
Dated: Brooklyn, New York
October 20, 1992
I. Leo Glasser, U.S.D.J.