The opinion of the court was delivered by: Lewis A. Kaplan, United States District Judge.
The United States moves to intervene in this civil action and to stay
(a) production by the SEC of transcripts of prior witness depositions and
interview notes, (b) initial disclosures of witness lists and related
information under Rule 26(a)(i)(A), and (c) depositions, all pending
completion of related criminal proceedings. Defendant Joseph F. Doody,
one of three defendants in the civil case, but not a defendant in the
related criminal case, resists the motion.
On the same date, the SEC brought this civil action against Doody, his
father, Joseph F. Doody ("Doody Sr."), and Neilly charging the same
insider trading scheme. Doody is alleged to have tipped Doody Sr. on the
basis of the tips he received from Neilly, and Doody Sr. is alleged to
have traded on that information as well. The SEC seeks an injunction and
other relief.
The trial of the criminal case now is set for March 8, 2002 before
Judge Scheindlin.
In the meantime, Doody Sr. has commenced an ambitious discovery program
in this action, seeking answers to interrogatories from and production of
documents by the SEC which, the government says, would result in
premature disclosure of the evidence upon which it hopes to rely in the
criminal case. In addition, Doody Sr. has noticed Neilly's deposition,
and the government apprehends that he will seek to depose individuals who
are likely to be witnesses in the criminal trial, thus further tipping
the government's hand and, in effect, giving Doody an extra opportunity
to cross-examine the government's witnesses.
The government has made a persuasive case that its interest in
protecting its criminal case justifies its intervention here, and Doody
makes no serious argument to the contrary. Accordingly, the government
will be permitted to intervene for the purpose of seeking relief against
discovery in this case pending the completion of the criminal trial.*fn1
The question is whether it is entitled to that relief.
Once an indictment has been returned, the government often moves for
and frequently obtains relief preventing a criminal defendant from using
parallel civil proceedings to gain premature access to evidence and
information pertinent to the criminal case.*fn2 In granting such
relief, courts must weigh competing interests, including "the interests
of the defendants, the interests of the plaintiffs in proceeding with the
litigation, the public interest, and the interests of the courts and of
third parties."*fn3
Doody Sr. argues that the abundance of authority is not controlling
or, arguably, even pertinent here because he is not a defendant in the
criminal case and, moreover, has a compelling need to proceed
expeditiously in the civil case. The need is said to stem from the fact
that he is employed by Enron, is likely soon to be out of a job and,
absent speedy disposition of the civil case, would have difficulty
finding employment with the stigma from the SEC's charges against him
hanging over his head.
Doody Sr. is at least arguably right also in saying that this case is
unusual in that he would be subjected to some prejudice by a delay of
civil discovery different than anything that might be claimed by one who
is a defendant in both cases. But he has failed to demonstrate that he
will suffer prejudice that outweighs the government's interest in
obtaining a stay. Perhaps he will lose his job, and perhaps he will have
some difficulty finding new employment while this action is pending. But
the fact is that he has not lost it yet and may not lose it. Even if he
does, the criminal case is scheduled for trial in approximately four
weeks. Doody Sr. has provided no information concerning his financial
situation, so there is no basis whatever to suppose that a delay of
discovery in this case for, say, six weeks would mean the difference
between his putting food on the table and starvation. Thus, Doody Sr.'s
position is based on unfounded assumptions and inappropriate
exaggerations. But he is not alone in having overstated his case.
The relief the government seeks is virtually a blanket stay of all
disclosure in this case. Perhaps no discovery could be provided here
without implicating its legitimate concerns in the criminal case, but
that is not self evident. In consequence, the Court is left guessing as
to just what protection the government legitimately requires. After
having weighed the competing ...