in proceeding expeditiously weighed
against the prejudice to the plaintiff caused by the delay; (4) the
private interests of and burden on the defendants; (5) the interests of
the courts; and (6) the public interest. Gala Enterprises, Inc., v.
Hewlett Packard Co., No. CV-96-4864, 1996 U.S. Dist. LEXIS 18867, at *4
(S.D.N.Y. Dec. 16, 1996); Trustees of Plumbers Pen. Fund v. Transworld
Mech., 886 F. Supp. 1134, 1139 (S.D.N.Y. 1995) (footnotes omitted).
Granting a stay of discovery may be especially appropriate where a
party under criminal indictment is also required to defend a civil suit
involving the same matter. Kashi, 790 F.2d at 1057 (quoting Dresser, 628
F.2d at 1375); Arden Way Assocs.v. Boesky, 660 F. Supp. 1494, 1496
(S.D.N.Y. 1987). The Constitution does not require a stay of civil
proceedings in such circumstances. Volmar Distributors, Inc. v. The New
York Post Co., Inc., 152 F.R.D. 36, 39 (S.D.N.Y. 1993). Nevertheless,
denying a stay may undermine a party's Fifth Amendment privilege against
self-incrimination. See In re Par Pharmaceutical, Inc., 133 F.R.D. 12, 13
(S.D.N.Y. 1990) ("The weight of authority in this Court indicates that
courts will stay a civil proceeding when the criminal investigation has
ripened into an indictment") (citing cases); Brock v. Tolkow, 109 F.R.D.
116, 119 (E.D.N.Y. 1985). Further, failure to grant a stay may extend
discovery beyond the limits set forth in Federal Rule of Criminal
Procedure 16(b); may expose the defense's theory to the prosecution in
advance of trial; or may otherwise prejudice the criminal case. See In re
Pharmaceutical, Inc., 133 F.R.D. at 13 (citing Dresser, 628 F.2d at
1376); Brock, 109 F.R.D. at 119.
In the instant case, there are overlapping issues in the criminal and
civil cases. In addition, Drayer and Besser have already been indicted,
and both have invoked their Fifth Amendment privileges. Drayer and Besser
contend that proceeding with discovery would force them in the
uncomfortable position between choosing to waive their Fifth Amendment
privilege, risking self-incrimination, or to invoke it, not only
preventing them from adequately defending their position but subjecting
them to adverse inferences. Although it is not unconstitutional to force
a party to choose between invoking his Fifth Amendment rights and risking
adverse inferences in a civil action, see, e.g., Baxter v. Palmigiano,
425 U.S. 308, 318, 96 S.Ct. 1551, 1558 (1976); United States v.
Rubinson, 543 F.2d 951, 961 (2d Cir. 1976), cert. denied, 429 U.S. 850,
97 S.Ct. 139 (1976), the risk of impairing the party's Fifth Amendment
rights presents a stronger case for staying discovery, particularly when
there are similar issues between the civil and criminal cases, as in this
case. See Gala Enterprises, 1996 U.S. Dist. LEXIS 18867, at *8.
Accordingly, the Court finds that a stay of discovery as to Drayer and
Besser is appropriate to preserve their Fifth Amendment rights.
With respect to RW Professional, it is well established that
corporations do not have a Fifth Amendment privilege against
self-incrimination. Dreier v. United States, 221 U.S. 394, 399-400, 31
S.Ct. 550, 550 (1911); SEC v. First Jersey Securities, Inc., 843 F.2d 74,
76 (2d Cir. 1988). RW Professional claims that the only employees capable
of responding to discovery are the individual defendants. As a result, RW
Professional argues that it cannot defend itself in the instant action
without the assistance of Drayer and Besser and it will suffer prejudice
if the individual defendants invoke their Fifth Amendment privilege. In
addition, like Drayer and Besser, the indictment against RW Professional
is based on similar allegations as in the civil case.
Further, as a practical matter, the defendants argue that the
seizure of substantially all of RW Professional's books and
records impedes the corporate defendant's ability to respond to any
discovery or prepare its defense. Also, because Drayer and Besser are
central figures in the instant action, a partial stay as to the
individual defendants could lead to dublicative depositions because the
plaintiff may need to re-depose certain individuals depending on the
testimony given by Drayer and Besser. Considering these factors, the
Court finds that a stay of discovery as to RW Professional is warranted.
Having reviewed the parties' submissions, it is hereby
ORDERED, that the defendants' motion for a protective order staying all
discovery in the civil case is GRANTED; and it is further
ORDERED, that the stay is in effect only until the resolution of the
criminal proceedings against the defendants; and it is further
ORDERED, that the plaintiff may move to vacate the stay if changes in
circumstances so warrant.
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