United States District Court, S.D. New York
April 27, 2004.
IN RE WORLDCOM, INC. SECURITIES LITIGATION This Document Relates to: ALL ACTIONS; IN RE WORLDCOM, INC. ERISA LITIGATION This Document Relates to: All Actions; IN RE PAINEWEBBER GOALS SECURITIES LITIGATION This Document Relates to: All Actions; IN RE TARGETS SECURITIES LITIGATION This Document Relates to: All Actions
The opinion of the court was delivered by: DENISE COTE, District Judge
MEMORANDUM OPINION AND ORDER
Having recently been indicted for conduct that underlies the civil
litigation against him, Bernard J. Ebbers ("Ebbers") moves for a stay of all civil proceedings against him until "final resolution"
of the criminal action.*fn1 This motion is granted.
Ebbers' motion would appear, at first blush, to be governed by the
Opinion in this action that imposed stays for other indicted civil
defendants. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288
(DLC), 2002 WL 31729501 (S.D.N.Y. Dec. 5, 2002). Ebbers, however, stands
in somewhat different shoes. Those stays were entered before discovery
began. Ebbers has fully participated in these civil proceedings,
including all of the document discovery and months of deposition
discovery. It can fairly be presumed that Ebbers, knowing that he was
under criminal investigation, found it to be in his interest to
participate actively in the civil litigation. Moreover, the Government has
not supported Ebbers' request for a stay; it did support the request that
a stay be entered as to other civil defendants it had indicted. See In re
WorldCom, Inc. Sec. Litig., 2002 WL 31729501, at *8.
There are strong arguments in favor of a stay as well. For instance,
Ebbers will be substantially prejudiced in the civil actions from his
invocation of his Fifth Amendment privilege. Ebbers also points out that
he will be prevented from using experts to support any defense that he has to offer to the extent
the experts would need to rely on his description of his knowledge and
understanding of events at WorldCom, Inc., and that he would be hamstrung
in opposing summary judgment. In addition, with his indictment, there is
an increased likelihood that Ebbers will attempt to use the civil
discovery in these actions to circumvent the more restricted right to
discovery in a federal prosecution. Weighing each of the interests
identified in the Opinion of December 5, 2002, on balance, Ebbers has
shown that this civil litigation should be stayed as to him.
Arthur Andersen LLP, the SSB Defendants, and the Underwriter Defendants
request an extension of discovery in the event that a stay is entered as
to Ebbers. Ebbers has already responded to document requests. None of the
participants in the WorldCom related civil litigation has yet required
him to answer interrogatories or to be deposed. The defendants apparently
assumed that Ebbers would invoke his Fifth Amendment privilege against
self incrimination, and therefore did not press for testimonial evidence
The defendants have not shown that they will be without alternative
avenues of proof at trial to show that Ebbers violated the securities
laws and that he bears an appropriate proportion of the responsibility
for investors' losses. This is particularly true in light of the access
that the parties will likely have before trial to currently "embargoed"
witnesses. See In re WorldCom, Sec. Litig., 2004 WL 802414. The request
for an extension is denied. The defendants have not shown that they will
be materially prejudiced by a stay as to Ebbers.
The motion by Bernard J. Ebbers for a stay is granted.