Suarez v. Adir

The U.S. Supreme Court has stated that the power to stay a proceeding is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel and for litigants. (Landis v. N. Am. Co. (1946) 299 U.S. 248, 254.) This is done by the court, in its judgment, weighing competing interests and maintaining an even balance. (Id. at 254-255.) The proponent for the stay must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay that the proponent prays for will work damage to someone else. (Id. at 255.)

The California Supreme Court also recognizes that the trial courts have the inherent authority to stay proceedings pending the resolution of another matter. (Adams v. Paul (1995) 11 Cal.4th 583, 593.) Factors for determining whether to stay a civil matter while a parallel matter proceeds are the extent Fifth Amendment rights are implicated (if parallel matter a criminal case) and additionally: (1) the interest of the [party opposing the stay] in proceeding expeditiously with this litigation or any particular aspect of it, and the potential prejudice to [the party opposing the stay] of a delay; (2) the burden which any particular aspect of the proceedings may impose on [the party seeking the stay]; (3) the convenience of the court in the management of its cases, and the efficient use of judicial resources; (4) the interests of persons not parties to the civil litigation; and, (5) the interest of the public in the pending civil and criminal litigation. (Bains v. Moores (2009) 172 Cal.App.4th 445, 483, quoting Avant!, supra, 79 Cal.App.4th at p. 885.)

“The decision whether to stay civil proceedings in the face of a parallel criminal proceeding should be made ‘in light of the particular circumstances and competing interests involved in the case.’ [Citation.] This means the decision maker should consider ‘the extent to which the defendant’s Fifth Amendment rights are implicated.’ [Citation.].” (Avant!, supra, 79 Cal.App.4th at p. 885, quoting Keating v. Office of Thrift Supervision (9th Cir. 1995) 45 F.3d 322, 324).)

In Pacers, Inc. v. Superior Court (1984) 162 Cal.App.3d 686, the issue before the Court was whether the trial court’s order precluding defendants from testifying was proper. The Court held that a defendant in a civil action should not be penalized for asserting his Fifth Amendment rights and should not have to choose between defending himself in the civil action or forfeiting his defense in favor or protecting himself from possible criminal liability. (Id. at p. 689.) The court noted Evidence Code section 940 excludes from discovery information which may tend to incriminate a party. (Id. at p. 688.) This principle has been construed to allow assertion of the privilege against self-incrimination in any proceeding, civil or criminal, administrative or judicial, investigatory or adjudicatory. (Ibid.) Civil defendants have “no obligation to disclose to real parties information they reasonably believed might be used against them in a criminal proceeding.” (Id. at p. 689.) Privileged matters lie beyond the reach of discovery and trial courts may not compel individuals to make responses that they reasonably believe could tend to incriminate them or subject them to criminal prosecution. (A & M Records, Inc. v. Heilman (1977) 75 Cal.App.3d 554, 566; U.S. Const., 5th Amend.; Cal. Const., art. I, § 15.)

In Fuller v. Superior Court (2001) 87 Cal.App.4th 299, petitioners were shoppers who claimed they had been beaten by a shopping center’s security guards. (Id. at pp. 302–303.) They sued, among others, the individual guards, and noticed the guards’ depositions. (Id. at p. 303.) The guards moved for a protective order to prevent the depositions from going forward, as the United States Attorney’s Office and the FBI were investigating the incident, and the guards were at jeopardy of being criminally prosecuted. (Ibid.) The guards asked the trial court, among other things, to stay the depositions until they were no longer in jeopardy of criminal prosecution, i.e., once the applicable statute of limitations had expired. (Id. at p. 303.) The petitioners opposed the guards’ motion; to the extent the court was inclined to grant the guards’ motion, petitioners urged the court to issue an order prohibiting the guards from testifying at trial. (Ibid.) Before the trial court ruled on the guards’ motion, the FBI and the Assistant United States Attorney closed their files, although the United States Attorney’s Office indicated it might reopen the investigation if facts warranting prosecution were developed. (Id. at pp. 303–304.) The United States Attorney’s Office also refused to grant the guards use or transactional immunity. (Id. at p. 304.) The trial court found that a stay of discovery was not necessary.

The Court of Appeal approved of the trial court’s denial of a motion to stay the litigation filed by the defendants, and the denial of the plaintiff’s motion to prohibit the defendants from testifying at trial to matters about which they might, during deposition, invoke the privilege against self-incrimination. (Fuller, supra, 87 Cal.App.4th at pp. 302–303.) Part of the Court’s reasoning was that there was no specific event in question, such as a deposition, to warrant a blanket stay. Once the deposition was set, then the defendants could interpose the objections to specific questions which the court could then rule upon as to each question. (Ibid.) The request for a stay was determined to be premature and was overbroad, in that it allowed the defendants to determine what they would or would not answer. (Fuller, supra, 87 Cal.App.4th at p. 309.) The court ordered the depositions to proceed, and if the defendants chose to invoke their rights, then that would provide a clear record for the court to base a ruling upon whether a constitutional privilege was implicated. (Id. at pp. 309–310.) When sending the case back to the trial court, the Court of Appeal suggested that some accommodation be made to the defendants that allowed at least ancillary discovery by the plaintiffs. (Id. at p. 310.)

The Court discussed that “a civil defendant does not have the absolute right to invoke the privilege against self-incrimination. [Citation.] A party or witness in a civil proceeding ‘may be required either to waive the privilege or accept the civil consequences of silence if he or she does exercise it. [Citations.]’ [Citation.] Courts recognize the dilemma faced by a defendant who must choose between defending the civil litigation by providing testimony that may be incriminating on the one hand, and losing the case by asserting the constitutional right and remaining silent, on the other hand. [Citation.]” (Fuller, supra, 87 Cal.App.4th at pp. 305–306.)

“At the same time, courts must also consider the interests of the plaintiff in civil litigation where the defendant is exposed to parallel criminal prosecution. Plaintiffs are entitled to an expeditious and fair resolution of their civil claims without being subjected to unwarranted surprise. Among the myriad purposes of the civil discovery statutes is to safeguard against surprise and gamesmanship, and to prevent delay. [Citation.] It would be manifestly unfair to petitioners if the security guards were to invoke their privilege against self-incrimination and later elect to waive that privilege and testify at trial about the same matters. ‘A litigant cannot be permitted to blow hot and cold in this manner. [Citations.]’ [Citation.] ‘“‘[T]he fact that a man is indicted cannot give him a blank check to block all civil litigation on the same or related underlying subject matter. Justice is meted out in both civil and criminal litigation....’ [Citations.]”’ [Citation.]” (Fuller, supra, 87 Cal.App.4th at p. 306.)

Given “the interest of the court in fairly and expeditiously disposing of civil cases, and in efficiently utilizing judicial resources ... [s]taying civil discovery to await the outcome of a related criminal case might benefit the litigants and does not implicate constitutional issues. [Citation.] However, courts are guided by the strong principle that any elapsed time other than that reasonably required for pleadings and discovery ‘is unacceptable and should be eliminated.’ [Citation.]” (Fuller, supra, 87 Cal.App.4th at p. 306.) The Fuller court further explained that a stay of the action for the requested three years does not comport with judicial policies for resolving litigation without delay. It also “exposes both sides of the litigation to the risk of diminished memory and lost records. While a stay is a possible solution here [citation], the court’s decision was not an abuse of discretion.” (Fuller, supra, 87 Cal.App.4th at p. 309.)

The Court also held “[t]he depositions should proceed. If the security guards choose to invoke their right against self-incrimination with respect to particular questions, then they should do so at that time. This will provide the trial court with a clear record upon which to base a ruling about whether the constitutional privilege is implicated. Once that determination has been made, the trial court will be in a better position to exercise its discretion and fashion a procedural ruling that can accommodate the various interests of the parties and of the judicial system.” (Id. at pp. 309–310.)

Nonetheless, a civil defendant does not have the absolute right to invoke the privilege against self-incrimination. (Alvarez v. Sanchez (1984) 158 Cal.App.3d 709, 712.) A party or witness in a civil proceeding “may be required either to waive the privilege or accept the civil consequences of silence if he or she does exercise it.” (Ibid.) Neither the U.S. Constitution nor the California Constitution requires a stay of civil proceedings pending the outcome of a criminal proceeding, and simultaneous civil and criminal proceedings are unobjectionable unless they result in substantial prejudice to the rights of the parties. (Avant!, supra, 79 Cal.App.4th at p. 885.)

In Fuller, supra, at pp. 307–308, the Court discussed procedures Courts have designed to accommodate the specific circumstances of the case stating: “Historically, courts have devised a number of procedures designed to accommodate the specific circumstances of the case. One accommodation is to stay the civil proceeding until disposition of the related criminal prosecution. (Avant!, supra, 79 Cal.App.4th at p. 882, citing People v. Coleman (1975) 13 Cal. 3d 867, 885 [120 Cal. Rptr. 384, 533 P.2d 1024]; Pacers, supra, at pp. 689–690 [directing trial court to stay civil proceeding until criminal statute of limitations runs].) Another possibility is to allow the civil defendant to invoke the privilege against self-incrimination, even if doing so may limit the defendant’s ability to put on a defense. (Avant!, supra, at p. 882, citing People v. Coleman, supra, 13 Cal.3d at p. 886; Keating v. Office of Thrift Supervision, supra, 45 F.3d at p. 326 [refusal to stay proceedings not abuse of discretion].) Other accommodations have included conferring an immunity on the party invoking the privilege (see Blackburn v. Superior Court (1993) 21 Cal.App.4th 414, pp. 431-432 [discussing procedure for obtaining immunity]), or precluding a litigant who claims the constitutional privilege against self-incrimination in discovery from waiving the privilege and testifying at trial to matters upon which the privilege had been asserted. (A & M Records, Inc., supra, 75 Cal. App. 3d at p. 566 [circumscribed testimony preclusion not abuse of discretion].) Each of these procedural tools is devised based on the circumstances of the particular case. ‘“‘The alleviation of tension between constitutional rights has been treated as within the province of a court’s discretion in seeking to assure the sound administration of justice.”’ (Avant!, supra, at p. 882, quoting from People v. Coleman, supra, 13 Cal.3d at p. 885.)

The Fifth Amendment to the U.S. Constitution provides protection against self-incrimination in criminal proceedings. Evidence Code section 940 provides that party has to the right to refuse to disclose any matter that may tend to incriminate him. This privilege extends to any proceeding whether civil, criminal, administrative, judicial, investigatory, or adjudicatory. (Segretti v. State Bar (1976) 15 Cal.3d 878, 886; Pacers, supra, 162 Cal.App.3d at p. 688.) The privilege protects a party or witness from disclosing what he reasonably believes could be used in a criminal prosecution or could lead to other evidence for use against him. (Segretti, supra, 15 Cal.3d at 886; Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1011 (“It is not enough that the witness fears incrimination from answering the questions; the fear must be reasonable in light of the witness’s specific circumstances, the content of the questions, and the setting in which the questions are asked. [Citation omitted.] In other words, the privilege protects only against ‘real dangers,’ and not ‘remote and speculative possibilities’.” [Emphasis in original]).)

Generally, in civil matters, a party may be required to either waive the privilege or accept the civil consequences of silence if he/she exercises it. (Alvarez v. Sanchez (1984) 158 Cal.App.3d 709, 712.) Some of those consequences that may arise if Defendant’s assert the privilege include the striking of the pleading (but which is recognized as an extreme consequence), exclusion of related evidence, disallowing production of documents, exclusion of previous testimony, suppression of related defenses, and striking defendant’s previous testimony. (Id. at p. 713, fn. 3.) Nonetheless, courts also note a party asserting the Fifth Amendment privilege should suffer no penalty for his silence. (Pacers, supra, 162 Cal.App.3d at p. 689.) “Penalty” is not limited to fine or imprisonment, but includes any sanction making the assertion of the Fifth Amendment costly. (Ibid.)

The Pacer Court held an order staying discovery until the expiration of the criminal matter is a proper solution. (Id. at p. 690 [“This remedy is in accord with federal practice where it has been consistently held that when both civil and criminal proceedings arise out of the same or related transactions, an objecting party is generally entitled to a stay of discovery in the civil action until disposition of the criminal matter.”].) In Fuller, supra, 87 Cal.App.4th at p. 305, the Court of Appeal noted “a party is not entitled to decide for himself ... whether the privilege against self-incrimination may be invoked. Rather, this question is for the court to decide after conducting a particularized inquiry, deciding, in connection with each specific area that the questioning party seeks to explore, whether or not the privilege is well founded.”

In Pacers, the defendants sought a stay to being deposed until after the statute of limitations ran on their potential criminal assault and battery claims, even though they were not under indictment, the U.S. Attorney maintained an open file on their case. (Pacers, supra, 162 Cal.App.3d at pp. 687–88.) The Court of Appeal ordered the trial court to stay the defendants’ depositions until after the expiration of the criminal statute of limitations. (Id. at pp. 690–691.) The Court recognized the delay would cause inconvenience, but “protecting a party’s constitutional rights is paramount.” (Id. at p. 690.) The mere fact that they were not yet criminal defendants did not matter because they were nevertheless threatened with criminal prosecution. (Ibid.)

Additionally, part of civil discovery and a trial is to ascertain the truth. (In re Lifschutz (1970) 2 Cal.3d 415, 432 [“[A] historically important state interest [is to facilitate] the ascertainment of truth in connection with legal proceedings.”]; Pratt v. Union Pacific R. Co. (2008) 168 Cal.App.4th 165, 180 [“[T]he discovery act continues to share the same purpose as the federal rules to make discovery a ‘“simple, convenient, and inexpensive’ means of revealing the truth and exposing false claims.”]; Stadish v. Superior Court (1999) 71 Cal.App.4th 1130, 1145 [“The state has two substantive interest in regulating pretrial discovery. The first is to facilitate the search for truth and promote justice.”]; Davies v. Superior Court (1984) 36 Cal. 3d 291, 303 [“This court has recognized that extensive pretrial discovery promotes the ‘historically important state interest of facilitating the ascertainment of truth in connection with legal proceedings.”].)

Plaintiff argues if the civil action is not stayed, he is left with the choice of responding to discovery and risking incriminating himself in the pending criminal proceedings or remaining silent and risking the equivalent of default in this civil action. In opposition, Adir argues the five factors identified in Avant! and Keating militate against a stay. The first factor is the interest of the plaintiffs in proceeding expeditiously with the litigation or any particular aspect of it, and the potential prejudice of a delay. This case is somewhat unusual because the Plaintiff who now seeks a stay is the party who first initiated the case, as opposed to the more common situation where the defendant is seeking to avoid incriminating him or herself. Nonetheless, in light of the cross-complaint Plaintiff is also in the shoes of a defendant. Adir argues the risk of evidence loss is particularly acute here because the four key witnesses as well as other percipient witnesses are all retail employees, an industry known for high turnover. Adir argues the longer the case sits, the greater the risk of fading memories and witness unavailability and that electronic data, phone metadata, and account records may be overwritten, deleted, lost, or become harder to authenticate. Adir further argues third party custodians such as telecom providers, social media platforms, or IT vendors may not retain records indefinitely. Adir further argues a stay will make it harder to identify and name other Doe Cross-Defendants. Adir further argues the criminal case may not be cleanly adjudicated against Plaintiff in the end.

The second factor is the burden litigation may impose on the party requesting the stay. Adir argues Plaintiff faces no special or unique hardship and has created this problem for himself by filing this action in which he now seeks to stay himself. Adir argues Plaintiff should not be rewarded for his strategic decision to file this action which has now backfired against him.

The third factor is court convenience and efficient use of judicial resources. Adir argues the courts are guided by the strong principal that delays should be eliminated.

The fourth factor is the interests of third parties to the litigation. Adir argues a stay would adversely affect its insurer by delaying its ability to obtain a clear allocation of liability, evaluate the factual basis for losses, and make informed decisions regarding subrogation and related matters. Adir further argues a stay would risk harming employees and patrons Adir contends have an interest in a timely, transparent resolution.

The fifth factor is the public interest in both the civil and criminal litigation. Adir argues any delay would discourage individuals from coming to court to resolve disputes and therefore would be against the public interest.

Taken on balance, Plaintiff’s position is stronger here. Plaintiff is between a rock and a hard place in deciding how to proceed in this case if denied a stay. This places his constitutional right to remain silent to avoid incriminating himself in jeopardy. The only one of Adir’s arguments that has persuasive force is its contention that it may lose valuable evidence if the action is stayed given what it asserts is the transient nature of retail employees. Yet most of the information concerning the identity of the involved employees would seem to be within Adir’s own knowledge. Plaintiff alleged he did not know who the affected employees are, but Adir acknowledged in its cross-complaint that an incident occurred and presumably could conduct its own investigation to identify involved persons without involving Court processes that would implicate Plaintiff’s right to remain silent.

RULING For all the reasons set forth above, the Court grants the motion to stay the civil action pending disposition of the criminal prosecution.