The opinion of the court was delivered by: Hon. Blanche M. Manning
After discovering rodent infestation at a food storage facility owned by LaGrou Distribution Systems, Inc., the government began this civil in rem action seeking forfeiture of fourteen million pounds of meat and poultry stored at the facility, and separate criminal proceedings against LaGrou and several former officers. The companies that owned the food stored in the warehouse joined this civil case by filing a third-party complaint against numerous corporate entities and individuals associated with LaGrou.
To help preserve the criminal defendants' Fifth Amendment privilege against self-incrimination, Magistrate Judge Bobrick stayed discovery in the civil case. By September 2005, the criminal defendants had either pled or were found guilty. With their guilt established, Magistrate Judge Levin (who received the case after Magistrate Judge Bobrick retired) lifted the stay as the criminal defendants' protection against self-incrimination was no longer in jeopardy: "because the convictions and potential appeals in this case are limited to the evidence already introduced at trial, any additional evidence uncovered in the subject civil action cannot be considered in those criminal matters." The third-party defendants filed timely objections to Magistrate Judge Levin's order, and ask this court to reinstate the stay. For the reasons that follow, the court overrules the third-party defendants' objections.
In considering a party's objection to a magistrate judge's order on a nondispositive matter, the district court may modify or set aside any part of the order only if it is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); Wingerter v. Chester Quarry Co., 185 F.3d 657, 660-61 (7th Cir. 1998).
The third-party defendants contend that the basis for Magistrate Judge Levin's decision to lift the stay-that the criminal defendants were no longer entitled to the privilege against self-incrimination because their criminal prosecutions had concluded-was clearly erroneous for two reasons. First, the two criminal defendants found guilty at trial-LaGrou Distribution and former president and CEO Jack Stewart-have appealed or plan to appeal, and, according to the third-party defendants, the privilege of LaGrou and Stewart against self-incrimination survives through their direct appeals. Second, numerous other individuals associated with LaGrou who have not been criminally indicted yet fear being indicted in the future, and are therefore entitled to exercise their privilege against self-incrimination.
The Fifth Amendment protects a criminal defendant from being forced to testify against himself. Hubanks v. Frank, 392 F.3d 926, 932 (7th Cir. 2004). However, for a defendant in both criminal and civil matters, the Constitution does not protect against having to "choose between preserving his privilege against self-incrimination and losing the civil suit." United States v. Certain Real Property, Commonly Known as 6250 Ledge Road, Egg Harbor, Wis., 943 F.2d 721, 729 (7th Cir. 1991) (internal quotation and citation omitted). In other words, it is not unconstitutional to force a party to choose between his Fifth Amendment rights and the adverse inference that he may face by failing to testify in a civil proceeding. Id.; SEC v. Dresser Indus., 628 F.2d1368, 1375 (D.C. Cir. 1980) ("The Constitution, therefore, does not ordinarily demand a stay pending the outcome of criminal proceedings."). Nevertheless, even though the constitution does not compel a stay, the district court is free to issue one in its discretion. United States v. Kordel, 397 U.S. 1, 12 n.27 (1970) (district courts have authority to enter stays when required to serve the ends of justice); Certain Real Property, 943 F.2d at 729.
In determining whether the stay originally issued by Magistrate Judge Bobrick should remain in place, the court will revisit the six factors that Magistrate Judge Bobrick concluded, on balance, favored a stay. Those factors included (1) the extent to which the issues in the criminal and civil matters overlap, and whether the government initiated both proceedings; (2) the posture of the criminal proceedings; (3) the interests of the plaintiffs in proceeding expeditiously with this litigation and the potential prejudice to plaintiffs of a delay; (4) the burden the proceedings may impose on defendants; (5) the convenience of the court in the management of its cases; and (6) the interests of persons not parties to the civil litigation and of the public in pending civil and criminal litigation. See Magistrate Judge Bobrick's October 2, 2003 Memorandum Order at 4-5, 2003 WL 22284318, at **5-6 (collecting cases identifying the relevant factors).
1. Overlap of Issues & Whether Government Initiated Both Proceedings
As was the case when Magistrate Judge Bobrick weighed this factor, the issues in the criminal and civil matters overlap substantially, and the government initiated both. Accordingly, this factor still favors a stay.
2. Posture of Criminal Proceedings
The posture of the criminal proceedings have changed significantly. Two defendants, Michael Faucher and David Smith, pleaded guilty. Defendants LaGrou Distributions and Jack Stewart were found guilty after trial. According to the parties, no one else has been indicted, and courts generally issue stays to protect the interests of only those persons against whom an indictment has already issued. See Dresser, 628 F.2d at 1376 (where no indictment has issued, purpose of staying a civil matter is "far weaker"); Am. Express Bus. Fin. Corp. v. RW Prof. Leasing Srvs., Corp., 225 F. Supp. 2d 263, 264 (E.D.N.Y. 2002) (courts generally require an indictment to stay a civil case). Therefore, this factor no longer favors a stay.
3. Interests of Plaintiffs
When Magistrate Judge Bobrick initially evaluated this factor, he concluded that it did not strongly favor a stay because the passage of time had not yet jeopardized witnesses' memories, document retention, or the chances of collecting money damages. However, two additional years have passed and the risks of fading memories and lost documents have increased substantially during that ...