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Cmb Export, LLC v. Atteberry

United States District Court, C.D. Illinois, Rock Island Division

August 20, 2014



SARA DARROW, District Judge.

Plaintiffs CMB Export, LLC, and CMB Summit, LLC, d/b/a/CMB Regional Centers (collectively "CMB") are suing Defendants Kimberly Atteberry, Christopher Atteberry, and Vermilion Consulting, LLC ("Vermilion"), for alleged violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and the Illinois Trade Secrets Act, 765 ILCS 1065, tortious interference with prospective economic advantage, civil conspiracy, and breach of fiduciary duty. Defendants move to stay these proceedings due to a parallel criminal investigation. Mot. Stay, ECF No. 25. As explained below, a stay is not appropriate in this case. The Court therefore DENIES Defendants' Motion to Stay Proceedings, ECF No. 25. At this time, the Court also enforces its Order denying Defendants' Motion to Seal and directs the Clerk to unseal ECF Nos. 14, 15, 19, and 20. Defendants' sealed Motion to Stay, ECF No. 23, and Plaintiffs' Motion to Strike or Consolidate, ECF No. 26, are MOOT.


CMB operates "Regional Centers" under the federal EB-5 Visa Program. Compl. ¶ 8-9, ECF No. 1. This program allows foreign nationals to secure permanent residency status in the United States by investing in various development projects here. Id. ¶ 7-9. CMB alleges that it collects and maintains "highly confidential personal information on potential investors, including highly sensitive financial data, highly confidential and privileged attorney-client information, [and] highly confidential and proprietary investment project information." Id. ¶ 10. CMB also "develop[s] and maintain[s] its own proprietary business models for client contact, outreach, project evaluation, and project development." Id.

Kimberly and Christopher Atteberry are married. Id. ¶ 15. Together, they established Vermilion Consulting, LLC. Id. ¶ 4; Mot. Stay ¶ 1, ECF No. 25. Kimberly began working for CMB on July 18, 2011, first as an independent contractor, and then as a full-time vice president beginning November 14, 2012. Compl. ¶ 11-12. CMB's owner, Pat Hogan, hired Christopher on August 27, 2012, to work within his auction business, Rock Island Auction. Id. On February 26, 2013, Kimberly resigned from CMB in an email to Hogan, id. ¶ 17, and Christopher provided notice of his resignation from Rock Island Auction, Mot. Stay ¶ 3. CMB alleges that both Kimberly and Christopher removed significant amounts of CMB's confidential, proprietary, and privileged information prior to resigning, and are using the information to further Vermilion's business. Compl. ¶ 19-21.

CMB contacted the Rock Island Police Department when it discovered the alleged removal of information. Id. ¶ 22; Mot. Stay ¶ 6. Officers executed a search warrant at the Atteberrys' residence on March 4, 2013. Mot. Stay ¶ 7. They seized four computers, an iPad, two iPhones, a briefcase, a DVD player, and files and documents. Id. Defendants state that the seized materials were shown to CMB representatives, and that a CMB representative was permitted to take photographs of the materials. Id. ¶ 8.

The parties agree that the FBI executed search warrants on April 4, 2013, to obtain from the Rock Island Police Department the materials seized from the Atteberrys' residence. Mot. Stay ¶ 14; Opp. Stay 3, ECF No. 15. Defendants state that on October 30, 2013, and again on February 18, 2014, the U.S. Attorney's Office for the Central District of Illinois "confirmed the existence of [an] open federal criminal investigation" with respect to Kimberly and Christopher into the "issues which gave rise to the federal search warrants." Mot. Stay ¶ 20-21.

CMB filed its five-count Complaint in this case on June 14, 2013. ECF No. 1. On November 5, 2013, Defendants filed under seal a Motion to Stay the Proceedings. Following the Court's February 13, 2014 Order, ECF No. 24, denying Defendants' Motion to Seal, ECF No. 12, Defendants filed an amended Motion to Stay, ECF No. 25, on February 25, 2014. CMB renewed its Opposition to the Motion to Stay, ECF No. 15, in a Response filed on March 14, 2014, ECF No. 27. CMB also moved to strike or consolidate Defendants' amended Motion to Stay. Mot. Strike, ECF No. 26.


Defendants argue that a stay is necessary because they "find themselves in a position wherein they will suffer unfair prejudice and tactical disadvantage in both civil and criminal arenas." Mot. Stay ¶ 22. They theorize that the federal criminal investigation has been "initiated and orchestrated by Plaintiffs, " id. at 1, and claim that "[a]bsent a stay, Kimberly and Christopher will be forced to choose between defending against this civil case or compromising their constitutional protections under the Fifth Amendment and otherwise in connection with the ongoing criminal matter, " id. ¶ 22. Defendants request that this case be stayed "until the criminal investigation is concluded, a prosecutive decision rendered by the U.S. Attorney's Office, and criminal proceedings, if any were to be filed, are put to rest." Id. ¶ 22.

I. Legal Framework

A court's broad discretion in deciding whether to stay proceedings stems from its power 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., 299 U.S. 248, 254 (1936); see also Clinton v. Jones, 520 U.S. 681, 706-07 (1997). Granting of a stay "is the exception, not the rule, and the party seeking the stay has the burden of demonstrating it is necessary." Hollinger Int'l, Inc. v. Hollinger Inc., No. 04 C 698, 2005 U.S. Dist. LEXIS 14437, at *8 (N.D. Ill. July 15, 2005). A stay is appropriate in "special circumstances" when there is a need to avoid substantial and irreparable prejudice. United States v. Certain Real Property, Commonly known as 6250 Ledge Road, Egg Harbor, Wis., 943 F.2d 721, 729 (7th Cir.1991). For example, the interest of justice may require a stay when a defendant in a civil suit is also a defendant in parallel criminal proceedings; the pendency of a parallel criminal action may force the defendant to choose between preserving his or her privilege against self-incrimination and losing the civil suit.[1] Chagolla v. City of Chicago, 529 F.Supp.2d 941, 945 (N.D. Ill. 2008). The fact that the defendant faces this choice does not automatically entitle him or her to a stay of the civil case, however, and the mere existence of the criminal proceeding does not, by itself, undercut his or her privilege against self-incrimination. Id. When a party to a civil suit moves to stay the proceeding because of an existing or impending criminal action, a court will consider a non-exclusive list of six factors:

(1) whether both actions involve the same subject matter;
(2) whether both actions are brought by the ...

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