Lee v. McDowell

Lee v. McDowell, 

.


STATE OF NORTH CAROLINA                    IN THE GENERAL COURT OF JUSTICE
                                               SUPERIOR COURT DIVISION
MECKLENBURG COUNTY                                   19 CVS 17741

KEITH LEE and YOUNG KWON
(individually and derivatively on behalf
of rFactr, Inc.),

                 Plaintiffs,

       v.                                   ORDER AND OPINION ON THIRD-PARTY DEFENDANTS RICHARD
CHRIS MCDOWELL; CHRIS LAU; and              BRASSER AND GREG GENTNER’S
ROBERT DUNN,                                  MOTION TO STAY AND CHRIS
                                              MCDOWELL’S REQUEST FOR
                 Defendants,                         SANCTIONS

       and

RFACTR, INC.,

                 Nominal Defendant.


CHRIS MCDOWELL,

                 Third-Party Plaintiff,

       v.

RICHARD BRASSER and GREG
GENTNER,

                 Third-Party
                 Defendants.


CHRIS LAU and ROBERT DUNN,

                 Third-Party Plaintiffs,

       v.
RICHARD BRASSER and GREG
GENTNER,

                   Third-Party
                   Defendants.


   1.     THIS MATTER is before the Court on Third-Party Defendants Richard

Brasser (“Brasser”) and Greg Gentner’s (“Gentner”) (together, the “Movants”) Motion

to Stay (the “Motion to Stay” or the “Motion”), (ECF No. 88), and Defendant and

Third-Party Plaintiff Chris McDowell’s (“McDowell”) Response to Motion to Stay

seeking sanctions (“McDowell’s Request for Sanctions” or the “Request”), 1 (ECF No.

91).

   2.     Having considered the Motion to Stay, McDowell’s Request for Sanctions,

the related briefing, and the arguments of counsel at the hearing on the Motion and

the Request on 18 August 2021 (the “Hearing”) 2, the Court, in the exercise of its

discretion and for the reasons set forth below, DENIES both the Motion to Stay and

McDowell’s Request for Sanctions.

        Moore & Van Allen PLLC, by Christopher Donald Tomlinson and
        William M. Butler, for Plaintiffs Young Kwon and Keith Lee.

        James, McElroy & Diehl, P.A., by John R. Buric, for Nominal Defendant
        rFactr, Inc.

        Troutman Pepper Hamilton Sanders LLP, by Mackenzie WillowJohnson, for Defendants and Third-Party Plaintiffs Robert Dunn and
        Chris Lau.


1 McDowell included his request for sanctions in his Response to the Motion to Stay rather

than file a separate motion. (See McDowell’s Resp. Mot. Stay 6–8, 11–12 [hereinafter
“McDowell’s Resp.”], ECF No. 91.)

2 All parties were represented by counsel at the Hearing.
        Rosenwood, Rose, & Litwak, PLLC, by Erik M. Rosenwood and Carl J.
        Burchette, for Defendant and Third-Party Plaintiff Chris McDowell.

        Bledsoe, Chief Judge
                                             I.

                  FACTUAL AND PROCEDURAL BACKGROUND

   3.     Plaintiffs Keith Lee and Young Kwon (together, “Plaintiffs”) filed this action

on 6 September 2019. (ECF No. 3.) They allege that McDowell and Defendants and

Third-Party Plaintiffs Chris Lau (“Lau”) and Robert Dunn (“Dunn”) (collectively,

“Defendants”) each breached their fiduciary duty of good faith as members of the

board of directors of Nominal Defendant rFactr, Inc. (“rFactr” or the “Company”), a

now-insolvent North Carolina corporation, (Verified Am. Compl. ¶ 3 [hereinafter

“Am. Compl.”], ECF No. 10), by failing to oversee Movants’ actions, resulting in the

demise of the Company. (Am. Compl. ¶¶ 3, 60.) Defendants seek indemnity and

contribution from Movants for Defendants’ putative liabilities via third-party

complaint. (McDowell’s Answer, Affirmative Defenses, Cross-cl., and Third-Party

Compl. 21–22, ECF No. 17; Lau and Dunn’s Answer Pls.’ Am. Verified Compl., Cross-

cl. and Third-Party Compl. 21–22, ECF No. 19.)

   4.     Separately, beginning as early as 4 December 2020, a federal grand jury has

been investigating Movants’ conduct concerning rFactr.             (McDowell’s Resp. 4.)

Although Movants’ counsel advised at the Hearing that neither a target letter 3 nor

an indictment nor any other process has been issued against either Brasser or



3 A target letter is “a prosecutor's letter to a potential defendant stating that a criminal

investigation is underway and suggesting that the recipient consult counsel.” Target Letter,
BLACK’S LAW DICTIONARY (10th ed. 2014).
Gentner, Movants contend that they face the possibility of parallel civil and criminal

consequences for their conduct as rFactr’s executive officers. As a result, Movants

seek a stay of the claims against them in this action, including a stay of Brasser’s

previously-scheduled deposition, so that they will not be required to exercise their

Fifth Amendment right against self-incrimination to their detriment in this civil

action.

   5.     McDowell’s Request for Sanctions focuses on Movants’ counsel’s conduct in

scheduling Brasser’s deposition and moving for a stay. Under the Court’s Second

Case Management Order, the deadline for the completion of all discovery in this

action was 14 May 2021. (ECF No. 75.) On 23 April 2021, counsel for Plaintiffs sent

an email copying all counsel of record that included as an attachment a notice of

deposition for Brasser and proposed 12 May 2021 as the date for his deposition.

(McDowell’s Resp. Ex. A, ECF No. 91.1.) Unbeknownst to Defendants, from 6 May

until 11 May 2021, Movants’ counsel negotiated with Plaintiffs’ counsel and offered

to provide an affidavit from Brasser in lieu of a deposition. (Movants’ Mem. Law

Supp. Mot. Stay 3 [hereinafter “Movants’ Mem. Supp.”], ECF No. 89; McDowell’s

Resp. 5; Chris Lau and Robert Dunn’s Mem. in Opp’n to Third-Party Defs.’ Mot. To

Stay 3 [hereinafter “Lau and Dunn’s Mem. in Opp’n.”], ECF No. 93.) Plaintiffs

rejected this offer. After exchanging nineteen emails on 13 May 2021, all parties

agreed that Brasser would be deposed on 8 June 2021. (McDowell’s Resp. Ex. N, ECF

No. 91.14.)
   6.    In the same email thread, Plaintiffs proposed an extension of the discovery

deadline from 14 May 2021 to 8 June 2021 for the sole purpose of deposing Brasser.

Movants’ counsel advised that this extension was “acceptable.” (McDowell’s Resp.

Ex. O, ECF No. 91.15.) Plaintiffs filed a motion for extension shortly thereafter and

the Court granted it the next day, briefly extending the discovery deadline for this

limited purpose. (See Joint Mot. Extend Disc. Deadline Sole Purpose Completing

Final Dep., ECF. No. 83; Fourth Amendment Case Management Order, ECF No. 85.)

   7.    Six days before Brasser’s deposition, Movants’ counsel informed all parties

that she intended to file a “motion to stay these proceedings pending the outcome” of

the grand jury investigation. (McDowell’s Resp. Ex. Q, ECF No. 91.17.) On 7 June

2021, the evening before Brasser’s deposition, Movants’ counsel filed the current

Motion to Stay, through which Movants seek a stay of the case against them until

either the criminal matter is resolved or a judgment is entered against Defendants

that triggers their claims for indemnity and contribution from Movants. (Movants’

Mot. Stay 2.)

   8.    Plaintiffs and Defendants oppose the Motion, and McDowell seeks sanctions

against Movants and Movants’ counsel for causing Defendants to incur substantial

expense in scheduling and preparing for Brasser’s deposition when he alleges

Movants’ counsel never intended for Brasser to appear and testify on the agreed-upon

date. Plaintiffs, Lau, Dunn, and rFactr declined to join McDowell’s Request for

Sanctions.
   9.     The Motion to Stay and McDowell’s Request for Sanctions are now ripe for

resolution.

                                             II.

                                        ANALYSIS

   A. Motion to Stay

   10.    It is within the Court’s discretion whether to grant a motion to stay. See

Bryant & Assocs., LLC v. ARC Fin. Servs., LLC, 

, 4 (2014).

   11.    Movants’ core contention is that permitting Brasser to be deposed would

potentially impair his Fifth Amendment protections in the parallel criminal

investigation and unduly prejudice him in this civil action. (Movants’ Mem. Supp. 2.)

In particular, Movants argue that because of the pending criminal investigation,

Brasser will be forced to invoke his right against self-incrimination should he be

deposed in this action, which will then be used by Plaintiffs and Defendants to his

disadvantage on summary judgment and at trial. 4

   12.    Plaintiffs and Defendants contend that the stay should be denied under

North Carolina and federal law because neither Brasser nor Gentner has been

indicted and a stay with its attendant delay would unduly prejudice them.

(McDowell’s Resp. 10; Pls.’ Resp. to Third-Party Defs. Richard Brasser and Greg




4 See, e.g., Baxter v. Palmigiano, 

 (1976) (recognizing “the prevailing rule

that the Fifth Amendment does not forbid adverse inferences against parties to civil actions
when they refuse to testify in response to probative evidence offered against them”); McKillop
v. Onslow County, 

, 63–64 (2000) (“The finder of fact in a civil cause may use
a witness’ invocation of his Fifth Amendment privilege against self-incrimination to infer
that his truthful testimony would have been unfavorable to him.”).
Gentner’s Mot. to Stay, [hereinafter “Pls.’ Resp. to Mot. Stay”], ECF No. 92; Lau and

Dunn’s Mem. in Opp’n 5–6.)

   13.    There is little North Carolina case law to guide trial courts in exercising

their discretion when considering requests to stay civil proceedings during a criminal

investigation. While North Carolina state courts recognize that a state trial court

may stay its proceedings pending the outcome of related federal litigation, especially

where the action before it involves the same parties and same issues, see, e.g.,

Howerton v. Grace Hosp., 

 (1996) (denying a motion to stay

because “ordinarily, the possibility of undergoing a second trial affects a substantial

right only when the same issues are presented in both trials”), neither the Court nor

the parties have identified any North Carolina appellate decisions addressing the

precise situation presented here.

   14.    Nevertheless, there are numerous federal court decisions in this context,

and the Court looks to those decisions for guidance. 5 To begin, the United States

Supreme Court has long recognized that the United States Constitution does not

preclude contemporaneous criminal and civil proceedings. See, e.g., U.S. v. Kordel,

 (1970); Standard Sanitary Manufacturing Co. v. U.S., 

, 52



5 North Carolina courts routinely look to federal decisions for guidance on procedural matters.

See, e.g., Turner v. Duke Univ., 

, (1989) (“The North Carolina Rules of Civil
Procedure are, for the most part, verbatim recitations of the federal rules[,]” so “[d]ecisions
under the federal rules are thus pertinent for guidance and enlightenment in developing the
philosophy of the North Carolina rules”); Harper v. Vohra Wound Physicians of NY, 

, 403, (2020) (noting that the court “looked to federal decisions for guidance” when
interpreting North Carolina’s rules of civil procedure); Window World of Baton Rouge, LLC
v. Window World, Inc., 

, at *42 n.29 (N.C. Super. Ct. Aug. 16, 2019)
(“In defining the contours . . . to the attorney-client privilege, the Supreme Court of North
Carolina has recognized that it is appropriate to look to federal case law for guidance”).
(1912). As a result, federal courts have routinely held that a defendant does not have

a constitutional right to a stay of a civil proceeding simply because the defendant may

be the subject of a criminal investigation. See, e.g., Microfinancial, Inc. v. Premier

Holidays Int’l, Inc., 

, 77–78 (1st Cir. 2004) (noting that “a defendant has

no constitutional right to a stay simply because a parallel criminal proceeding is in

the works”); Keating v. Office of Thrift Supervision, 

 (9th Cir. 1995)

(“The [United States] Constitution does not ordinarily require a stay of civil

proceedings pending the outcome of criminal proceedings.”); SEC v. Dresser Indus.,

Inc., 

, 1374 (D.C. Cir. 1980) (“In the absence of substantial prejudice to

the rights of the parties involved, [parallel civil and criminal] proceedings are

unobjectionable under our jurisprudence.”).

   15.   Nevertheless, the Supreme Court has made clear that courts may “defer[]

civil proceedings pending the completion of parallel criminal prosecutions when the

interests of justice seem[] to require such action.” Kordel, 

. For

a court to so conclude, “[t]he proponent of a stay [must meet] the burden of

establishing its need,” Clinton v. Jones, 

 (1997), and “clear and

convincing circumstances [must] be shown in support of the stay that outweigh

potential harm to the non-moving party,” Suntrust Mortg., Inc. v. Busby, No. 2:09cv3,

, at *20 (W.D.N.C. Dec. 7, 2009). Federal courts have

therefore observed that “the granting of a stay of civil proceedings due to [a] pending

criminal investigation is an extraordinary remedy, not to be granted lightly.” U.S. v.

Simcho, 

, 792–93 (5th Cir. 2009) (quotation marks and citation
omitted); see also Louis Vuitton Malletier S.A. v. LY USA, Inc., 

 (2d

Cir. 2012) (“[A] stay of a civil case to permit conclusion of a related criminal

prosecution has been characterized as an extraordinary remedy[.]”) (cleaned up)

(quotation marks and citations omitted). So, “absent a showing of undue prejudice

upon defendant or interference with his constitutional rights, there is no reason why

plaintiff should be delayed in its efforts to diligently proceed to sustain its claim.”

Louis Vuitton, 

.

    16.     When determining whether to stay civil proceedings until the completion of

a criminal matter, federal courts generally use a multi-factor balancing test including

some or all of the following factors:

          1) the extent to which the issues in the criminal case overlap with those
          presented in the civil case; 2) the status of the case, including whether
          the defendants have been indicted; 3) the private interests of the
          plaintiffs in proceeding expeditiously weighed against the prejudice to
          plaintiffs 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.

United FTC v. E.M.A. Nationwide, Inc., 

 (6th Cir. 2014). 6

    17.     Circuit courts have pointed out the particularized nature of this inquiry.

See, e.g., Microfinancial, Inc., 

, (“The decision to grant or deny such a

stay involves competing interests. Balancing these interests is a situation-specific



6 See also Louis Vuitton, 

 (using the same six-factor balancing test but
recognizing that balancing tests “can do no more than act as a rough guide for the . . . court
as it exercises its discretion”); Microfinancial, Inc., 

 (applying a substantially
similar seven-factor test, including the “status of the cases”); Keating, 

(applying a substantially similar five-factor test). For other potential factors, see Suntrust
Mortg., Inc., 

, at *21 (“Additional considerations have been
interests of persons not party to the civil litigation . . . the danger of discovery abuse, [and]
bad faith[.]”).
task, and an inquiring court must take a careful look at the idiosyncratic

circumstances of the case before it.”); Federal Sav. & Loan Ins. Corp. v. Molinaro, 

 (9th Cir. 1989) (“A court must decide whether to stay civil proceedings

in the face of parallel criminal proceedings in light of the particular circumstances

and competing interests involved in the case.”); Dresser, 628 F.2d at 1375 (“The court

must make such determinations in the light of the particular circumstances of the

case.”).

   18.     In the absence of guidance from North Carolina’s appellate courts, the Court

elects to apply the balancing analysis favored in the federal courts and considers each

factor in turn.

   19.     On factor one—the degree of overlap between the civil and criminal

proceedings 7—Movants contend that “[t]here is no question that there is overlap of

the issues” in the civil case and the grand jury investigation. (Mem. in Supp. 2.) As

proof, Movants attach an affidavit from Brasser’s criminal defense counsel asserting

that “the issues raised in this case appear to be identical to the issue Mr. Brasser is

being investigated for in the grand jury investigation.” (Motion to Stay Ex. 1 ¶ 6,

ECF No. 88.1.)




7 Some courts consider the overlap between the civil and criminal cases to be a threshold

question that should be applied before balancing other factors, see Ashworth v. Albers Med.,
Inc., 

 (S.D. W. Va. 2005) (“the requirement of the existence of a nexus
between the parallel proceedings sufficient to show that such proceedings are related and
involve substantially similar issues is the threshold factor for a stay”), while other courts fold
the degree of overlap into the multi-factor balancing test, see E.M.A. Nationwide, Inc., 

.
   20.   Federal courts have held that “a stay of civil proceedings may only be

appropriate when the pending civil and criminal proceedings involve substantially

similar issues[,]” Drolett v. Robinson, No. 1:20 CV 213 MR WCM, 

, at *6 (W.D.N.C. Feb. 25, 2021) (quoting Ellis v. Kirkman, Civil Action

No. 9:19-cv-2163-RMG-MGB, 

, at *4–5 (D.S.C. Oct. 16,

2020)), because “[i]f there is no overlap, there would be no danger of self-incrimination

and accordingly no need for a stay[,]” Trs. of the Plumbers & Pipefitters Nat’l Pension

Fund v. Transworld Mech., 

 (S.D.N.Y. 1995).

   21.   Whether a civil defendant has been indicted carries great weight in

considering this factor, otherwise “whether the proceedings will overlap is a matter

of speculation.” United States ex rel. Shank v. Lewis Enters., No. 04-CV-4105-JPG,

, at *10 (S.D. Ill. Apr. 21, 2006); see, e.g., SEC v.

Amerifirst Funding, Inc., Civil Action No. 3:07-CV-1188-D, 

, at *8 (N.D. Tex. 2008) (Because “no indictment has as yet been handed up

against [the defendant], the court cannot determine with certainty the degree of

overlap between [the civil] action and the criminal investigation.”); Alcala v. Webb

County, 

 (S.D. Tex. 2009) (“Prior to an indictment, whether

the issues will even overlap is a mere ‘matter of speculation.’ ”) (quoting Shank, 

, at *10); see also, e.g., Dresser, 628 F.2d at 1375–76 (“Other

than where there is specific evidence of agency bad faith or malicious governmental

tactics, the strongest case for deferring civil proceedings until after completion of
criminal proceedings is where a party under indictment for a serious offense is

required to defend a civil or administrative action involving the same matter.”).

   22.   Indictments, however, are just one way to satisfy this factor of the balancing

test. Federal courts have also granted stays when criminal investigators provide

notice that the criminal and civil suits involve overlapping issues. See, e.g., Ellis,

, at *5 (granting a stay where the FBI informed the

defendant that it was commencing an investigation of defendant’s use of force during

an arrest, an event that gave rise to a parallel civil suit); Walsh Sec. v. Cristo Prop.

Mgmt., 

 (D.N.J. 1998) (granting a stay after the government

“submitted a sealed, in camera affidavit elaborating on the status of the criminal

investigation”).

   23.   But the mere existence of a criminal investigation does not guarantee that

there will be an overlap with a concurrent civil case. For example, in Suntrust Mortg.,

Inc., a case from the United States District Court for the Western District of North

Carolina, the defendants feared that the FBI was investigating the same transactions

underlying the civil action against them.      To prove the overlap, the defendants

submitted an affidavit claiming that “an interview of an unnamed defendant [had]

been ‘attempted’ by the FBI and that the FBI would like to interview all defendants.”

Suntrust Mortg. Inc., 

, at *13. The court denied the stay, even

after “[a]ssuming the investigation [the affiant] suspects” was ongoing, because

granting a stay where “no indictment has issued and no target letters have been

provided would amount to an indefinite stay of these proceedings.” Id. at *26.
   24.      Movants here present even less compelling proof of overlap than did the

defendants in Suntrust. Not only do Movants lack an indictment or even a target

letter, but they also fail to offer evidence that prosecutors have contacted Brasser or

Gentner with information or questions about the criminal investigation. Instead,

Movants rely on an affidavit from Brasser’s criminal counsel averring “that Mr.

Brasser is a target of the grand jury investigation” and an unverified claim from

Movants’ Reply Brief that “many of the parties have been interviewed in the course

of [the criminal] investigation and thus were aware of the investigation and the

subject of that investigation.” (Motion to Stay, Ex. 1, ¶12; Movants’ Reply Supp. Mot.

Stay 3, ECF No. 98.) Because neither Brasser nor Gentner has received a subpoena,

a request for an interview, or a target letter, much less been indicted, the Court

concludes that the degree of overlap between this action and the criminal

investigation is purely speculative, which weighs against the entry of a stay.

   25.      On factor two—the status of the criminal case—Movants argue that the

Court should stay Brasser’s civil deposition because he is a pre-indictment civil

defendant under grand jury investigation. (Mem. Supp. 4.) Movants ask the Court

to balance the harms in favor of Brasser, contending that the grand jury investigation

puts enough pressure on Movants’ Fifth Amendment privileges to warrant granting

a stay. (Mem. Supp. 6.) The great weight of case law, however, is against Movants’

position.

   26.      In cases like this one, where a civil defendant is facing a parallel criminal

investigation but has not been indicted, courts will generally deny a motion to stay
the civil case. See Maryland v. Universal Elections, 

 (4th Cir. 2013)

(explaining that “[s]tays generally are not granted before an indictment has issued”

and noting that “[t]he district court’s denial of defendants’ motion to stay is in keeping

with the bulk of judicial authority, which holds that stays are generally not granted

before indictments have issued”); Anderson v. Fluor Intercontinental, Inc., No. 1:19-

cv-289, 

, at *7 (E.D. Va. Nov. 8, 2019) (denying a pre-

indictment motion to stay and noting that “stays are rarely granted before an

indictment has issued”); U.S. SEC v. Woodard, No. 2:13cv16, 

, at *5 (E.D. Va. Jan. 6, 2014) (lifting a stay and noting “[i]mportantly, this case

does not involve concurrent criminal and civil proceedings, but instead involves only

the potential for the future filing of criminal charges against Defendant”); Suntrust

Mortg., Inc., 

, at *24 (denying a motion to stay because

“the mere possibility that one may be the subject of an ongoing investigation is no

guarantee that one will be indicted”); Alcala, 625 F. Supp. at 401 (“[C]ourts generally

decline to impose a stay where the defendant is under criminal investigation, but has

yet to be indicted[.]”); A. Schulman, Inc. v. Citadel Plastic Holdings, No. 12459-VCL,

, at *5 (Ch. Nov. 2, 2017) (“Federal authorities frequently

conduct investigations, only a fraction of investigations lead to indictments, and the

timeline from investigation to indictment can be protracted; consequently, the routine

grant of pre-indictment stays would generate many false positives and result in

lengthy delays of civil litigation.”).
   27.   Indeed, some courts have concluded that a “pre-indictment motion to stay

can be denied on this ground alone.” Citibank, N.A. v. Hakim, 92 Civ. 6233, 

, *3 (S.D.N.Y. Nov. 17, 1993); see also, e.g., Doe v. City of

Scranton, Civil Action No. 3:20-490, 

, *5 (M.D. Pa. 2021)

(“Pre-indictment requests to stay parallel civil litigation are routinely denied because

the defendant faces a reduced risk of self-incrimination. . . . When a party seeking a

stay has not yet been indicted, the court may deny the motion on that ground alone.”)

(quotation marks and citations omitted).

   28.   Moreover, some circuit courts have upheld the denial of a stay even after a

civil defendant has been indicted. See Keating, 

 (holding that “any

remaining overlap between the [civil] and criminal proceedings did not make the

[court’s] refusal to stay the [civil] proceeding an abuse of discretion” where other

factors weighed against a stay); Louis Vuitton, 

 (holding that it was

not an abuse of discretion to deny a stay to defendants who had been indicted in a

parallel criminal proceeding where other factors weighed against the stay).

   29.   While it is true, as Movants contend, that some courts have issued pre-

indictment stays, those cases are rare, and those courts have generally done so only

when the criminal investigation had been sufficiently targeted and advanced against

the moving defendant, a circumstance not present here. See, e.g., Walsh, 

 (granting a pre-indictment motion to stay after the government “executed

search warrants and issued subpoenas to several defendants”); Parker v. Dawson,

Nos. 06-CV-6191 (JFB) (WDW), 06-CV-6627 (JFB) (WDW), 07-CV-1268 (JFB)
(WDW), 

, at 15 (E.D.N.Y. Aug. 27, 2007) (granting a pre-

indictment motion to stay because “a felony complaint ha[d] been filed against

[defendant]”).

   30.   As noted above, Movants have not shown any specific, targeted investigatory

or prosecutorial activity against either of them. They offer no evidence that either of

them have been served with subpoenas or search warrants, much less a target letter

or an indictment. This factor therefore weighs against granting a stay.

   31.   On factor three—the interests of and burdens on the plaintiff—Movants

emphasize the unique procedural posture of this case. They emphasize that the civil

defendants facing criminal investigation here are third-party defendants who are

only sued for indemnity and contribution and contend that staying the case against

them will not prejudice the other parties in the case. In particular, Movants argue

that Defendants will not be prejudiced by a stay because their indemnity and

contribution claims will not come to bear unless a judgment is rendered against

Defendants. (Supp. Mot. Stay 8.) Movants further argue that Plaintiffs will not be

prejudiced because their claims can proceed against Defendants if the motion to stay

is granted. (Supp. Mot. Stay 8.)

   32.   In pressing these arguments, however, Movants ignore Plaintiffs’ contention

that Brasser possesses information relevant to their claims.         While Plaintiffs

acknowledge that they could proceed with their claims without deposing Brasser,

they argue they have the right to prosecute their claims in the manner they choose

and with the evidence they seek to offer in support. (Pls.’ Resp. to Mot. Stay 9 n. 3.)
And while Movants argue that Plaintiffs have failed to show that Brasser’s testimony

is relevant to Plaintiffs’ claims, Plaintiffs identified at the Hearing specific topics they

intended to cover during Brasser’s deposition and have satisfied the Court that these

topics are relevant to the claims they brought against Defendants. Movants have

produced no case law—either in their briefs or at the Hearing— showing that their

procedural posture in this action should tilt the balancing analysis in favor of a stay.

   33.   The Court further notes that if the case were stayed as to Movants, not only

would Plaintiffs be forced to forego relevant testimony, but they would also be

prejudiced by further delay in a case that has been pending for nearly two years. The

outcome of the grand jury investigation remains speculative, and Movants request a

stay with no ascertainable end date. Courts disfavor indefinite stays, and this, too,

weighs against granting the stay that Movants seek. See United States v. Any & All

Assets of Shane Co., 

 (M.D.N.C. 1992) (noting that “stays should

not be indefinite ones”); AvalonBay Cmtys., Inc. v. San Jose Water Conservation

Corp., No. 07-306, 

, at *6 (E.D. Va. Aug. 27, 2007)

(denying a motion to stay, noting that “[p]laintiff will be prejudiced by the

undeterminable time length of any criminal prosecution because this makes it more

likely that: (1) documents will be misplaced, (2) memories will fade and (3)

[d]efendants will have fewer monetary resources available for [p]laintiff to collect on

any financial judgment”); see also Suntrust Mortg., Inc., 

, at *24

(rejecting a stay and noting that “the mere possibility that one may be the subject of

an ongoing investigation is no guarantee that one will be indicted or that the
investigation will go any further than an Assistant United States Attorney's desk. If

such matter proceeds further, it may in fact take years to for a grand jury to complete

its investigation, which is also no guarantee that an indictment will issue.”).

   34.    On factor four—the interests of and burdens on the defendant—Movants

argue that the unpredictability of the criminal investigation is itself grounds for a

stay because it would be unfair for Movants to invoke the Fifth Amendment

unnecessarily: “if Brasser was compelled to appear at his deposition he would have

no option but to invoke his Fifth Amendment right in response to any question he is

asked, while he may not ultimately need to do so if the federal grand jury does not

issue an indictment.” (Mem. in Supp. 6.) Movants complain that, faced with the

possibility (but not certainty) of criminal prosecution, Brasser could later learn that

invoking the Fifth Amendment in his civil deposition harmed his defense in this

action.

   35.    However, the fact that Brasser “may not ultimately need to” invoke the Fifth

Amendment, (Mem. in Supp. 6), is precisely why this factor weighs against granting

a stay—his criminal jeopardy is speculative while the delay from granting a stay is

certain. See, e.g., Microfinancial, Inc., 

 (“While pre-indictment stays of

parallel civil proceedings occasionally have been granted, an unindicted defendant

who argues that going forward with a civil proceeding will jeopardize his Fifth

Amendment rights usually presents a much less robust case for such extraordinary

relief.”); A. Schulman, Inc., 

, at *8 (holding that the concern

over defendants’ “potentially difficult choice of ‘waiving their Fifth Amendment rights
during civil discovery or asserting the privilege and losing the civil case’ . . . is

substantially reduced when the defendants have not yet been indicted”) (quoting In

re Herley Indus. Sec. Litig., No. 06-2596, 

, at *9 (E.D.

Pa. Apr. 11, 2007)).

   36.   After careful review, the Court concludes that the burden on Movants, while

real, is substantially reduced in the present circumstances where no investigatory

action has been directed against them and no indictment has issued. Accordingly,

the Court finds that this factor should not be afforded great weight in the balancing

test and further finds that the burden on Movants is outweighed by the burden the

other parties would suffer from the delay attendant to the requested stay.

   37.   On factor five—the interest of the court—the Court notes that it has an

interest in resolving disputes expeditiously. See, e.g., In re Scrap Metal Antitrust

Litig., Case No. 1:02CV0844, 

, * 21 (N.D. Ohio Nov. 7,

2002) (noting that a court “has an obligation to move its docket, and not let cases

languish before it”); United States v. Private Sanitation Indus. Assoc. of

Nassau/Suffolk, Inc., 

 (E.D.N.Y 1992) (“[C]onvenience of the

courts is best served when motions to stay proceedings are discouraged.”). This case

has been pending for two years. At the time the Motion was made, discovery was a

few days from its close and had been extended solely to permit Brasser’s deposition.

Entering the requested stay now would postpone the resolution of this action to an

unknown, likely faraway date based entirely on Movants’ speculative concern of a

possible criminal prosecution. The Court’s interest in the prompt adjudication of
justice therefore weighs against the entry of a stay. See, e.g., Microfinancial, Inc.,

 (affirming the denial of a stay, in part because “the court had an

interest in moving [the case] along, especially since the defendants were, in effect,

asking to stay proceedings for an indefinite (and potentially protracted) period”).

   38.   On factor six—the public interest—one federal court has persuasively

observed that “it is not in the public interest to require plaintiff, which has promptly

asserted its causes of action, to wait indefinitely because defendants may also be

subject to a criminal investigation or criminal prosecution on the same or

substantially the same underlying allegations.” Suntrust Mortg., Inc., 

, at *26. This factor, too, weighs against granting a stay.

   39.   To sum up, federal courts uniformly hold that stays are not generally

granted before a grand jury indicts a defendant—the procedural posture the Court

faces here. The degree of overlap between the civil and criminal cases is speculative

because the grand jury has not involved Movants in their investigation, much less

issued a target letter to or an indictment against either Movant. Plaintiffs have

shown that Brasser’s testimony is relevant to their claims against Defendants, and

Plaintiffs and Defendants have shown that they would be prejudiced by an undue and

unfair delay if a stay were granted. Finally, the Court and the public would benefit

from resolving this dispute expeditiously, while the requested stay would postpone

final resolution of this matter indefinitely. Movants may face some hardship if they

invoke the Fifth Amendment in this action, but all the other balancing test factors
weigh against granting the Motion. The Court, therefore, concludes, in the exercise

of its discretion, that the Motion to Stay should be denied.

   B. McDowell’s Request for Sanctions

   40.   The Court next turns to McDowell’s Request for Sanctions. 8 Under North

Carolina law, the Court has “broad discretion to determine if sanctions [are]

appropriate.” State v. Russell, 

, 565 (2020) (quoting State v. Nolen,

 (2001)).

   41.   McDowell alleges that Brasser’s counsel arranged for Brasser’s deposition

fully aware that she would not permit Brasser to testify and then waited to file a

motion to stay to postpone the deposition the day before the deposition was scheduled

to take place. (McDowell’s Resp. 5–6.) McDowell seeks sanctions for his reasonable

costs and attorneys’ fees related to the scheduling of Brasser’s deposition, preparing

for the deposition, and responding to the Motion to Stay. (McDowell’s Resp. 6.)

Although Brasser’s counsel’s conduct equally impacted all parties to the litigation, no

other party has joined in McDowell’s Request.

   42.   After carefully considering the record evidence, the briefs, and the

arguments of counsel at the Hearing, including Movants’ counsel’s explanation for

the conduct on which McDowell bases his Request, the Court, in the exercise of its

discretion, declines to impose sanctions in the totality of the circumstances here. See,

e.g., State v. Aguilar-Ocampo, 

 (2012) (citation omitted)


8 Although Movants challenge McDowell’s Request for Sanctions on grounds that McDowell

failed to file a separate motion and supporting brief as required under Business Court Rule
7.2, the Court nonetheless elects to consider the merits of McDowell’s Request, assuming
without deciding that the Request is properly made.
(“Because the trial court is not required to impose any sanctions for abuse of discovery

orders, what sanctions to impose, if any, is within the trial court's discretion.”).

                                           IV.

                                    CONCLUSION

   43.     WHEREFORE, the Court, in the exercise of its discretion, hereby

ORDERS as follows:

   A. The Motion to Stay is hereby DENIED; and

   B. McDowell’s Request for Sanctions is hereby DENIED.

         SO ORDERED, this the 14th day of September, 2021.


                                         /s/ Louis A. Bledsoe, III
                                         Louis A. Bledsoe, III
                                         Chief Business Court Judge