MICHAEL D. COHEN, PERSONAL ATTORNEY FOR THE PRESIDENT OF THE UNITED STATES, ANNOUNCES: “I DECLINE TO ANSWER ON THE GROUND THAT MY ANSWER MAY TEND TO INCRIMINATE ME”
WHEN SHOULD THE COURT HALT PROCEEDINGS IN A CIVIL CASE IN ORDER TO PRESERVE CONSTITUTIONAL RIGHTS AND THE INTEGRITY OF A CRIMINAL CASE AND THE JUDICIAL SYSTEM?
Untitled, Pen and Ink, 19" x 12.5", Richard J Van Wagoner, Courtesy of Helen Bero-Van Wagoner and Richard A. Van Wagoner
In a criminal case, the fact finder is not permitted to draw an adverse inference from a defendant’s decision not to testify.
But
In a civil case, the fact finder usually is permitted to draw an adverse inference against a person who invokes his Fifth Amendment right against self-incrimination. The adverse inference is that the answer would have been harmful to that person’s interest.
• Question: “You ran the red light at the intersection of 9th and 9th at approximately 2:00 p.m. on April 28, 2018, correct?”
• Answer: “On advice of counsel, I decline to answer.”
• Adverse Inference: He ran the red light.
In a civil case, a plaintiff’s attorney who wishes to have the fact finder draw an adverse inference from a defendant’s refusal to answer under the Fifth Amendment must proceed with specific questions. A court will not permit the fact finder to draw an adverse inference from a general subject matter question such as, “If I ask you any questions about payments to Stormy Daniels on behalf of Donald Trump, will you invoke the Fifth Amendment?” Answer: “Yes.” Unhelpful. Rather, the questions must be sufficiently narrow to allow the specific inference to follow. Examples of a few questions that might work include:
• You paid a porn star $130,000.00, right? [On advice of counsel, I decline to answer.]
• You paid the porn star that money pursuant to a settlement agreement, correct? [On advice of counsel, I decline to answer.]
• You negotiated that settlement agreement, didn’t you? [On advice of counsel, I decline to answer.]
• You negotiated that settlement agreement on behalf of a client, correct? [On advice of counsel, I decline to answer.]
• You made that payment to the porn star on behalf of that client, didn’t you? [On advice of counsel, I decline to answer.]
• That client was the 2016 Republican Candidate for President of the United States, Donald J. Trump, correct? [On advice of counsel, I decline to answer.]
• Before paying her hush money, your client was [un]aware of negotiations to silence the porn star, right [the “un” is bracketed because the question may depend on (1) whether there is a factual predicate to ask the question, and (2) which adverse inference is better for the plaintiff’s case]? [On advice of counsel, I decline to answer.]
• The purpose of the payment was to prevent the porn star from speaking publicly about a sexual relationship with the Candidate, wasn’t it? [On advice of counsel, I decline to answer.]
• Your client was [un]aware of the terms of the settlement agreement before you signed it, correct? [On advice of counsel, I decline to answer.]
• At around the time you paid the porn star hush money, your client was [un]aware of that payment, right? [On advice of counsel, I decline to answer.]
• You paid the porn star the $130,000.00 a few days before the 2016 U.S. presidential election, right? [On advice of counsel, I decline to answer.]
• You intended to silence the porn star from speaking publicly about a 2006 sexual relationship Mr. Trump had with her, didn’t you? [On advice of counsel, I decline to answer.]
• You made the payment in order to prevent her from saying something that could have a negative influence on your client’s chances in the 2016 United States presidential election, correct? [On advice of counsel, I decline to answer.]
• You made the payment through a limited liability company, correct? [On advice of counsel, I decline to answer.]
• You used the limited liability company in order to hide the source of the payment, didn’t you? [On advice of counsel, I decline to answer.]
• You believed that payment was in violation of campaign finance laws, didn’t you? [On advice of counsel, I decline to answer.]
• That’s why you tried to hide the payment through a limited liability company, correct? [On advice of counsel, I decline to answer.]
• The source of the money used to pay her was a loan you obtained from a federally insured bank, right? [On advice of counsel, I decline to answer.]
• You submitted a written application to the federally insured bank for the loan to obtain funds to pay her, didn’t you? [On advice of counsel, I decline to answer.]
• In the written application, the bank required you to explain the purpose of the loan, correct? [On advice of counsel, I decline to answer.]
• You failed to disclose to the bank that the purpose of the loan was hush money for a porn star on behalf of a client, correct? [On advice of counsel, I decline to answer.]
• You lied in the application to the federally insured bank about the purpose of the loan, didn’t you? [On advice of counsel, I decline to answer.]
• You disclosed to the bank a false purpose for the loan, didn’t you? [On advice of counsel, I decline to answer.]
• The settlement you negotiated with the porn star was through her lawyer, correct? [On advice of counsel, I decline to answer.]
• You had secretly arranged to have her lawyer represent her in the settlement negotiations, correct? [On advice of counsel, I decline to answer.]
• The plan was that Ms. Daniels was not to know her lawyer had secretly agreed to work for both sides of this transaction, correct? [On advice of counsel, I decline to answer.]
• You and her lawyer executed that plan, right? [On advice of counsel, I decline to answer.]
• You did that so the settlement would be more favorable to your client, right? [On advice of counsel, I decline to answer.]
• The settlement was not an arms-length transaction, was it? [On advice of counsel, I decline to answer.]
• It was an inside job, right? [On advice of counsel, I decline to answer.]
These questions could be improved, but you get the idea. Parenthetically, the adverse inferences will not carry over to his client, the former Candidate, although the client may create his own adverse inferences by invoking his right against self-incrimination to specific questions in a civil case.
CONTEXT MATTERS
After I had completed this post, the Washington Post reported that the judge in the Stormy Daniels’ case had stayed the civil proceeding for 90 days due to the likelihood of an indictment against Mr. Cohen. https://www.washingtonpost.com/politics/judge-puts-stormy-daniels-case-on-hold-for-90-days-citing-likelihood-michael-cohen-will-be-indicted/2018/04/27/34d87316-4a67-11e8-ad53-d5751c8f243f
Despite the entertainment we all anticipated with parallel civil and criminal proceedings against Mr. Cohen and possibly Mr. Trump, as a criminal defense attorney I believe the judge’s decision to stay was probably correct. Here’s why.
Context matters when invoking one’s Fifth Amendment right against self-incrimination. Considerable tension can exist between parallel civil and criminal proceedings relating to the same subject. Having a civil case proceed through discovery or to trial before the criminal case risks significant negative impact on one’s constitutional rights. It forces one to choose between incriminating one’s self and asserting one’s Fifth Amendment rights with the resulting adverse inference. An adverse inference is tantamount to a default judgment in the civil case. Hence, defendants who are subject to such parallel proceedings appropriately move the civil court to stay proceedings until resolution of a criminal investigation and/or charges in order to protect constitutional rights and preserve fairness and the integrity of the justice system.
Courts have discretion to determine whether to stay civil proceedings when a parallel criminal prosecution or investigation is underway. A court may stay a civil action pending the resolution of a parallel criminal proceeding “when the interests of justice seem[] to require such action.” United States v. Kordel, 397 U.S. 1, 12 n.27 (1970). Such a stay contemplates special circumstances and the need to avoid substantial and irreparable prejudice.
A court has the power “to control the disposition of the causes of its docket with economy of time and effort for itself, for counsel, and for the litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). Absent abuse of discretion, an appellate court will not upset the lower court’s decision whether to stay civil litigation in deference to parallel criminal proceedings. What does that mean? Pretty much whatever the appellate court wants it to mean.
In determining whether to grant a stay of a civil case in whole or part, courts utilize a six factor test. The court gives each factor the weight it deems appropriate. The factors include: (1) the extent to which issues in the criminal case overlap with those presented in the civil case; (2) the status of the criminal case, including whether the defendant has been charged; (3) the private interests of the plaintiff in the civil case in proceeding expeditiously versus the prejudice to plaintiff caused by the delay; (4) the private interests of, and burden on, the defendant; (5) the interests of the Court; and (6) the public’s interest. Some considerations fall within more than one factor.
(1) OVERLAP: A stay of a civil case becomes more compelling where the potential for self-incrimination is more likely due to significant overlap between the civil and criminal cases. The risk of impairing the party’s Fifth Amendment rights presents a stronger case for staying discovery when there are similar issues between the civil and criminal cases. Where the criminal and civil actions involve the same matters, denial of the stay might undermine the defendant’s Fifth Amendment privilege against self-incrimination, expose the basis of the defense to the prosecution in advance of a criminal trial, or otherwise prejudice the criminal case.
(2) STATUS OF CRIMINAL CASE: An ongoing criminal prosecution weighs strongly in favor of granting a stay in the civil proceeding. Discovery in criminal cases is considerably more restrictive than in civil cases. A defendant has a legitimate concern that a prosecutor may exploit the civil discovery in order to build or enhance a criminal investigation or prosecution. Courts have prohibited such action, holding that liberal civil discovery may not be used to subvert limitations on discovery in a criminal case. Courts have also stayed civil cases where no criminal information or indictment has been filed but where an active criminal investigation is ongoing. An active and ongoing criminal prosecution weighs in favor of imposing at least a limited stay of discovery in the civil case.
(3) PRIVATE INTERESTS OF PLAINTIFF IN CIVIL CASE: Plaintiffs have an interest in the timely resolution of the civil case. Harm to a plaintiff can be mitigated by reaching a resolution of the criminal case, particularly where the matters at issue are the same or significantly overlap. [A conviction in a criminal case could establish liability in a civil case, for example, but liability in a civil case does not establish commission of a crime. The criminal case carries a higher burden of proof. Proof beyond a reasonable doubt satisfies the lesser burdens of proof in civil cases but not vice versa.] Criminal cases sometimes narrow and focus the issues presented in the civil litigation.
One’s Fifth Amendment rights are usually deemed to be more important considerations than plaintiffs’ interest in a speedy resolution of the civil claims, particularly in the interest of avoiding the quandary of choosing between waiving one’s Fifth Amendment rights or effectively forfeiting the civil case. Where a stay of civil proceedings would not cause serious or immediate injury to a plaintiff’s interests, resolution of the criminal case may be to the plaintiff’s ultimate benefit; the criminal case may result in the need for less discovery when evidence gathered in the criminal case may be later used in the civil case. If a plaintiff’s alleged injuries are not ongoing and the plaintiff is not in a position where the injuries will increase by a temporary stay of litigation, the stay may well be warranted.
(4) PRIVATE INTERESTS OF DEFENDANT: When a defendant faces criminal charges that are substantially similar to a parallel civil proceeding and civil discovery is unrestrained, the defendant is forced to make a Hobson’s choice ¬– either he asserts his right against self-incrimination and faces an adverse inference in the civil case, or he waives his right by testifying in the civil case and risks that his statements will be used against him in the criminal proceedings. Courts have held that defendants cannot, consistent with the Fifth Amendment privilege, be compelled to choose between waiving it or suffering the practical equivalent of a judgment by default in the civil case. The impact of a default judgment is significant given that plaintiffs often seek general damages, special damages, punitive damages, attorneys’ fees and costs and/or specific declaratory or injunctive relief that could significantly impact the interests of the parties [say, a declaration that a settlement agreement is invalid and non-binding].
Any testimony given in the civil case would directly impact the parallel criminal proceedings. Participating in substantive written and oral civil discovery runs the risk of self-incrimination. Moreover, a stay may be necessary to prevent the early disclosure of defense theories to the prosecution in the criminal case. Civil discovery could present the government an irresistible temptation to use that discovery to its advantage in the criminal case. Plaintiffs have a strong incentive to cooperate with and provide information to the government because a finding of criminal wrongdoing against their civil opponents significantly enhances their civil case.
(5) INTERESTS OF THE COURT: Judicial efficiency often favors staying the civil action. A stay in the civil proceeding could benefit the court by allowing the criminal case to limit and focus the issues to be decided. Courts consider the possibility that a stay of civil proceedings pending the conclusion of the criminal trial may narrow the issues, streamline discovery, and foster settlement discussions in the civil case. Courts have granted stays of civil discovery, recognizing that a resolution of the criminal case may reduce the scope of discovery in the civil case and the evidence gathered during the criminal prosecution can later be used in the civil action.
(6) PUBLIC INTEREST: Courts often find a stay in the civil proceedings is in harmony with the public interest. The public interest favors a civil case giving way to a criminal case. “[A]dministrative policy gives priority to the public interest in law enforcement. This seems necessary and wise that a trial judge should give substantial weight to it in balancing the policy against the right of a civil litigant to reasonably prompt determination of his civil claims and liabilities.” Campbell v. Eastland, 307 F.2d 478, 487 (5th Cir. 1962).
IF THE COURT DECLINES TO STAY THE CIVIL CASE, THE COURT STILL MAY IMPOSE LIMITATIONS ON DISCOVERY IN ORDER TO PRESERVE CONSTITUTIONAL PROTECTIONS
If the court is unwilling to stay the civil case, the court may fashion a stay that will allow the civil case to proceed but ensure constitutional rights are protected. A complete stay of a civil case is one option available to a court when the defendant is faced with a parallel criminal proceeding. Alternate tools include the imposition of protective orders, sealed interrogatories, a stay for a finite period of time, or a stay limited to a specific subject matter. With a limited stay, the parties could still proceed with discovery by gathering documents and conducting depositions of witnesses who are not targets of the criminal proceedings.
*My brother the very talented fiction writer and novelist, Robert Hodgson Van Wagoner, deserves considerable credit for offering both substantive and technical suggestions to https://medium.com/@richardvanwagoner and https://lastamendment.com
**My daughter Angela Moore, a professional photographer, photographed more than 500 pieces of my father’s work. On behalf of the Van Wagoner Family Trust, she is in the process of compiling a collection of his art work. The photographs of my father’s art reproduced in lastamendment.com are hers.