OVERVIEW: Defendants were the subject of a criminal investigation; therefore, they requested a stay of discovery procedures. The court held that this request was not appropriate, because there was no indictment when defendants made the request. Plaintiffs also wished only documentary discovery at the time. Because there would be no depositions, the need of expedient resolution of the civil proceedings outweighed defendants' self-incrimination concerns. As to the non-party's request to quash a subpoena, the court held that the subpoena was addressed to him as custodian of various records for business entities, not to him personally. Therefore, there was no danger that the subpoena would compromise the non-party's rights under U.S. Const. amend. V. The court also held that the subpoena was not too broad. It requested only the number of defendant employer's employees for whom benefit contributions should have been made, dates on which contributions should have been made, and dollar amounts.

OUTCOME: Court denied defendants' application for stay of discovery; stays pending criminal investigations were generally unavailable without indictment, and defendants' Fifth Amendment interests were not at risk when plaintiffs sought documents only. Court denied non-party's motion to quash subpoena, because request for documents was neither overbroad, nor would it compromise Fifth Amendment rights.

CORE TERMS: subpoena, custodian, discovery, deposition, criminal investigation, indictment, Fifth Amendment, business entities, non-party, beneficiaries, pretrial discovery, grand jury, telephonic, civil proceedings, benefit plan, ongoing, production of documents, implicate, scheduled, belonging, wished
 

 Constitutional Law : The Judiciary

The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings. Nevertheless, a court may decide in its discretion to stay civil proceedings when the interests of justice seem to require such action.

 Civil Procedure : Discovery or Disclosure

In the absence of an indictment, requests for a stay of civil discovery proceedings are typically denied.

 Civil Procedure : Discovery Methods : Requests for Production & Inspection
 Constitutional Law : Procedural Due Process : Self-Incrimination Privilege

A custodian of a business entity's records is not permitted to resist a subpoena on the grounds that the custodian's act of production will be personally incriminating. This is so because, when the custodian complies with the subpoena, the custodian acts in a representative capacity and not in a personal capacity. The custodian's acts are deemed to be those of the business entity and not the custodian's individual acts. Even if the custodian is the sole owner of the company and, thus, is closely identified with it, the custodian's act of production is still deemed to be that of the company. As a result, any incrimination that would flow from the production of the company's records, by the custodian, would not be self-incrimination.

COUNSEL: For MASON TENDERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND, ANNUITY FUND, TRAINING PROGRAM FUND, NEW YORK STATE LABORERS-EMPLOYERS COOPERATION AND EDUCATION TRUST FUND, NEW YORK LABORERS' HEALTH AND SAFETY TRUST FUND, BUILDING CONTRACTORS ASSOCIATION INDUSTRY ADVANCEMENT PROGRAM, JOHN J. VIRGA, ANTHONY SILVERI, plaintiffs: Lawrence A. Kravitz, Gorlick, Kravitz & Listhaus, P.C., New York, NY.
 
For MIETEK MASON CONTRACTORS, INC., NICK PONIATOWSKI, defendants: Linda A. Wendling, Tesser & Cohen, New York, NY.

JUDGES: KEVIN NATHANIEL FOX, UNITED STATES MAGISTRATE JUDGE.

OPINIONBY: KEVIN NATHANIEL FOX

OPINION: MEMORANDUM and ORDER
 
KEVIN NATHANIEL FOX
UNITED STATES MAGISTRATE JUDGE

INTRODUCTION

In this action, brought pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., plaintiffs seek to recover delinquent contributions, owed to various benefit funds, which they allege the defendants failed to tender to them on behalf of persons the defendants  [*2]  employed, who are beneficiaries of the funds.

Defendants have requested that all pretrial discovery in this action be stayed because of a criminal investigation being conducted by a local prosecutor's office. In addition, a non-party has asked that the Court quash a deposition subpoena, served on him by the plaintiffs, because of the criminal investigation being conducted by the prosecutor's office. The request of the defendants, to stay all pretrial discovery, and that of the non-party, that the subpoena served on him be quashed, are addressed below.

BACKGROUND

On April 25, 2000, the parties were scheduled to participate in a telephonic pretrial status conference with the Court. The day before the conference, the Court received a letter from counsel to the defendants, Mietek Mason Contractors, Inc. ("Meitek") and Nick Poniatowski ("Poniatowski"), requesting that all pretrial discovery in this action be stayed because of a criminal investigation of, among others, Meitek and Poniatowski, that was being conducted by the New York County District Attorney.

The letter explained that plaintiffs had requested that Poniatowski submit to a deposition. The letter also stated that criminal  [*3]  defense counsel for a non-party to the action, Saul Heifetz ("Heifetz"), wished to participate in the April 25, 2000 conference. Heifetz, to whom plaintiffs had issued a deposition subpoena, is also being investigated by the New York County District Attorney in connection with his use of Meitek employees at projects undertaken by Heifetz for the New York City School Construction Authority. The Court granted the request that Heifetz's counsel be permitted to participate in the April 25, 2000 telephonic conference.

When the telephonic conference was held, the Court was advised that no indictment had been returned by a grand jury as a result of the above-noted criminal investigation. Thereafter, in response to defendants' letter to the Court, counsel to the plaintiffs urged the Court not to stay all discovery in this action. He explained that plaintiffs were willing to delay deposition discovery, at this time, because they recognized that the oral examinations of Poniatowski and Heifetz would have implications for their Fifth Amendment rights. However, plaintiffs felt that document discovery should proceed unabated. Plaintiffs' counsel also stated that, inasmuch as the subpoena issued  [*4]  to Heifetz also directed that he produce certain business records, at the time scheduled for his deposition and, furthermore, given that his production of documents belonging to various business entities would not implicate Heifetz's Fifth Amendment rights, Heifetz should be required to produce the documents plaintiffs wished to examine.

For his part, Heifetz's counsel argued that the subpoena plaintiffs served on his client should be quashed because the mere production by Heifetz of documents belonging to business entities with which he is associated, implicates his Fifth Amendment rights. Heifetz's counsel requested permission to submit a writing to the Court that would set forth more fully the position of his client and the case law which supports that position. The Court granted that request and also gave plaintiffs' counsel an opportunity to submit a writing in support of plaintiffs' position: that the documents sought from Heifetz should be produced. Thereafter, the Court received and considered the respective writings.

DISCUSSION
 
Stay of Discovery

"The Constitution ... does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings  [*5]  ... Nevertheless, a court may decide in its discretion to stay civil proceedings ... 'when the interests of justice seem ... to require such action ... .'" Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d Cir. 1986)(citing and quoting S.E.C. v. Dresser Industries, 202 U.S. App. D.C. 345, 628 F.2d 1368, 1372 (D.C. Cir. 1980) (en banc), and U.S. v. Kordel, 397 U.S. 1, 12 n. 27, 90 S. Ct. 763, 770 n. 27, 25 L. Ed. 2d 1 (1970).

The provisions of ERISA §§ 502 and 515 were enacted to enable benefit plan participants and beneficiaries to protect their plan's solvency when employers fail to make the requisite financial contributions to the benefit plan(s) and, thereby, do not fulfill their collective bargaining and trust agreement obligations. See Benson v. Brower's Moving & Storage, Inc., 907 F.2d 310, 313-314 (2d Cir. 1990)(stating that "benefit plans must be able to rely on the contribution promises of employers because plans must pay out to beneficiaries whether or not employers live up to their obligations"). Accordingly, plaintiffs have an interest in obtaining discovery and moving forward with this litigation expeditiously.  [*6] 

No indictment has been returned by a grand jury charging the defendants with any criminal offense(s) based upon the ongoing investigation of the New York County District Attorney. Moreover, there is no certainty when or that an indictment may be obtained as a result of the criminal investigation. In the absence of an indictment, requests for a stay of civil discovery proceedings are typically denied. See e.g., United States v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., 811 F. Supp. 802, 805 (E.D.N.Y. 1992); In re Par Pharmaceutical, Inc. Securities Litigation, 133 F.R.D. 12, 13-14 (S.D.N.Y. 1990).

For the Court to stay all discovery in this action and delay, indefinitely, the parties from reaching a resolution of their dispute would not be prudent. This is especially so since plaintiffs have indicated a willingness to pursue document discovery only, at this time, to avoid the Fifth Amendment concerns that they recognize deposition discovery presents because of the ongoing criminal investigation. The parties, the public and the Court all have an interest in achieving a speedy resolution to the litigation and a concomitant interest  [*7]  in avoiding prejudice to anyone. Therefore, defendants' application that all discovery proceedings in this action be stayed is denied. Should circumstances change, for example, if plaintiffs determine that they can no longer prosecute the action meaningfully under their self-imposed deposition discovery restraint, or should an indictment(s) naming the defendants be returned by a grand jury, the parties will be free to revisit with the Court the issue of a court-imposed stay of discovery.
 
Heifetz Subpoena

A custodian of a business entity's records is not permitted to resist a subpoena on the grounds that the custodian's act of production will be personally incriminating. This is so because, when the custodian complies with the subpoena, the custodian acts in a representative capacity and not in a personal capacity. The custodian's acts are deemed to be those of the business entity and not the custodian's individual acts. See Braswell v. United States, 487 U.S. 99, 117-118, 108 S. Ct. 2284, 2295, 101 L. Ed. 2d 98 (1988). Even if the custodian is the sole owner of the company and, thus, is closely identified with it, the custodian's act of production is still  [*8]  deemed to be that of the company. As a result, any incrimination that would flow from the production of the company's records, by the custodian, would not be self-incrimination. See In the Matter of Grand Jury Subpoenas dated October 22, 1991 and November 1, 1991 v. Doe, 959 F.2d 1158, 1163 (2d Cir. 1992).

Although it is not altogether clear from the face of the relevant subpoena that it was addressed to Heifetz in his capacity as a custodian of the records for various business entities, the submissions made by the plaintiffs and by Heifetz's counsel suggest that it was understood that the subpoena was addressed to him in his representative capacity as a custodian of records. Therefore, Heifetz's claim, that his production of the documents will compromise his Fifth Amendment rights, is rejected by the Court.

In the submission made to the Court by counsel to Heifetz, he also urged that the subpoena be quashed because the range of documents it requires Heifetz to produce is too broad.

The Court finds that Heifetz's contention, that the request for documents made via plaintiffs' subpoena is too broad, is without merit. The documents requested are pertinent to the subject  [*9]  matter of this action. The subpoena appears to seek only documents that will enable plaintiffs to determine: (i) the number of Mietek employees for whom contributions to the various benefit funds should have been made; (ii) the location(s) of the projects on which the Mietek employees worked; (iii) the amount of contributions that should have been made to the benefit funds on behalf of Mietek employees; and (iv) the date(s) on which the contributions should have been made to the benefit funds. The range of documents sought through the subpoena is reasonable and appropriate.

Based on the record before the Court, Heifetz's application that plaintiffs' subpoena be quashed is denied. As discussed above, plaintiffs have determined not to depose Heifetz at this time. They seek only the production of documents from various business entities with which he is affiliated. Should plaintiffs change their position, and seek to examine Heifetz orally, he may renew his request that he not be compelled to give testimony at a deposition while the above-referenced criminal investigation is active.

CONCLUSION

For the reasons set forth above, defendants' application, that all discovery in the  [*10]  instant action be stayed, is denied. The application by a non-party, that a subpoena served upon him by plaintiffs be quashed, is denied.
 
Dated: New York, New York
May 23, 2000

SO ORDERED:

KEVIN NATHANIEL FOX

UNITED STATES MAGISTRATE JUDGE