United States District Court, D. Delaware
E.I. du PONT de NEMOURS AND COMPANY, Plaintiff,
ANCHI HOU, an individual, and JOHN DOE Nos. 1, an entity, Defendants.,
March 2, 2017, Plaintiff filed claims of misappropriation of
trade secrets pursuant to 18 U.S.C. § 1836(b) and 6 Del.
C. § 2001 et seq., and breach of contract
against Defendants. (D.I. 1). On April 6, 2017, the Federal
Bureau of Investigation filed a criminal complaint against
Defendant Anchi Hou alleging Possession of Stolen Trade
Secrets in violation of 18 U.S.C. § 1832(a)(3). (D.I. 39
at 7). Defendant Hou moves to stay the proceedings pending
"the resolution of the [c]riminal [a]ction."
(Id. at 4). Alternatively, Defendant Hou moves to
stay discovery as to Defendant Hou to "allow Plaintiff
to continue to conducting discovery from third parties and
preparing its case, while protecting Mr. Hou's
constitutional interests." (Id. at 5-6).
C]ourt has discretion to stay a case if the interests of
justice require it." United States v. Kordel,
397 U.S. 1, 12 n. 27 (1970). The court may apply a six factor
test in determining whether to stay a civil case pending the
resolution of a criminal case. Moloney v. Gordon,
328 F.Supp.2d 508, 511 (D. Del. 2004). "[C]ourts
consider many factors, including (1) the extent to which the
issues in the civil and criminal cases overlap; (2) the
status of the criminal proceedings, including whether any
defendants have been indicted; (3) the plaintiffs interests
in expeditious civil proceedings weighed against the
prejudice to the plaintiff caused by the delay; (4) the
burden on the defendants; (5) the interests of the court; and
(6) the public interest." Id.
first factor, the extent to which the issues in the civil and
criminal cases overlap, weighs in favor of granting the stay
because the "the civil and criminal cases here involve
the same issue - the alleged theft of [Plaintiffs] trade
secrets." (D.I. 39 at 9). "The similarity of the
issues has been termed 'the most important issue at the
threshold' in determining whether or not to grant a
stay." Walsh Sec. v. Cristo Prop. MgmL, Ltd., 7
F.Supp.2d 523, 527 (D.N.J. 1998) (citation omitted).
Plaintiff argues that the criminal case "is at a very
early stage, " and the precision of overlap of the
issues is unknown. (D.I. 40 at 11). The overlap is evident
since Plaintiff provided the FBI with the "information
that forms the basis of the [c]riminal [c]omplaint."
(D.I. 39 at 9).
second factor, the status of the criminal proceedings, favors
granting the stay because "civil proceedings, if not
deferred, would undermine [Defendant's] privilege against
self-incrimination under the Fifth Amendment."
Javier H. v. Garcia-Botello, 218 F.R.D. 72, 75
(W.D.N.Y. 2003). Plaintiff argues a stay until the resolution
of the criminal case is "open-ended and indefinite"
since Defendant Hou "waived his speedy-trial rights and
agreed to a continuance." (D.I. 40 at 12). Defendant
Hou, however, agreed to a continuance because plea
negotiations are currently in progress. United States v.
Hou, 2:17-mj-07049-CLW, D.I. 11 (D.N.J. Apr. 10, 2017).
Plaintiff argues Defendant "Hou has not been indicted,
and no indictment is imminent." (D.I. 40 at 12).
"[Pre-indictment] requests for a stay are generally
denied" because "there is less risk of
self-incrimination, and more uncertainty about the effect of
a delay on the civil case." Walsh Sec, 7
F.Supp.2d at 527. "It is 'still possible' to
obtain a stay, even though an indictment or information has
not yet been returned, if the Government is conducting an
active parallel criminal investigation." Id.
(citing Milton Pollack, Parallel Civil and Criminal
Proceedings, 129 F.R.D. 201, 203 (1989)). Although no
indictment has been issued against Defendant Hou, he has been
charged by complaint. There is therefore an active criminal
investigation. Discovery against Defendant Hou poses a risk
of self-incrimination and would force Defendant Hou to assert
his Fifth Amendment privilege.
third factor, the plaintiffs interests in expeditious civil
proceedings weighed against the prejudice to the plaintiff
caused by the delay, heavily favors denying the stay.
Plaintiff has a "clear interest in having discovery
occur, for it is essential for [Plaintiff] to determine the
magnitude and extent of [the] theft, including what
[Defendant Hou] did with [Plaintiffs] trade secrets."
(D.I. 40 at 13). "A failure by the owner to employ
reasonable security measures to safeguard its trade secrets
can cause such information to lose its trade secret
status." Bro-Tech v. Thermax, Inc., 651
F.Supp.2d 378, 410 (E.D. Pa. 2009). "A trade secret once
lost is, of course, lost forever." FMC Corp. v.
Taiwan Tainan Giant Indus. Co., 730 F.2d 61, 63 (2d Cir.
1984). Plaintiff argues the trade secret of its
"Cyrel® flexographic printing plates are extremely
valuable, and [Plaintiff] has an entire business operation
employing thousands of individuals dedicated to their
manufacture, sale, and use." (D.I. 40 at 14).
fourth factor, the burden on the defendants, weighs in favor
of granting the stay. Defendant Hou has a clear interest in
protecting himself from self-incrimination during discovery
of this civil matter. (D.I. 39 at 10). Plaintiff argues
"any particular area where [Defendant Hou] may assert
his rights are speculative given that depositions have not
occurred, and that [Defendant Hou] has not yet responded to
any interrogatories." (D.I. 40 at 17). Defendant Hou
argues, "It is evident from the limited discovery
Plaintiff has already sought to obtain .. . that [Defendant
Hou] would be forced to assert his [Fifth] Amendment right,
" and this would "serve no legitimate purpose, but
rather, would unduly prejudice [Defendant Hou]" because
Plaintiff "would undoubtedly seek an adverse inference
against [Defendant Hou]." (D.I. 42 at 4-5).
fifth factor, the interests of the Court, weighs in favor of
granting a partial stay to discovery against Defendant Hou.
The Court has "an interest in efficiently managing its
caseload." In re Adelphia Communs. Sec. Litig.,
2003 WL 22358819, at *5 (E.D. Pa. May 13, 2003). Plaintiff
argues "there is no way to predict when the criminal
action will end, " and staying the case could just
promote inefficiency. (D.I. 40 at 18). "Without a stay,
[Defendant Hou] will likely assert [his] Fifth Amendment
rights, causing the court to decide a number of privilege
issues during civil discovery." In re Adelphia
Communs. Sec. Litig., 2003 WL 22358819, at *5. Defendant
Hou further argues that "the outcome of the [c]riminal
[a]ction may assist the parties in settlement
discussions." (D.I. 39 at 11).
final factor, the public interest, favors granting a partial
stay to discovery against Defendant Hou. The public benefits
from the Government conducting a complete and unhindered
investigation of criminal activity; however, "there is a
generalized public interest in 'upholding the
inviolability of trade secrets and enforceability of
confidentiality agreements.'" Bimbo Bakeries USA
v. Botticella, 613 F.3d 102, 119 (3d Cir. 2010)
(citation omitted). The public is not significantly harmed by
granting a partial stay to discovery against Defendant Hou;
furthermore, the public interest can be satisfied by allowing
discovery to continue against third parties.
all the factors, the Court finds that a partial stay is
warranted. IT IS HEREBY ORDERED that Defendant Hou's
motion to stay (D.I. 38) is GRANTED in part and is DENIED in
part. A partial ...