Case: 1:16-cv-08637 Document #: 4576 Filed: 04/29/21 Page 1 of 17 PageID #:299236
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`IN RE BROILER CHICKEN
`ANTITRUST LITIGATION
`
`This Document Relates To All Actions
`
`Case No. 16-cv-8637
`Honorable Thomas M. Durkin
`Magistrate Judge Jeffrey T. Gilbert
`
`MEMORANDUM OF LAW IN SUPPORT OF NON-PARTY
`JAYSON PENN’S MOTION FOR LEAVE TO INTERVENE
`AND FOR ENTRY OF A PROTECTIVE ORDER
`
`Jayson Penn respectfully seeks leave to intervene in the above-captioned
`action for the limited purpose of moving for entry of a protective order temporarily
`staying his deposition pending the resolution of a related criminal case. Mr. Penn—
`the former chief executive officer of poultry supplier Pilgrim’s Pride Corporation
`(“Pilgrim’s”)—is not a party to this action. However, he is a defendant in a criminal
`antitrust case pending in the District of Colorado, as well as a defendant in a
`related securities class action pending in that same District, and in a related
`shareholder derivative action pending in Colorado state court. See infra pp. 3-4.
`Plaintiffs’ counsel in this action notified counsel for Mr. Penn on April 22,
`2021 that this Court had entered a sealed order allowing Mr. Penn’s deposition to
`proceed now on certain topics, but not on others, and inquired about Mr. Penn’s
`availability to be deposed. While plaintiffs have not yet served a deposition
`subpoena on Mr. Penn, the issue of whether Mr. Penn should have to sit for a
`deposition now is clearly ripe given the Court’s recent order and plaintiffs’ request
`to schedule his deposition.
`
`

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`
`Allowing Mr. Penn’s deposition to go forward now would present him with a
`Hobson’s Choice. Mr. Penn would be forced to choose between invoking his Fifth
`Amendment privilege (thereby exposing him to a potential adverse inference in the
`two civil cases in which he is a defendant) or waiving his privilege and testifying
`substantively (thereby prejudicing his defense in the criminal action). Mr. Penn is
`the only proposed deponent who would be forced to make this choice, as he is
`apparently the only defendant in the criminal action who is to be deposed under the
`Court’s recent order.
`Plaintiffs’ counsel has indicated that the Court’s order allows the deposition
`of Mr. Penn to cover “all topics other than bid-rigging,” but that limitation does Mr.
`Penn little good. Mr. Penn’s Fifth Amendment rights extend beyond “bid-rigging,”
`see Hoffman v. United States, 341 U.S. 479, 486 (1951) (Fifth Amendment privilege
`extends to any testimony that would “furnish a link in the chain of evidence needed
`to prosecute the claimant for a federal crime”), and he has “reasonable cause” to
`believe the government would use any testimony he gives in the civil action against
`him in the criminal case, see id. The government has repeatedly made clear that its
`continuing criminal investigation is active and not limited to “bid-rigging.” See infra
`p.3. On the other hand, plaintiffs have many alternative avenues to discover facts
`about “topics other than bid-rigging” besides deposing Mr. Penn. For example, if
`plaintiffs seek information about the Georgia Dock price index, they can take the
`depositions of Georgia Department of Agriculture employees who worked on the
`Georgia Dock, and Rule 30(b)(6) depositions of the corporate defendants in this
`action such as Pilgrim’s, Mr. Penn’s former employer.
`The Court should grant leave for Mr. Penn to intervene in this action and
`issue a protective order staying his deposition pending the resolution of the criminal
`case against him.
`
`– 2 –
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`FACTUAL AND PROCEDURAL BACKGROUND
`
`Mr. Penn is the former chief executive officer of Pilgrim’s. Declaration of
`Michael F. Tubach in Support of Non-Party Jayson Penn’s Motion to Intervene and
`For a Protective Order (“Tubach Decl.”), ¶ 2. In June 2020, a grand jury returned an
`indictment against Mr. Penn and three other individuals for alleged bid-rigging and
`price-fixing in connection with the sale of broiler chicken products during the time
`period from 2012 through 2017. United States v. Penn et al., No. 1:20-cr-00152-PAB
`(D. Colo. June 2, 2020), ECF No. 1. In October 2020, the government obtained a
`superseding indictment, which names six additional defendants and identifies
`additional conduct purportedly violating Section 1 of the Sherman Act. Tubach Decl.
`Ex. 1 (“Supersed. Ind.”). As the government has indicated, its investigation and the
`indictments overlap substantially with the allegations in this action. See The
`United States’ Motion to Intervene and Stay Discovery, In re Broiler Chicken
`Antitrust Litig., No. 16-cv-8637, (N.D. Ill. June 21, 2019), ECF No. 2268, at 7
`(“Here, there is very substantial overlap between the civil and criminal matters.”).
`The government has also repeatedly stated that its criminal investigation is
`ongoing and active, and is not limited to bid-rigging. See Tubach Decl. Ex. 2 (Press
`Release, U.S. Dep’t of Justice, One of the Nation’s Largest Chicken Producers
`Pleads Guilty to Price Fixing and Is Sentenced to a $107 Million Criminal Fine
`(Feb. 23, 2021), (“This case is the result of an ongoing federal antitrust investigation
`into price fixing, bid rigging, and other anticompetitive conduct in the broiler
`chicken industry . . . .”) (emphasis added)).1 Earlier this month, the government
`reiterated in a filing in this case that its criminal investigation is ongoing. Brief in
`
`1 See also Tubach Decl. Ex. 3 (Press Release, U.S. Dep’t of Justice, Six Additional
`Individuals Indicted On Antitrust Charges In Ongoing Broiler Chicken
`Investigation (Oct. 7, 2020) (same)); Id., Ex. 4 (Press Release, U.S. Dep’t of Justice,
`Senior Executives at Major Chicken Producers Indicted on Antitrust Charges (June
`3, 2020) (same)).
`
`– 3 –
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`Support of United States’ Motion for Limited Deposition Stay, In re Broiler Chicken
`Antitrust Litig., No. 16-cv-8637, (N.D. Ill. Apr. 5, 2021), ECF No. 4520, at 1, 2, 8.
`After the initial indictment was returned against Mr. Penn in June 2020,
`certain purported Pilgrim’s shareholders filed a civil class action complaint in
`Colorado federal court under the Securities Exchange Act of 1934, in which they
`named Mr. Penn and others as defendants.2 The gravamen of the claim in the
`Securities Action is that executives at Pilgrim’s, including Mr. Penn, participated in
`an unlawful antitrust conspiracy; that Pilgrim’s failed to disclose material facts
`about that conspiracy; and that the class suffered damages as a result of that
`omission. Tubach Decl. Ex. 5 ¶ 6 (“Securities Compl.”). The antitrust conspiracy
`alleged in the criminal indictment is a critical predicate of that claim. See, e.g., id.,
`Ex. 5, ¶¶ 41-48.
`A week after the superseding indictment was returned on October 7, 2020, a
`separate group of purported Pilgrim’s shareholders filed a shareholder derivative
`action in Colorado state court naming Mr. Penn and others as defendants.3 The
`plaintiffs in the Derivative Action allege, inter alia, that Mr. Penn and others at
`Pilgrim’s conspired to rig bids, fix prices, restrict supply, and manipulate the
`Georgia Dock price index. E.g., Tubach Decl., Ex. 6, ¶¶ 5, 6, 19-20, 26, 94-98
`(“Derivative Compl.”). Their complaint incorporates the allegations at issue in the
`actions pending in this Court as well as those set forth in the original and
`superseding indictments. See, e.g., id., Ex. 6, ¶¶ 160-271, 377-78, 424-43.
`In a telephone call with prosecutors on March 29, 2021, undersigned counsel
`learned that certain plaintiffs in this action sought to depose Mr. Penn and that the
`
`
`2 U.F.C.W. Int’l Union Local 464A v. Pilgrim’s Pride Corp., No. 1:20-cv-01966-RM-
`MEH (D. Colo. July 6, 2020) (the “Securities Action”).
`3 In re Pilgrim’s Pride Corp. Derivative Litig., Case No. 2017CV30207 (Weld Cty.,
`Colo. Dist. Ct.) (the “Derivative Action”).
`
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`government intended to oppose their request. Id. ¶ 6. Undersigned counsel
`represented to the government that Mr. Penn agreed with the government’s
`position. Id. ¶ 6. On April 22, 2021, counsel for all plaintiffs in this action emailed
`undersigned counsel and counsel for Pilgrim’s. Id., Ex. 7. Plaintiffs’ counsel stated
`that this Court had entered a sealed order on April 19, 2021 in which it permitted
`plaintiffs to depose Mr. Penn “on all topics other than bid-rigging, which remains
`stayed.” Id. Plaintiffs asked that Mr. Penn agree to sit “for a 14-hour deposition
`given his importance to the case.” Id. Undersigned counsel contacted plaintiffs’
`counsel on April 26, 2021, to inform them that Mr. Penn intended to file a motion to
`intervene for the purpose of moving for a protective order to stay the deposition of
`Mr. Penn until the conclusion of the criminal case. Plaintiffs’ counsel responded on
`April 27, 2021 that they had no objection to the motion to intervene, but that they
`objected to the motion for a protective order. Id. ¶ 7.
`
`LEGAL STANDARDS
`
`Federal Rule of Civil Procedure 24 governs motions to intervene. Rule 24(a)
`directs courts to “permit anyone to intervene who . . . claims an interest relating to
`the property or transaction that is the subject of the action, and is so situated that
`disposing of the action may as a practical matter impair or impede the movant’s
`ability to protect its interest, unless existing parties adequately represent that
`interest.” FED. R. CIV. P. 24(a)(2). “The rule is straightforward: the court must
`permit intervention if (1) the motion is timely; (2) the moving party has an interest
`relating to the property or transaction at issue in the litigation; and (3) that interest
`may, as a practical matter, be impaired or impeded by disposition of the case. A
`proposed intervenor who satisfies these three elements is entitled to intervene
`unless existing parties adequately represent his interests.” Driftless Area Land
`Conservancy v. Huebsch, 969 F.3d 742, 746 (7th Cir. 2020).
`
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`Courts may permit a party who does not qualify for intervention of right
`under Rule 24(a) to intervene under Rule 24(b), provided the party timely moves
`and “has a claim or defense that shares with the main action a common question of
`law or fact.” FED. R. CIV. P. 24(b). “Two requirements must be met before a court
`may exercise its discretionary power to grant intervention under 24(b)(2). The
`proposed intervenor must demonstrate that there is (1) a common question of law or
`fact, and (2) independent jurisdiction.” Sec. Ins. Co. of Hartford v. Schipporeit, Inc.,
`69 F.3d 1377, 1381 (7th Cir. 1995). In making the discretionary determination
`whether to allow permissive intervention, “the court must consider whether the
`intervention will unduly delay or prejudice the adjudication of the original parties’
`rights.” FED. R. CIV. P. 24(b)(3).
`Federal Rule of Civil Procedure 26 governs motions for a protective order. For
`good cause, a court may enter a protective order “to protect a party or person from
`annoyance, embarrassment, oppression, or undue burden.” FED. R. CIV. P. 26(c)(1).
`Rule 26(c)(1)(D) authorizes courts to “forbid[] inquiry into certain matters, or limit[]
`the scope of disclosure or discovery to certain matters.” FED. R. CIV. P. 26(c)(1)(D).
`That authority extends to staying parallel civil litigation during the pendency of a
`criminal case “if the interests of justice require it.” Chagolla v. City of Chicago, 529
`F. Supp. 2d 941, 945 (N.D. Ill. 2008). In making that determination, courts
`“balance[e] the interests of the plaintiff, the defendants, and the public” and
`consider a non-exhaustive list of factors including:
`
`[W]hether the civil and criminal matters involve the same subject; whether
`the governmental entity that has initiated the criminal case or investigation
`is also a party in the civil case; the posture of the criminal proceeding; the
`effect of granting or denying a stay on the public interest; the interest of the
`civil-case plaintiff in proceeding expeditiously, and the potential prejudice the
`plaintiff may suffer from a delay; and the burden that any particular aspect
`of the civil case may impose on defendants if a stay is denied.
`
`Id.
`
`– 6 –
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`ARGUMENT
`
`I.
`
`The Court should allow Mr. Penn to intervene in this case for the
`limited purpose of seeking a stay of his deposition.
`
`A. Mr. Penn is entitled to intervene as of right under Federal Rule
`of Civil Procedure 24(a).
`
`Mr. Penn is entitled to intervene in this action. He has a significant,
`protectable interest in this litigation; his interests will be impaired if the Court
`denies his motion to intervene; the existing parties do not adequately represent his
`interests; his motion is timely; and Plaintiffs do not oppose his intervention.
`Because he satisfies all of Rule 24(a)’s prerequisites, this Court should grant Mr.
`Penn’s motion to intervene.
`First, Mr. Penn has a “direct, significant” and “legally protectable” interest in
`a stay of his deposition in this action that would be impaired should the Court
`permit the plaintiffs to depose him. See Zurich Cap. Mkts. Inc. v. Coglianese, 236
`F.R.D. 379, 385 (N.D. Ill. 2006) (“The requisite interest is something more than a
`mere betting interest . . . but less than a property right.”) (quotations omitted). As
`Judge Kennelly explained in Chagolla v. City of Chicago, civil defendants who face
`prosecution or investigation in parallel criminal actions face an impossible choice:
`“Any defendant who chooses to invoke the privilege runs the risk that this will be
`used as the basis for an adverse inference against him or her in th[e civil] case, . . . a
`practice the Fifth Amendment does not prohibit.” 529 F. Supp. 2d at 945.
`“Conversely, any defendant who chooses to testify or otherwise respond to discovery
`in th[e civil] case runs the risk that his or her responses will be used by prosecuting
`authorities to pursue the current criminal charges or other potential charges not yet
`filed.” Id.
`Mr. Penn faces that same Hobson’s Choice here. If he exercises his Fifth
`Amendment privilege at a deposition in this case, the plaintiffs in the Securities
`
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`Action and Derivative Action pending in Colorado will undoubtedly seek an adverse
`inference on the basis of that invocation. See Empress Casino Joliet Corp. v.
`Balmoral Racing Club, Inc., 831 F.3d 815, 834-35 (7th Cir. 2016) (affirming an
`adverse inference jury instruction based on representations in a defendant’s
`immunity letter from a parallel criminal proceeding); Lightspeed Media Corp. v.
`Smith, 761 F.3d 699, 705 (7th Cir. 2014) (affirming imposition of adverse inference
`based on defendants’ Fifth Amendment invocation in separate civil proceedings
`pending in a California district court). Conversely, if Mr. Penn testifies at a
`deposition in this case, he risks that the government will use his responses against
`him in the pending criminal case. See Chagolla, 529 F. Supp. 2d at 945.
`Denying Mr. Penn’s motion to intervene would “impair or impede” his ability
`to protect these direct, significant, and legally protectable interests. See FED. R. CIV.
`P. 24(a)(2). Either outcome in that scenario—Mr. Penn’s invocation of the Fifth
`Amendment or his testimony on matters that overlap with a pending criminal case
`and ongoing criminal investigation—threatens to foreclose his rights in a
`subsequent proceeding. See Meridian Homes Corp. v. Nicholas W. Prassas & Co.,
`683 F.2d 201, 204 (7th Cir. 1982) (“The existence of ‘impairment’ depends on
`whether the decision of a legal question involved in the action would as a practical
`matter foreclose rights of the proposed intervenors in a subsequent proceeding.”).
`Second, the parties to this action do not adequately represent Mr. Penn’s
`interests. The plaintiffs’ interests are in opposition to Mr. Penn’s—including,
`without limitation, because they seek to force him to sit for a deposition. The
`defendants in this action are not in the same position as Mr. Penn because they do
`not have Fifth Amendment rights and do not face the choice that Mr. Penn does. See
`Curcio v. United States, 354 U.S. 118, 122 (1957) (“It is settled that a corporation is
`not protected by the constitutional privilege against self-incrimination.”). Mr. Penn
`therefore meets the “minimal” burden of showing that the current parties’
`
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`“representation [of his interest] ‘may be’ inadequate” in this case. See Driftless Area
`Land Conservancy, 969 F.3d at 747 (internal citations and quotation marks
`omitted).
`Third, Mr. Penn’s motion for intervention is timely. To assess timeliness, the
`Seventh Circuit “consider[s] four factors: (1) the length of time the intervenor knew
`or should have known of his interest in the case; (2) the prejudice caused to the
`original parties by the delay; (3) the prejudice to the intervenor if the motion is
`denied; [and] (4) any other unusual circumstances.” Heartwood, Inc. v. U.S. Forest
`Serv., Inc., 316 F.3d 694, 701 (7th Cir. 2003) (quotations omitted). Mr. Penn makes
`this motion seven days after the plaintiffs informed him of this Court’s order and
`their intent to take his deposition, and one month after the government informed
`Mr. Penn’s counsel of the possibility that some plaintiffs in this case would seek to
`take his deposition. It is difficult to identify any prejudice to the parties attendant
`to that brief delay between Mr. Penn’s recognition of his interest in this case and
`the filing of this motion. And for reasons and circumstances already discussed,
`denying Mr. Penn’s motion to intervene would prejudice him in the civil and
`criminal actions to which he is a party.
`
`B.
`
`In the alternative, the Court should exercise its discretion
`under Federal Rule of Civil Procedure 24(b) to permit Mr.
`Penn to intervene.
`
`Should the Court determine that Mr. Penn cannot intervene as of right, it
`should exercise its discretion under Rule 24(b) and permit him to intervene. As
`noted earlier, Mr. Penn’s motion is timely. He “has a claim or defense that shares
`with the main action a question of law or fact” in common, namely, that he seeks a
`protective order to stay his deposition, and plaintiffs in this action want to take that
`deposition. See Fed. F. Civ P. 24(b). Further, no “undu[e] delay or prejudice for
`adjudication of the original parties’ rights” will result if Mr. Penn is permitted to
`
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`intervene. See Fed. R. Civ. P. 24(b). While there will be some small inconvenience
`and delay attendant to Mr. Penn’s request to intervene, that burden is minimal in
`light of the significant Fifth Amendment issues that Mr. Penn’s motion raises.
`Finally, the Court can exercise jurisdiction over this request. See Griffith v.
`University Hosp., L.L.C., 249 F.3d 658 (7th Cir. 2001) (recognizing that third parties
`may permissively intervene for the purpose of contesting protective orders); cf.
`Jessup v. Luther, 227 F.3d 993, 997 (7th Cir. 2000) (noting that “every court of
`appeals to have considered the matter” has held that “Rule 24 is sufficiently broad-
`gauged to support a request of intervention for the purposes of challenging
`confidentiality orders”).4 For that reason, and because it would be inconsistent and
`unjust if Mr. Penn could not intervene under Rule 24(b) for the purpose of filing a
`motion that Rule 26(c) explicitly authorizes him to make, the Court should permit
`Mr. Penn to intervene here. See FED. R. CIV. P. 26(c)(1) (“A party or any person from
`whom discovery is sought may move for a protective order in the court where the
`action is pending . . . .”).
`
`II.
`
`The Court should enter a protective order staying Mr. Penn’s
`deposition pending the resolution of his criminal case.
`
`Many of the same considerations that militate in favor of granting Mr. Penn
`leave to intervene also support the issuance of a protective order staying his
`deposition, as multiple courts in this jurisdiction have concluded in similar
`situations. See Chagolla, 529 F. Supp. 2d at 948; United States v. All Meat &
`
`
`4 In fact, courts in similar situations have not even required “intervenors [who] do
`not seek to litigate a claim on the merits” to establish an independent basis for
`jurisdiction. See, e.g., Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 473 (9th
`Cir. 1992) (“Intervenors do not ask the district to rule on additional claims or seek
`to become parties to the action. They ask the court only to exercise that power
`which it already has, i.e., the power to modify the protective order. For that reason,
`no independent jurisdictional basis is needed.”); Flynt v. Lombardi, 782 F.3d 963,
`966-67 (8th Cir. 2015) (same).
`
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`Poultry Prods., 2003 WL 22284318, at *4 (N.D. Ill. Oct. 3, 2003); Doe v. City of
`Chicago, 360 F. Supp. 2d 880, 881 (N.D. Ill. 2005); Cruz v. Cty. of DuPage, 1997 WL
`370194, at *4 (N.D. Ill. June 27, 1997). A court may stay parallel civil litigation “if
`the interests of justice require it,” Chagolla, 529 F. Supp. 2d at 945, and here the
`relevant factors counsel in favor of a stay of Mr. Penn’s deposition.
`First, there is a close relationship between the allegations at issue in this
`case and those that form the basis of the government’s superseding indictment, the
`Securities Action, and the Derivative Action. The superseding indictment alleges
`that Mr. Penn “participated in a continuing network of [s]uppliers and co-
`conspirators, an understood purpose of which was to suppress and eliminate
`competition through rigging bids and fixing prices and price-related terms for
`broiler chicken products sold in the United States” from 2012 through at least 2019.
`Supersed. Ind., ¶¶ 1, 47-48. The Securities Complaint’s allegations adhere closely to
`the allegations in the superseding indictment. Securities Compl. ¶¶ 41-47. And the
`Derivative Complaint includes allegations that Mr. Penn participated in a
`conspiracy to fix prices, rig bids, coordinate supply reductions, and manipulate the
`Georgia Dock price index from 2014 through the present. Derivative Compl., ¶¶ 1,
`5-6, 19-20.
`This “substantial overlap of issues between the criminal and civil
`proceedings, if not a near identity of those issues,” supports the entry of a limited
`stay of Mr. Penn’s deposition. See All Meat & Poultry Prods., 2003 WL 22284318, at
`*2; Chagolla, 529 F. Supp. 2d at 945-46 (“The close relationship between the civil
`and criminal matters weighs in favor of a stay.”); Glover v. Upmann, 2020 WL
`1433801, at *2 (N.D. Ill. Mar. 24, 2020) (noting that a “significant overlap of issues
`here. . . . weighs in favor of a stay”). That overlap is especially salient given the
`“danger that the government may use civil discovery to obtain evidence and
`information for use in its criminal prosecution, and by doing so, circumvent the
`
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`Fifth Amendment rights against self-incrimination.” See Cruz, 1997 WL 370194, at
`*3. Since the original indictment was filed in June 2020, the government has
`continued its criminal investigation and has already obtained one superseding
`indictment. The government should not be allowed to obtain discovery from Mr.
`Penn in the civil case that it cannot obtain in the criminal case.
`Second, the posture of the criminal action favors a stay of Mr. Penn’s
`deposition. “The strongest case for granting a stay is where a party under criminal
`indictment is required to defend a civil proceeding involving the same matter.”
`Hollinger Int’l, Inc. v. Hollinger Inc., 2008 WL 161683, at *2 (N.D. Ill. Jan. 16,
`2008). That describes Mr. Penn’s situation exactly. Mr. Penn is under indictment in
`the criminal case in Colorado and is simultaneously a defendant in two related civil
`cases. Each case turns upon his alleged participation in an antitrust conspiracy in
`the broiler chicken industry in approximately the same time period. A stay of Mr.
`Penn’s deposition is warranted under this factor, even if “it is unclear as to when
`the criminal defendant[] will go to trial.” See Cruz, 1997 WL 370194, at *3.
`Third, the public interest weighs in favor of a stay. While “[t]he public has an
`interest in the prompt disposition of civil litigation,” see Chagolla, 529 F. Supp. 2d
`at 946-47, there is a greater interest in “ensuring the criminal proceedings continue
`untainted by civil litigation.” See Glover, 2020 WL 1433801, at *4 (“Defendants call
`this the ‘greatest interest.’ . . . The Court agrees. Given the overlap of issues, it is
`important to avoid any possible interference with the prosecution . . . .”). As the
`court recognized in Glover, “such interference could arise if civil discovery, including
`sworn testimony, is elicited while the criminal charges are still pending.” Id.
`(quoting Tostado v. Jackson, 2011 WL 2116396, at *3 (E.D. Wis. May 25, 2011)).
`Fourth, the plaintiffs’ interest in resisting a stay of Mr. Penn’s deposition is
`neutral on balance. Although plaintiffs have “a significant interest in obtaining
`resolution of [their] claims and compensation if [they] prove [they are] entitled to
`
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`it,” Chagolla, 529 F. Supp. 2d at 947, “this is only one of the relevant factors to be
`considered in determining whether to grant [a] motion to stay.” See Cruz, 1997 WL
`370194, at *3; All Meat & Poultry Prods., 2003 WL 22284318, at *3 (noting that “the
`passage of time does not affect the [plaintiffs’] damage claims” against defendants
`and that business records pertaining to the claims in the case “will not become
`‘stale’ before the criminal proceedings conclude”).5 Moreover, the stay that Mr. Penn
`seeks relates only to his own deposition, not any other discovery that plaintiffs may
`be entitled to take.
`Fifth, the burden on Mr. Penn tips decisively in favor of a stay. As discussed,
`should Mr. Penn invoke his Fifth Amendment privilege at a deposition in this case,
`the plaintiffs in the Securities Action and Derivative Action will undoubtedly seek
`an adverse inference against him. Courts may permit those inferences even when
`the defendant testifies about the same subject matter in the civil action after the
`conclusion of the criminal proceedings. See Empress Casino, 831 F.3d at 834-35
`(holding that “[r]eversing course and testifying after invoking the Fifth Amendment
`privilege” in a separate proceeding “does not remove the relevance of a witness’s
`prior silence as one piece of evidence a jury may consider” in the instant
`proceeding); see also Chagolla, 529 F. Supp. 2d at 947 (“Though a person who claims
`the privilege in such circumstances and then has it used against him in a parallel
`
`
`5 See Chagolla, 529 F. Supp. 2d at 947 (granting a stay notwithstanding the delay
`imposed on a civil plaintiff, in part to avoid backing the parallel civil-criminal
`defendant “into a corner in which he has no viable choice but to claim the privilege
`[and] is forced to face a significant risk of unfair prejudice that may be virtually
`impossible to remedy”); see also Trs. of Plumbers & Pipefitters Nat. Pension Fund v.
`Transworld Mech., Inc., 886 F. Supp. 1134, 1139–41 (S.D.N.Y. 1995) (noting that
`“[t]he inconvenience and delay to plaintiffs that will unfortunately be caused by a
`stay are outweighed by the defendants’ significant Fifth Amendment concerns,
`particularly where a stay will not inordinately prolong the civil case and where the
`criminal prosecution could provide some benefit to the civil case and advance public
`interests”).
`
`– 13 –
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`

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`Case: 1:16-cv-08637 Document #: 4576 Filed: 04/29/21 Page 14 of 17 PageID #:299249
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`civil case ordinarily is given a chance to explain his invocation of the privilege, the
`finer points of risk-aversion as it relates to criminal defense practice easily can be
`lost on lay jurors.”). Forcing Mr. Penn into this position is unfair, given that “it is
`not at all rare for a person faced with criminal charges or a pending investigation to
`invoke the privilege even though he may have done nothing wrong, out of an
`abundance of caution prompted by a careful criminal defense lawyer.” See id.6 Mr.
`Penn fully expects to be acquitted at trial in the criminal matter, but by then it may
`be too late to avoid an adverse inference in the Securities Action and Derivative
`Action. See Empress Casino, 831 F.3d at 834-35.
`Again, Mr. Penn’s is the “strongest case for deferring civil proceedings until
`after completion of criminal proceedings.” Cruz, 1997 WL 370194, at *2 (quoting
`S.E.C. v. Dresser Indus., Inc., 628 F.2d 1368, 1376 (D.C. Cir. 1980)). He is “under
`indictment for a serious offense,” and “required to defend a civil . . . action involving
`the same matter.” See id. If not deferred, his deposition in this matter “might
`undermine [his] Fifth Amendment privilege against self-incrimination, expand
`rights of criminal discovery beyond the limits of Federal Rule of Criminal Procedure
`16(b), expose the basis of the defense to the prosecution in advance of criminal trial,
`or otherwise prejudice the case.” See id. Indeed, Mr. Penn’s position seems to be
`unique, in that he is apparently the only defendant in the criminal action whose
`deposition will go forward under the Court’s recent order. The Court should not
`permit the plaintiffs in this action to place Mr. Penn in the position of having to
`choose whether to compromise his civil or criminal defenses. See Heidt, supra, note
`6, at 1133 (noting the possibility of abuse where plaintiffs and potential plaintiffs
`
`
`6 See also Robert Heidt, The Conjurer’s Circle—The Fifth Amendment Privilege in
`Civil Cases, 91 YALE L.J. 1062, 1132-33 (1982) (“[T]here is an acute risk that
`responses to discovery requests in the civil case will harm the defendant’s strategic
`position in the criminal case. Faced with such a dilemma, most criminal defendants,
`innocent or guilty, probably would choose to invoke in the civil case.”).
`
`– 14 –
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`“schedule civil discovery before the criminal trial merely to get the criminal
`defendant’s invoking on the record” for the purpose of “admit[ting] the invoking
`against the invoker or his employer and, perhaps, of barring the invoker from
`testifying”). The Court should exercise its discretion to relieve Mr. Penn of that
`“severe burden” and stay his deposition. See Cruz, 1997 WL 370194, at *4.
`Finally, the interest in judicial economy weighs in favor of a stay. While the
`Court certainly has “an interest in moving the cases on its docket to an expeditious
`conclusion,” Nowaczyk v. Matingas, 146 F.R.D. 169, 175 (N.D. Ill. 1993), staying Mr.
`Penn’s deposition pending the resolution of the criminal proceedings “may eliminate
`much of the Court’s work in the civil action by simplifying the issues.” See All Meat
`& Poultry Prods., 2003 WL 22284318, at *5. For example, “[c]onvenience to the
`court will militate in favor of a stay where the outcome of a criminal case can be
`expected to remove the predicate for the assertions of the Fifth Amendment rights
`against self-incrimination by potential deponents and lighten the work load of a
`court to review those assertions.” Id. Lastly, staying Mr. Penn’s deposition—one
`small bit of discovery in this sprawling litigation—should not delay the broader
`action. The Court has already stayed discovery into “bid-rigging,” so a stay of Mr.
`Penn’s deposition should have little, if any,