Before the Court en banc. Opinion by Justice Saitta.
In this original petition for a writ of mandamus or prohibition, the Court addressed the district court’s denial of petitioners’ motion to stay a civil proceeding during the pendency of a parallel criminal investigation. Real parties in interest Kenneth and Yvonna Gragson brought civil suit against Petitioners, alleging that Petitioners defrauded them by operating a real estate Ponzi scheme. During the course of discovery, Petitioners learned that the Federal Bureau of Investigation (FBI) had begun a criminal investigation into the criminality of the scheme, that real parties in interest were putatively funneling obtained discovery to the FBI, and that the FBI investigation began at the behest of the real parties in interest. Petitioners then moved the district court to stay all discovery that would require testimonial statements from their officers and employees, which the district court summarily denied. In reviewing stays in the context of parallel proceedings, the Nevada Supreme Court noted that parallel criminal and civil proceedings often put defendants in a Catch-22: waive the Fifth Amendment privilege during testimony in the civil proceeding, which may reveal incriminating information to criminal investigators, or assert Fifth Amendment privileges and forego the opportunity to deny allegations in the civil suit, with the practical effect of “forfeiting” the civil matter. But this Catch-22 does not mandate a stay. Instead, such situations require a “highly nuanced” balancing of defendants’ Fifth Amendment rights against the plaintiffs’ interest in swift resolution of the civil suit and the court’s efficient use of judicial resources. In applying the Ninth Circuit’s five-factor test to balance the interests of all parties, the Court noted that Petitioners’ interests were minor because they had not yet been indicted and the record did not support the charge that the real parties interest were mere conduits for the FBI investigation. The plaintiffs’ interests in a swift resolution were significant because many of the key witnesses were elderly, meaning a stay could prevent them from testifying, and because the complex nature of the fraud claims required difficult proof that often erodes over time. Moreover, the court’s interest in efficiency was strong because no indictments were present, meaning a stay would have an indefinite, and perhaps protracted, duration, nor did Petitioners present any evidence showing they were likely to be indicted. Thus, because the balance tipped away from the Petitioners, the district court did not abuse its discretion when it denied their motion for a stay. Writ denied. (Rory T. Kay, Associate in the Las Vegas office of McDonald Carano Wilson LLP).
