Judge Christopher K. Lui, Case Number: 22STCV01293, Date: 2024-02-07 Tentative Ruling

Judge: Christopher K. Lui, Case: 22STCV01293, Date: 2024-02-07 Tentative Ruling

Case Number: 22STCV01293 Hearing Date: February 7, 2024 Dept: 76

Plaintiff alleges that Defendants have marketed unauthorized health insurance plans and insurance, as purported health care sharing ministry (“HCSM”) plans, to Californians, but refused to pay for any member’s medical costs.

Defendants Shelley Steele, Timothy Candace Moses, Chase Moses (the “Moses Defendants”) and First Call Telemedicine, LLC (“First Call”) move for a stay of discovery in these proceedings pending resolution of criminal proceedings in Texas.

TENTATIVE RULING

Defendants Shelley Steele, Timothy Candace Moses, Chase Moses and First Call Telemedicine, LLC’s motion for stay of discovery is GRANTED IN PART.

Discovery as to Defendants Shelley Steele, Chase Moses, First Call Telemedicine LLC and Timothy Candace Moses is ordered STAYED for six months. A status conference is set for August 7, 2024 at 8:30 a.m. The Court anticipates that a continuance of the trial date will be necessary, with a corresponding continuance of the discovery cutoff dates. The parties are to file status conference briefs by July 31, 2024.

ANALYSIS

Motion To Stay Proceedings

Discussion

“Trial courts generally have the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489.)

In Bains v. Moores (2009) 172 Cal.App.4th 445, 483, the court discussed the law governing the issuance of stays of civil proceedings in light of pending related criminal proceedings:

In Avant!, supra, 79 Cal.App.4th 876, a corporate defendant in a civil action sought a stay of proceedings during the pendency of a related criminal proceeding in which the corporation, as well as several of its current or former employees, were defendants. In concluding that the trial court had not abused its discretion in denying the motion to stay, the Avant! court listed the factors that a trial court should consider in ruling on such a motion: “ ‘The decision whether to stay civil proceedings in the face of a parallel criminal proceeding should be made “in light of the particular circumstances and competing interests involved in the case.” [Citation.] This means the decisionmaker should consider “the extent to which the [party seeking the stay's] fifth amendment rights are implicated.” [Citation.] In addition, the decisionmaker should generally consider the following factors: (1) the interest of the [party opposing the stay] in proceeding expeditiously with this litigation or any particular aspect of it, and the potential prejudice to [the party opposing the stay] of a delay; (2) the burden which any particular aspect of the proceedings may impose on [the party seeking the stay]; (3) the convenience of the court in the management of its cases, and the efficient use of judicial resources; (4) the interests of persons not parties to the civil litigation; and (5) the interest of the public in the pending civil and criminal litigation. [Citation.]’ [Citation.]” (Id. at p. 885.)

Factors

1. The extent to which the party seeking the stay’s fifth amendment rights are implicated:

Moving Defendant First Call Telemedicine, LLC does not have any Fifth Amendment right. “[C]orporations and other organizations are not protected by the Fifth Amendment (United States v. White (1944) 322 U.S. 694, 699 [88 L.Ed. 1542, 64 S.Ct. 1248]).” (People v. Appellate Division of Superior Court (World Wide Rush, LLC (2011) 197 Cal.App.4th 985, 991.) As such, a corporation’s records are not protected by the Fifth Amendment privilege against self-incrimination. (People v. Superior Court (Keuffel & Esser Co.) (1986) 181 Cal.App.3d 785, 788.)

Moreover, records of a corporation are not protected by the Fifth Amendment privilege, even though the information contained therein may implicate individuals. (City of San Jose v. MediMarts, Inc. (2016) 1 Cal.App.5th 842, 850-54.) As such, the individual moving Defendants, Shelly Steele and Chase Moses, cannot assert a Fifth Amendment right to prevent disclosure of the LLC’s records.

Moving Defendants admit that there are no criminal proceedings currently against Defendant Timothy Moses, Steele’s husband and former Executive Director of Aliera, only a threat of such criminal prosecution. Thus, his Fifth Amendment privilege is not directly implicated.

Only Steele and Chase’s Fifth Amendment rights are implicated.

This factor only weighs in favor of a stay as to discovery against Steele and Chase.

2. The interest of the party opposing the stay in proceeding expeditiously with this litigation or any particular aspect of it, and the potential prejudice to the party opposing the stay of a delay;

The Court accepts the general argument that the People have an interest in proceeding with this action, but the need to do so expeditiously is less clear. While the People claim that Defendants are still operating in California or will start another fraudulent business, that can be halted with provisional injunctive relief if the People wish to obtain such. Likewise as the People’s claim that Defendants will transfer and hide assets—the status of discovery in this action will not affect their ability to do so.

This factor is neutral.

3. The burden which any particular aspect of the proceedings may impose on the party seeking the stay;

The Court accepts the argument that there will be some prejudice to Defendants Steele and Chase in these proceedings because they will be forced to choose between asserting the Fifth Amendment privilege in this action to preserve such right in criminal court, which may to some extent hinder their ability to defend themselves in this civil suit.

However, as the People argue, there is no indication that the Fifth Amendment privilege would apply to each and every discovery request or deposition question. But the extent to which the privilege would apply is speculative in this regard.

Also, such prejudice does not apply to First Call Medicine or Timothy.

Moreover, absent substantial prejudice to the rights of the parties to this civil action, simultaneous parallel civil and criminal proceedings are permissible. (Avant! Corp. v. Superior Court (2000) 79 Cal App.4th 876, 885-86 [bold emphasis added].)

Even where the civil discovery process is directed against an individual defendant who is also a defendant in a related criminal case, the Ninth Circuit has held that " [t]he Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings. [Citations.]" ( Keating v. Office of Thrift Supervision (9th Cir. 1995) 45 F.3d 322, 324.) Keating observed that the question of whether a civil proceeding should be stayed pending the outcome of a parallel criminal proceeding often rests not on the constitutional issue of self-incrimination, but on the issue of abuse of discretion. " 'In the absence of substantial prejudice to the rights of the parties involved, [simultaneous] parallel [civil and criminal] proceedings are unobjectionable under our jurisprudence.' [Citation.] 'Nevertheless, a court may decide in its discretion to stay civil proceedings . . . "when the interests of justice seem[] to require such action." ' [Citations.]" (Ibid.)

Keating further stated: "The decision whether to stay civil proceedings in the face . . .

Concluding that the administrative law judge's refusal to stay the civil proceeding was not an abuse of discretion, Keating, citing Baxter v. Palmigiano (1976) 425 U.S. 308, 318 [96 S. Ct. 1551, 1557, 47 L. Ed. 2d 810], held that "[a] defendant has no absolute right not to be forced to choose between testifying in a civil matter and asserting his Fifth Amendment privilege. Not only is it permissible to conduct a civil proceeding at the same time as a related criminal proceeding, even if that necessitates invocation of the Fifth Amendment privilege, but it is even permissible for the trier of fact to draw [*886] adverse inferences from the invocation of the Fifth Amendment in a civil proceeding." ( Keating v. Office of Thrift Supervision, supra, 45 F.3d at p.

(Avant! Corp. v. Superior Court (2000) 79 Cal App.4th 876, 885-86 [bold emphasis added].)

This factor does not favor a stay.

4. The convenience of the court in the management of its cases, and the efficient use of judicial resources;

" [C]onvenience of the courts is best served when motions to stay proceedings are discouraged." (Avant! Corp. supra, 79 Cal.App.4th at 888.)

This Court is overburdened and, to the extent the parties can utilize discovery produced in the Texas criminal proceedings, it would further the efficient use of judicial resources in this action.

This factor favors a stay.

5. The interests of persons not parties to the civil litigation;

The victims of Defendants’ alleged torts have an interest in receiving restitution, but there is no serious prejudice to those interests by virtue of a stay on discover for a limited period.

This factor is neutral.

6. The interest of the public in the pending civil and criminal litigation.

“[T]he public has a significant interest in a system that encourages individuals to come to court for the settlement of their disputes.” (Avant! Corp., supra, 79 Cal.App.4th at 887-889.) Moreover, the public has an interest in seeing that the victims receive restitution. On the other hand, there is less of a public interest in the outcome of the Texas criminal proceeding, although here is always a generalized constitutional interest in preserving the Fifth Amendment right against self-incrimination.

This factor weighs slightly against a stay.

Conclusion

The foregoing factors taken together slightly weight in favor of a discovery stay as to Defendants Shelley Steele and Chase Moses only. However, it is unclear how this action could proceed toward trial if discovery only proceeds as to First Call Telemedicine LLC and Timothy Candace Moses, while discovery is stayed as to Defendants Shelley Steele and Chase Moses.

In that regard, given that a pre-trial hearing is set in the Texas proceeding for February 21, 2024 (Reply, Page 8:5-6 and footnote 1 thereto), and the possibility that trial will be set for later this year, along with the People request that any stay not be open-ended, the Court will grant moving parties’ request for a six-month discovery stay.

The motion for stay of discovery is GRANTED IN PART. Discovery as to Defendants Shelley Steele, Chase Moses, First Call Telemedicine LLC and Timothy Candace Moses is ordered STAYED for six months. A status conference is set for August 7, 2024 at 8:30 a.m. The Court anticipates that a continuance of the trial date will be necessary, with a corresponding continuance of the discovery cutoff dates. The parties are to file status conference briefs by July 31, 2024.