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Parallel Civil and Criminal Proceedings
By Paula Cotter, NAAG Energy and Environment Counsel
Parallel criminal and civil litigation can raise ethical and practical concerns for attorneys general. Many state attorneys general have authority to prosecute criminal environmental cases as well as civil environmental cases, and in many cases, the Office of the Attorney General also represents the state in administrative proceedings. In those cases, the office is well advised to implement a plan to avoid potential unethical actions, such as disclosure of grand jury information, and to minimize practical problems.
There is no blanket prohibition against a state, or the federal government developing parallel cases, but there are risks. There is a fairly large body of federal law on parallel proceedings, but state law is likely relevant as well. Office leadership is wise to review it in formulating general plans or working on specific cases.
Cases tend to speak to subject matter in regulatory areas like securities, tax, environment, and so forth. Possible reasons include the fact that the governing statutes have multiple punitive and remedial schemes, i.e., civil penalties, criminal penalties, and administrative remedies. Also, because of the technical nature of the subject matter in the highly-regulated areas, the potential government witnesses in criminal and civil proceedings are sometimes limited to a single agency or unit, creating a possible inappropriate overlap.
The investigation and case development period of parallel proceedings can pose risks that that either the criminal or civil case will be dismissed, or that critical evidence will be excluded. During the investigative phase, and throughout parallel proceedings, one key theme is that a party – most particularly a governmental party -- may not use one sort of process only to advance progress in the other. The concept is articulated by the D.C. Circuit in Dresser; many state cases also adopt this idea. In Dresser, the court spoke to civil or administrative investigations that feed into criminal investigations and ultimately to prosecutions. The court identified an investigation “…conducted solely for [a] criminal enforcement purpose” as a bad faith use of process (although it did not find such bad faith in the case at hand).
If a good faith civil investigation turns up information that is germane to a criminal investigation, however, the law does not categorically preclude using that information in a criminal case. Federal cases explaining this rule include Kordel, (a Food and Drug Administration case) and its progeny. In Kordel, the Supreme Court held:
We do not deal here with a case where the Government has brought a civil action solely to obtain evidence for its criminal prosecution or has failed to advise the defendant in its civil proceeding that it contemplates his criminal prosecution; nor with a case where the defendant is without counsel or reasonably fears prejudice from adverse pretrial publicity or other unfair injury; nor with any other special circumstances that might suggest the unconstitutionality or even the impropriety of this criminal prosecution. (citations omitted)
One state case example is Stock v. State of Alaska, where the court found no reason to prevent the development of a criminal case against the defendant although an administrative matter was also in progress. While holding that the state could appropriately move forward in the criminal case, the court noted that in some cases, immunity from prosecution based on admissions in civil proceedings is appropriate. As in Stock, the parallel proceedings issue often emerges in the context of whether the privilege against self-incrimination may legitimately be invoked.
For instance, in Stringer, brought by the Securities and Exchange Commission (SEC), the Ninth Circuit also held that there can be parallel proceedings without a Due Process violation if the government does not act in bad faith. Points in that case that led the court to think the plaintiff had acted in good faith included the fact that the SEC had begun its civil investigation before the U.S. attorney was involved and instigated a criminal case, and the fact that the government had made some (admittedly broad) statements to the defendant that there was a potential for civil and/or criminal liability. The Court stated that the governmental authority cannot “affirmatively mislead” the defendant without veering into bad faith.
Often a defendant will ask the court to stay the civil case while the criminal case proceeds to avoid giving rise to an inference of (civil) wrongdoing by invoking Fifth Amendment rights. It is legitimate not to testify against oneself, but if a defendant avoids it in a civil case, it can be used to make him look bad, unlike a criminal case, where such a failure to incriminate oneself cannot be used against the defendant. Thus a guilty defendant may want to avoid choosing between perjury, an outright admission, or a damaging inference, and move for a stay.
Granting a Stay
Courts are under no automatic obligation to grant a stay. Factors include the burden on the defendant (self-incrimination pressure/inference of wrongdoing), burden on the plaintiff, public interest in prompt resolution, and court resource management. For government cases, a key factor weighing in favor of denying a request for a stay is the ability to make the argument that the civil or administrative case is remedial or corrective, and not strictly punitive. If the non-criminal case is not punitive, the court may be more likely to permit both cases to go forward.
With respect to the flow of information from the criminal investigation to the civil investigation, there are two common risks: One risk is disclosure of grand jury information. The prohibition protects the integrity of the grand jury, helps witnesses feel comfortable that they will not suffer reprisal because their secret testimony will not be revealed, and prevents unsupported allegations from circulating. Another risk is the conversion of investigators in the civil case to participants in the criminal investigation. If the agency witness becomes involved in actually planning the criminal investigation, as opposed to gathering factual evidence, the (formerly) civil inspector or investigator can trigger criminal law requirements, and may not be able to resume activities as a civil inspector at the facility.
In the settlement phase it is also important to avoid manipulating one legal process to influence another. Specifically, this means that the government must never threaten criminal prosecution as a way to achieve settlement of a civil action. Global settlements (covering civil and criminal actions) are not precluded, but must be negotiated appropriately. Some prosecutors insist that an offer of a global settlement be documented by a written offer from the relevant defendant or defendants, to avoid the appearance of a quid pro quo between civil and criminal sanctions.
Double jeopardy is also a potential issue where defendants are convicted of a crime that has elements in common with civil liability also imposed on them. The leading case in that area is U.S v. Hudson. The analysis outlined there is a preliminary step and then a multi-part analysis as a second step. First the court must examine the statute to see if the legislature indicated whether a law is criminal or civil. If the legislative intent is found to be civil, the analysis must still go on to evaluate whether “the statutory scheme was so punitive either in purpose or effect as to transform what was clearly intended as a civil remedy into a criminal penalty.” (internal citations omitted).
The analysis of whether the statute was transformed by its harshness into a criminal law is governed by the Mendoza factors: (1) “whether the sanction involves an affirmative disability or restraint”; (2) “whether it has historically been regarded as a punishment”; (3) “whether it comes into play only on a finding of scienter”; (4) “whether its operation will promote the traditional aims of punishment -- retribution and deterrence”; (5) “whether the behavior to which it applies is already a crime”; (6) “whether an alternative purpose to which it may rationally be connected is assignable for it”; and (7) “whether it appears excessive in relation to the alternative purpose assigned.”
This is an important area that cannot be addressed after problems arise. Governmental counsel are best served if they develop and implement a plan incorporating general principles as well as any jurisdiction-specific law, and if staff are trained to identify possible problems in parallel criminal and civil (or administrative) litigation.
 SEC v. Dresser Inc., 628 F 2d 1368 (D.C.Cir. 1980), cert den’d, 449 U.S. 993 (1980).
 E.g. Farricielli et al. v. State of Connecticut, Department of Environmental Protection, 1997 Conn. Super. LEXIS 66, Commonwealth v. Hogan, 389 Mass. 450 (1983).
 U.S. v. Kordel, 397 U.S. 1, 25 L. Ed. 2d 1 (1970).
 526 P.2d 3 (1974); 1974 Alas. LEXIS 3241974.
 U.S. v. Stringer, 535 F.3d 929 (9th Cir. 2008), cert. den’d, 129 S. Ct. 662 (2008).
 Kennedy v. Mendoza-Martinez, 372 U.S. 144, 83 S. Ct. 554 (1963).
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Contact: Bill Malloy
Contact: Bill Malloy
Contact: Bill Malloy