Steps for avoiding the civil action

If you face a criminal investigation and are served with a civil complaint relating to the same matter, you could defend it like any other civil case and be subject to probing discovery that may elicit incriminating statements and documents that will expose any possible defense to the criminal charges.

However, your attorney may follow these five steps with a goal of avoiding reaching trial or judgment in the civil action until your criminal status and fate are decided:

  • Answer with a general denial.
  • Answer by proxy.
  • Seek a protective order.
  • Move for a stay.
  • Invoke the Fifth Amendment.

Also, along the way, your attorney might negotiate for more time. Both the opposing party and the court will realize that the criminal prosecution might relieve them of the burdens of trying and proving the case.

Enter a general denial

Your attorney might buy some time by answering a complaint or a summary judgment motion with general denials that do not commit you to a specific factual position that can be used against you in a criminal prosecution.

However, this tactic has some dangers:

  • Some jurisdictions’ pleading rules require specific denials.
  • General denials of incontrovertible facts might result in frivolous pleading sanctions.
  • If you later attempt to claim the Fifth Amendment privilege within the same civil case, it might be argued that you waived the privilege by answering the complaint on the merits. However, you can assert the privilege and refuse to answer questions in a criminal grand jury or trial because the waiver holds only for the particular proceeding in which the testimony was given, not later proceedings.

In any event, this tactic buys only limited time because you cannot make the same response to specific discovery requests.

Eventually, when you claim the Fifth Amendment privilege, the opposing party might have the answer or summary judgment affidavit stricken because of the subsequent invocation of the privilege.

Answer by proxy

If you are a business-owner and the civil action is against your company, rather than you personally, you might choose another officer or agent of the company to sign the answer and discovery responses or affidavits.

However:

  • This tactic is no help once the opposing party seeks to depose you personally.
  • You must be careful that you do not confer with the agent answering the discovery because the agent can be asked about that in his deposition and thereby might become a witness to your admissions.

Seek a protective order

Sometimes, the civil plaintiff has no interest in assisting the criminal prosecutors. Instead, the plaintiff wants his case heard as soon as possible.

Such a plaintiff might agree to a protective order forbidding the disclosure of any discovery materials to anyone, including criminal investigators, prosecutors and grand juries.

However, be wary of trusting civil protective orders to safeguard discovery materials and deposition transcripts and civil settlements from grand jury subpoenas. Such orders may give way to criminal subpoenas.

Also, remember that you may not know which court in which jurisdiction will decide whether to honor the protective order because while you can make an educated guess, you cannot control where the criminal prosecution will be filed.

Move to stay the civil action

Defending a civil case in the midst of a criminal investigation is perilous:

  • If you actively defend the civil matter you may incriminate yourself, expose your defense to the criminal charges, and open your records and your witnesses to extensive civil discovery.
  • If you do not defend you may be subject to impoverishing damages and injunctive relief without a fair adjudication of your liability.

Unfortunately, this dilemma does not confer any right to a stay of the civil action.

Courts have broad discretion in deciding whether or not to stay the civil case. In exercising that discretion, courts generally consider several factors, such as:

  • The extent to which the issues in the criminal case overlap with those presented in the civil case.
  • The status of the case, including whether the defendants have been indicted.
  • The private interests of the plaintiffs in proceeding expeditiously weighed against the prejudice to plaintiffs caused by the delay.
  • The private interests of and burden on the defendants.
  • The interests of the courts.
  • The public interest.

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.

Invoke the Fifth

Refusing to answer on the grounds of self-incrimination is the safest course with respect to criminal liability, but it can be deadly to the civil case and bring about other negative consequences. Therefore, try to forestall the invocation of the privilege until you have no other choice.

The damage to the civil case is that the trier of fact can draw adverse inferences against the party who invokes the privilege.

However, the trial court should not enter judgment against you until it has considered and found other remedies to be inadequate.

Some ancillary negative effects of invoking the Fifth Amendment are:

  • Some regulatory agencies will revoke your license or bar you from working in the industry for invoking the Fifth; your employer may even fire you.
  • Where you seek the benefits of insurance coverage, you might lose it because refusing to answer the insurer’s discovery questions will be considered a breach of the cooperation clause.v

Further, unlike taking the Fifth before a grand jury, your assertion that answers might incriminate you will be public and could bring career-ending infamy and suspicion if you are a community leader, politician or renowned businessman. It also might incite other private plaintiffs to file suit against you because they perceive you as defenseless.