UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

DOUGLAS W. STOCKWELL and 

INTERNATIONAL UNION OF 

OPERATING ENGINEERS LOCAL 324, 

 Plaintiffs, 

v. Civil Case No. 15-11609 

 Honorable Linda V. Parker 

JOHN M. HAMILTON and 

WILLIAM B. ROUGH, 

 Defendants. 

____________________________/ 

OPINION AND ORDER GRANTING MOTION FOR STAY 

 On May 5, 2015, Plaintiffs initiated this action against Defendants pursuant 

to the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiffs 

allege that Defendants breached their fiduciary duties while acting as officers and 

employees of the International Union of Operating Engineers Local 324 (“Union”), 

in violation of Sections 404 and 406 of ERISA. Presently before the Court is a 

“Motion for a Temporary and Limited Stay of Certain Discovery,” filed by 

Intervenor United States of America on January 22, 2016. (ECF No. 42.) 

Plaintiffs concur in the requested stay. (ECF No. 49.) Defendant John M. 

Hamilton (“Hamilton”) opposes the motion. (ECF No. 44.) 

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Factual and Procedural Background

 Plaintiff Douglas W. Stockwell (“Stockwell”) is a Trustee and participant in 

the ERISA-regulated Operating Engineers Local 324 Pension Fund (“Pension 

Fund”). (ECF No. 51 ¶ 2.) Plaintiff International Union of Operating Engineers 

Local 324 (“Union”) is a labor union operating within the Eastern District of 

Michigan, whose members fund the Pension Fund based on the hours or work they 

perform pursuant to a collective bargaining agreement to which their employers 

and the Union are signatories. (Id. ¶¶ 3, 13.) The Pension Fund is administered by 

a ten-member Board of Trustees. (Id. ¶ 14.) 

 Hamilton served as a Pension Fund Trustee from 1993 until 2013. (Id. 

¶ 17.) In that capacity, Hamilton was a Pension Fund fiduciary as defined in 

ERISA, 29 U.S.C. § 1002(21). (Id. ¶ 18.) Hamilton also served as the Union’s 

Business Manager from 2003 until 2012. (Id. ¶ 17.) 

 In their Amended Complaint, Plaintiffs allege that Hamilton breached his 

fiduciary duties during his tenure as a Pension Fund Trustee. Specifically, 

Plaintiffs allege that Hamilton took things of value (e.g., travel, food, lodging, 

entertainment, and other gifts and gratuities) from AA Capital Partners, Inc. (“AA 

Capital”), an investment advisory firm the Pension Fund hired in 2003 to invest 

and manage its assets. (Id. ¶¶ 22-23, 30, 32.) Further, Plaintiffs allege that 

Hamilton caused the Pension Fund to pay, with Pension Fund assets, his individual 

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and personal legal fees and expenses related to federal investigations and a lawsuit 

the United States Securities and Exchange Commission (“SEC”) brought against 

AA Capital and its co-owner, John Orecchio (“Orecchio”). (Id. ¶¶ 39-44.) 

Proskauer Rose LLP, a Washington, D.C. law firm, represented Hamilton between 

October 2008 and April 2012, in connection with the federal investigations and 

lawsuit. (Id. ¶ 29.) The SEC subpoenaed Hamilton for an investigative deposition 

under oath in March 2009. (Id. ¶ 55.) During that deposition, Hamilton invoked 

his rights under the Fifth Amendment to the U.S. Constitution and refused to 

answer SEC questions. (Id. ¶¶ 60, 64-67.) 

 In December 2015, a federal grand jury issued a nine-count Indictment 

against Hamilton, relating to his conduct while serving as the Business Manager of 

the Union. See Indictment, United States v. Hamilton, No. 15-CR-20804 (E.D. 

Mich. filed Dec. 16. 2015), ECF No. 1. In the Indictment, Hamilton is accused of 

violating several federal criminal laws by inter alia wrongfully receiving personal 

benefits, including extravagant meals, from unnamed business agents and other 

employees of the Union. See, e.g., id. ¶¶ 7, 32-33, 35-37. Hamilton has been 

arraigned on the Indictment and a trial date currently is scheduled for November 8, 

2016. See Jt. Stip. to Extension of Jury Trial Date, Hamilton, No. 15-CR-20804 

(E.D. Mich. filed April 26, 2016), ECF No. 16. In its brief in support of the 

motion to stay, the United States represents that its criminal investigation is 

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ongoing with respect to Hamilton’s wrongdoings during his tenure as the Union’s 

Business Manager. (ECF No. 42 at Pg ID 331.) The United States has filed the 

declaration under seal of one of the prosecutors assigned to the case, David A. 

Gardey, more explicitly detailing the federal grand jury’s continued investigation 

into Hamilton’s conduct. (ECF No. 43.) 

 In late May 2015, soon after Plaintiffs initiated the pending civil lawsuit, the 

United States moved to intervene in the action and to seek a stay of discovery. 

Hamilton had not yet responded to Plaintiffs’ Complaint. Defendant William B. 

Rough (“Rough”), who had moved for an extension of time to answer the 

Complaint by that point, concurred with the Government’s request for a stay. 

(ECF No. 7.) Noting “the substantial overlap between the federal criminal 

investigation and the claims in this civil action [which] raise issues under the Fifth 

Amendment . . .,” Rough asserted that his interests would be impaired by 

proceeding with the civil case while the federal criminal investigation was 

pending. (Id. at Pg ID 41-42.) On June 12, 2015, the Honorable Terrence G. Berg 

granted the Government’s motion and entered a six-month stay of “certain 

discovery.” (ECF No. 16.) That stay expired on November 29, 2015. (Id.) 

 In the meantime, Hamilton had filed a motion to dismiss Plaintiffs’ 

Complaint and an Answer to the Complaint. (ECF Nos. 20, 29.) Plaintiffs 

responded to Hamilton’s motion and moved to file an Amended Complaint on 

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September 30, 2015. (ECF Nos. 30, 31.) On October 1, 2015, Judge Berg 

disqualified himself from this action and the case was reassigned to the 

undersigned. (ECF No. 32.) On February 16, 2016, this Court denied Hamilton’s 

motion to dismiss and granted Plaintiffs’ motion to file an Amended Complaint, 

which they filed on the same date. (ECF Nos. 50, 51.) 

The United States filed the pending, second motion to stay discovery on 

January 22, 2016. The United States cites to the continuing criminal proceedings 

and investigation concerning Hamilton as the basis for the stay. 

Applicable Law and Analysis

 “The Constitution . . . does not ordinarily require a stay of civil proceedings 

pending the outcome of criminal proceedings. SEC v. Dresser Indus., Inc., 628 

F.2d 1368, 1376 (D.C. Cir. 1980) (en banc) (citing Baxter v. Palmigiano, 425 U.S. 

308 (1975) and DeVita v. Sills, 422 F.2d 1172, 1181 (3d Cir. 1970)); see also FTC 

v. E.M.A. Nationwide, Inc., 767 F.3d 611, 627 (6th Cir. 2014) (citing Chao v. 

Fleming, 498 F. Supp. 2d 1034, 1037 (W.D. Mich. 2007)). Nevertheless, a court 

has broad discretion to stay a civil action in the face of pending criminal 

proceedings. E.M.A. Nationwide, 767 F.3d at 627 (citing Fleming, 498 F. Supp. 2d 

at 1037 (citing Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936)). “The 

power to stay proceedings is incidental to the power inherent in every court to 

control the disposition of the causes in its docket with economy of time and effort 

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for itself, for counsel and for litigants . . ..” E.M.A. Nationwide, 767 F.3d at 626-

27 (quotation marks and citation omitted). 

“[T]he strongest case for deferring civil proceedings until after the 

completion of criminal proceedings is where a party under indictment for a serious 

offense is required to defend a civil or administrative action involving the same 

matter.” Dresser Indus., 628 F.2d at 1375-76; see also E.M.A. Nationwide, 767 

F.3d at 628 (“A stay of a civil case is most appropriate where a party to the civil 

case has already been indicted . . ..”). As the Court of Appeals for the D.C. Circuit 

explained in Dresser Industries: 

The noncriminal proceeding, if not deferred, might undermine the 

party’s 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 

[criminal] case. 

628 F.2d at 1376. The Sixth Circuit has found that “courts generally do not stay 

proceedings in the absence of an indictment.” E.M.A. Nationwide, 767 F.3d at 

628. 

Several factors are relevant to a court’s decision whether to stay civil 

proceedings: 

1) the extent to which the issues in the criminal case overlap with 

those presented in the civil case; 2) the status of the case, including 

whether the defendants have been indicted; 3) the private interests of 

the plaintiffs in proceeding expeditiously weighed against the 

prejudice to [the] plaintiffs caused by the delay; 4) the private 

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interests of and burden on the defendants; 5) the interests of the 

courts; and 6) the public interest. 

Id. at 627 (citing Fleming, 498 F. Supp. 2d at 1037). The party seeking the stay 

has the burden of demonstrating “ ‘that there is pressing need for delay, and that 

neither the other party nor the public will suffer harm from entry of the order.’ ” 

Id. at 627-28 (quoting Ohio Envtl. Council v. U.S. Dist. Court, S. Dist. of Ohio, E. 

Div., 565 F.2d 393, 396 (6th Cir. 1977)). The Sixth Circuit has stated that “[t]he 

most important factor is the balance of the hardships, but the district court must 

also consider whether granting the stay will further the interest in economical use 

of judicial time and resources.” Id. at 628 (brackets, quotation marks, and citation 

omitted). 

 Applying the relevant factors to the instant case, the Court begins with the 

fact that Hamilton has been indicted. On one hand, Hamilton contends that there is 

“virtually no significant overlap” between the allegations asserted in the 

Indictment and the civil proceedings. (See ECF No. 44 at Pg Id 382-83). On the 

other hand, he acknowledges that both cases involve his activities while acting as 

the Union’s Business Manager and Trustee between 2002 and 2012, specifically 

his acceptance of expensive meals which Plaintiffs and the United States allege 

“ ‘had little or no pension-related business purpose.’ ” (Id. at Pg Id 384-85, 

quoting Indictment ¶¶ 53-54; see also ECF No. 51 ¶ 93.) While Plaintiffs allege in 

their Amended Complaint that Hamilton engaged in additional wrongdoing-- 

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specifically, that he recovered some $3 million in attorneys’ fees wrongfully paid 

on his behalf-- the United States indicates that its investigation into Hamilton’s 

misconduct as the Union’s Business Manager is ongoing. 

As Hamilton acknowledges in response to the Government’s motion, “ ‘the 

strongest case for deferring civil proceedings until after completion of criminal 

proceedings is where a party under indictment for a serious offense is required to 

defend a civil . . . action involving the same matter.’ ” (Id. at Pg ID 389-90, 

quoting Fleming, 498 F. Supp. 2d at 1037, emphasis added by Hamilton.) Thus, 

the first and second factors weigh in favor of a stay. 

 The third factor does not influence the Court’s analysis because Plaintiffs 

concur in the Government’s request for a stay. As relevant to the fourth factor, 

Hamilton contends that his strong interest in the timely resolution of this civil case 

will be impeded by a stay and that he “will be severely prejudiced by the granting 

of this [s]econd [m]otion to [s]tay, as he is concerned ‘about witnesses’ memories 

fading with the passage of time,’ as well as with ‘documents becoming lost and 

witnesses becoming unavailable.’ ” (Id. at Pg ID 395-96, emphasis removed, 

quoting In re Scrap Metal Antitrust Litig., No. 1:02-cv-0844, 2002 WL 31988168, 

at *2 (N.D. Ohio Nov. 7, 2002) (unpublished).) The risk of such prejudice is 

remote, however, because the civil and criminal proceedings significantly overlap 

and thus the cases presumably will involve many of the same issues, witnesses, and 

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evidence. Witness testimony and documents will be preserved in the criminal 

proceedings. Moreover, due to the Speedy Trial Act, there should not be an 

extensive delay in the adjudication of this case and thus any risk of prejudice to 

Hamilton caused by the delay is reduced. 

 The Court finds that a stay of the civil proceedings “will further the interest 

in economical use of judicial time and resources.” E.M.A. Nationwide, 767 F.3d at 

628 (internal quotation marks and citation omitted). As another court found when 

issuing a stay under comparable circumstances, “[t]he resolution of the criminal 

proceedings may serve to expedite the civil proceedings, avoiding the needless 

expense of judicial time and resources.” SEC v. Abdallah, No. 1:14-CV-1155, 

2016 WL 397970, at *4 (N.D. Ohio Feb. 2, 2016) (unpublished). Relying on yet 

another court’s similar ruling, the Abdallah court explained: 

“The conviction of a civil defendant as a result of a plea or following 

a trial can contribute significantly to the narrowing of issues in dispute 

in the overlapping civil case and promote settlement of civil litigation 

not only by that defendant but also by co-defendants who do not face 

criminal charges.” 

Id. (quoting In re Worldcom, Inc. Sec. Litig., No. 02-CIV-3288, 2002 WL 

31729501, at *8 (S.D.N.Y. Dec. 5, 2002) (unpublished)) (brackets omitted).

Further, staying this case in favor of the criminal proceedings probably will reduce, 

if not eliminate, the need for discovery in the civil proceedings. Whereas absent a 

stay, the Court likely will be burdened by discovery disputes, such as Defendants’ 

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repeated assertions of their Fifth Amendment rights and the Government’s 

assertion that compliance with Defendants’ discovery requests risks the disclosure 

of sensitive information critical to its criminal investigation and to an anticipated 

criminal trial. See SEC v. Healthsouth Corp., 261 F. Supp. 2d 1298, 1325 (N.D. 

Ala. 2003) (granting a stay of civil proceedings in the face of an overlapping 

criminal prosecution because “discovery in the case before the court has been, and 

will continue to be, all but meaningless, as many witnesses have, and will continue 

to, assert their Fifth Amendment privileges”). 

 Finally, a stay of the civil proceedings furthers the interests of third parties 

and the public. A stay protects the United States’ interest in preventing discovery 

in the civil case from being used to circumvent the more limited scope of discovery 

in the criminal proceedings. See Dresser Indus., 628 F.2d at 1376 (citing 

Campbell v. Eastland, 307 F.2d 478 (5th Cir. 1962), cert. denied, 371 U.S. 955 

(1963) (“A litigant should not be allowed to make use of the liberal discovery 

procedures applicable to a civil suit as a dodge to avoid the restrictions on criminal 

discovery and thereby obtain documents he would not otherwise be entitled to for 

use in his criminal suit.”)). A stay also “benefit[s] the public by allowing the 

[g]overnment to conduct a complete, unimpeded investigation into potential 

criminal activity.” Healthsouth, 261 F. Supp. 2d at 1325 (citing Walsh Securities, 

Inc. v. Cristo Property Mgmt, Ltd., 7 F. Supp. 2d 523, 529 (D.N.J. 1998)). 

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Moreover, the criminal case will protect and advance the same interests implicated 

in the civil action. See Fleming, 498 F. Supp. 2d at 1038 (citing Brock v. Tolkow, 

109 F.R.D. 116 (E.D.N.Y. 1985) (staying civil case brought against ERISA 

trustees for breach of their fiduciary duties in light of criminal proceedings against 

the same trustees for ERISA violations, noting that a criminal prosecution serves to 

enforce the public interests at stake in the civil case). 

In short, the factors relevant to this Court’s decision whether to stay this 

civil action weigh in favor of a stay. While the United States asks the Court only 

to renew the previously issued “temporary and limited stay of certain discovery,” 

the stay, in reality, has resulted in a complete cessation of any progress in these 

civil proceedings. No scheduling order has been issued or requested, it does not 

appear that any discovery has been conducted, and the case is unlikely to progress 

without discovery. Furthermore, it is unclear what discovery is permitted and what 

discovery is prohibited under the requested “limited stay of certain discovery.” 

The interests furthered by the stay will be undermined if the parties and the Court 

are required to litigate and resolve that question. 

Additionally, while the United States requests a stay of only six months, the 

Court finds it more appropriate to stay the civil proceedings until the criminal 

action is resolved through either a plea or trial. It is not an efficient use of the 

parties’ or the Court’s time or resources to require the filing, briefing, and 

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resolution of yet another motion to stay in six months-- if the criminal action 

remains pending at that time. Moreover, as stated previously, any further delay 

should not be extensive as the law requires the criminal case to proceed in a speedy 

manner. 

Therefore, the Court is GRANTING the United States’ motion to stay and is 

STAYING this action. Any of the parties to this lawsuit are free to petition the 

Court to lift or modify the stay should there be a change in circumstances 

warranting such action. The United States shall file an update in this case with 

respect to any changes to the current dates scheduled, the entry of a plea, or 

initiation of a trial in the criminal proceedings. 

SO ORDERED. 

 s/ Linda V. Parker 

 LINDA V. PARKER 

 U.S. DISTRICT JUDGE 

Dated: June 23, 2016 

I hereby certify that a copy of the foregoing document was mailed to counsel of 

record and/or pro se parties on this date, June 23, 2016, by electronic and/or U.S. 

First Class mail. 

 s/ Shawna Burns on behalf of Richard Loury 

 Case Manager 

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