Antitrust Law Daily Wrap Up, RICO—S.D. Ohio: Civil RICO action partially stayed due to parallel criminal investigation, (Dec 13, 2013)

By Edward L. Puzzo, J.D.

The federal district court in Columbus, Ohio has agreed to partially stay a civil RICO case brought by Cranel, Inc. against one of its former employees and against one of its competitors and its employee, pending the outcome of a parallel criminal investigation concerning the same facts (Cranel, Inc. v. Pro Image Consultants Group, December 9, 2013, Abel, M.).

Plaintiff Cranel, Inc. alleged that its former national sales manager Frank Damico, its competitor Pro Image Consultants Group, and Pro Image’s employee Richard Morin engaged in a conspiracy to reveal Cranel’s confidential and proprietary pricing information to Pro Image, which used this information to solicit Cranel’s clients. Cranel claimed, among other allegations, RICO violations, misappropriation of trade secrets, tortious interference with customer relations and employment relations, and unfair competition.

Concurrent criminal investigation. In parallel with this civil action, the FBI commenced a criminal investigation based on the same set of facts. The defendants argued that they could not defend the civil matter at the same time as the criminal matter without foregoing their Fifth Amendment rights against self-incrimination in the criminal matter.

The court noted that, although there was significant overlap between the criminal case and the civil action, there had been no indictment of the defendants. Plaintiff Cranel, the court continued, had considerable interests in proceeding expeditiously to prevent defendants from misappropriating its proprietary and trade secret information and documents. The defendants too had valid self-incrimination concerns.

The court ruled that a stay of the civil matter was warranted for defendants Damico and Morin pending the outcome of the parallel criminal investigation, but not for Pro Image Consultants Group, because the latter, as a corporation, has no Fifth Amendment rights. The court also ordered that the case should not be stayed as to third party discovery or motion practice between the parties.

The case is Civil Action No. 2:13-cv-00766.

Attorneys: Scott Edward North (Porter Wright Morris & Arthur) for Cranel, Inc. Maribeth Deavers (Isaac Wiles Burkholder & Teetor, LLC) for Pro Image Consultants Group, LLC.

Companies: Cranel, Inc.; Pro Image Consultants Group, LLC

Cases: RICO OhioNews