Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Pagelof5 Page ID #:581 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL ‘
Present: The Honorable CHRISTINA A. SNYDER Catherine Jeang Not Present N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Not Present Not Present Proceedings: (IN CHAMBERS) -MOTION TO STAY ACTION PENDING JUDGMENT IN CRIMINAL PROCEEDINGS (Dkt. 79, filed on DECEMBER 15, 2022) The Court finds that the motion to stay action pending judgment in criminal proceedings is appropriate for decision without oral argument. See Fed. R. Civ. P. 78; C.D. Cal. L-R. 7-15. Accordingly, the matter is hereby taken under submission. I. INTRODUCTION AND BACKGROUND On July 22, 2016, relator Linda Dibenedetto filed a complaint under the gui tam provisions of the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, against defendants Valley View Drugs, Inc. (“Valley View”); David Michael Jensen; Pro-Med Marketing, LLC; John Pal Singh Janda; Western Medical Solutions, Inc.; Gary Dean Schoonover; Samia Solutions, LLC; Michael Steven Sinel; Michael David Roub; Edward’s Healthy Living Pharmacy, Inc. (“Ed’s”); and Trojan Medical Billing, Inc. (“Trojan”). Dkt. 1. The relator alleges that Valley View, a pharmacy that prepares and dispenses compounded drugs, and its owner Jensen paid kickbacks to physicians to induce them to prescribe drugs compounded and dispensed by Valley View and Ed’s. Id. 4 37-54. Valley View allegedly created and used Trojan as a billing entity to seek government reimbursement for illegally prescribed drugs. Id. 450. The other defendants are physicians and marketers to whom Valley View allegedly paid kickbacks. Id. 37-54. The relator alleges that the United States was defrauded out of at least $20 million as a result of this scheme. Id. § 53. In June 2016, a grand jury returned an indictment bringing criminal charges against defendants Jensen, Janda, Sinel, Roub, and Schoonover, in connection with the same CV-90 (10/18) CIVIL MINUTES - GENERAL Page 1 of 5
Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Page 2of5 Page ID #:582 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL ‘2. Id. See generally United States v. David Michael Jensen, et al., 2:16-CR-00412 (FMO). On October 21, 2022, the United States notified the Court of its decision not to intervene in this action. Dkt. 77. The Court then ordered that the action be partially unsealed and that the relator serve the complaint on defendants. Dkt. 78. On December 15, 2022, the relator filed a motion to stay the case pending judgment in the parallel criminal proceedings. Dkt. 79. On December 29, 2022, the United States filed a notice of non-opposition to the motion to stay. Dkt. 80. The relator’s motion is presently before the Court. II. LEGAL STANDARD “The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings.” Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 1995), cert. denied, 516 U.S. 827 (1995). Parallel civil and criminal proceedings are permitted under Ninth Circuit precedent unless such proceedings substantially prejudice the rights of the parties involved. Id. “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.”” Id. (quoting Fed. Sav. & Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989)). The party proposing a stay bears the burden of proving that a stay is warranted. Clinton v. Jones, 520 U.S. 681, 708 (1997). A district court is vested with the discretion to stay an action based on its inherent authority to control its own docket. Landis v. N. Am. Co., 299 U-S. 248, 254 (1936). Although there is no requirement that a court stay a civil action pending the outcome of a related criminal proceeding, a court may choose to do so “when the interests of justice seem | | to require such action.” Keating, 45 F.3d at 324 (quotation marks omitted). In deciding whether to grant a motion to stay civil proceedings in favor of parallel criminal proceedings, courts in the Ninth Circuit must consider the “extent to which the defendant's [F]ifth [A ]mendment rights are implicated.” Id. In addition, Keating CV-90 (10/18) CIVIL MINUTES - GENERAL Page 2 of 5
Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Page3of5 Page ID #:583 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL ‘Federal Rule of Criminal Procedure 16(b), expose the defense strategy to the prosecution before the criminal trial, or cause other prejudice. Id. at 1376. Accordingly, where the civil proceeding wholly or substantially overlaps with the criminal proceeding, a court may be justified in staying the civil case, deferring civil discovery, or taking other protective measures. Id. Il.
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Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Pagelof5 Page ID #:581 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL ‘
Present: The Honorable CHRISTINA A. SNYDER Catherine Jeang Not Present N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Not Present Not Present Proceedings: (IN CHAMBERS) -MOTION TO STAY ACTION PENDING JUDGMENT IN CRIMINAL PROCEEDINGS (Dkt. 79, filed on DECEMBER 15, 2022) The Court finds that the motion to stay action pending judgment in criminal proceedings is appropriate for decision without oral argument. See Fed. R. Civ. P. 78; C.D. Cal. L-R. 7-15. Accordingly, the matter is hereby taken under submission. I. INTRODUCTION AND BACKGROUND On July 22, 2016, relator Linda Dibenedetto filed a complaint under the gui tam provisions of the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, against defendants Valley View Drugs, Inc. (“Valley View”); David Michael Jensen; Pro-Med Marketing, LLC; John Pal Singh Janda; Western Medical Solutions, Inc.; Gary Dean Schoonover; Samia Solutions, LLC; Michael Steven Sinel; Michael David Roub; Edward’s Healthy Living Pharmacy, Inc. (“Ed’s”); and Trojan Medical Billing, Inc. (“Trojan”). Dkt. 1. The relator alleges that Valley View, a pharmacy that prepares and dispenses compounded drugs, and its owner Jensen paid kickbacks to physicians to induce them to prescribe drugs compounded and dispensed by Valley View and Ed’s. Id. 4 37-54. Valley View allegedly created and used Trojan as a billing entity to seek government reimbursement for illegally prescribed drugs. Id. 450. The other defendants are physicians and marketers to whom Valley View allegedly paid kickbacks. Id. 37-54. The relator alleges that the United States was defrauded out of at least $20 million as a result of this scheme. Id. § 53. In June 2016, a grand jury returned an indictment bringing criminal charges against defendants Jensen, Janda, Sinel, Roub, and Schoonover, in connection with the same CV-90 (10/18) CIVIL MINUTES - GENERAL Page 1 of 5
Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Page 2of5 Page ID #:582 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL ‘2. Id. See generally United States v. David Michael Jensen, et al., 2:16-CR-00412 (FMO). On October 21, 2022, the United States notified the Court of its decision not to intervene in this action. Dkt. 77. The Court then ordered that the action be partially unsealed and that the relator serve the complaint on defendants. Dkt. 78. On December 15, 2022, the relator filed a motion to stay the case pending judgment in the parallel criminal proceedings. Dkt. 79. On December 29, 2022, the United States filed a notice of non-opposition to the motion to stay. Dkt. 80. The relator’s motion is presently before the Court. II. LEGAL STANDARD “The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings.” Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 1995), cert. denied, 516 U.S. 827 (1995). Parallel civil and criminal proceedings are permitted under Ninth Circuit precedent unless such proceedings substantially prejudice the rights of the parties involved. Id. “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.”” Id. (quoting Fed. Sav. & Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989)). The party proposing a stay bears the burden of proving that a stay is warranted. Clinton v. Jones, 520 U.S. 681, 708 (1997). A district court is vested with the discretion to stay an action based on its inherent authority to control its own docket. Landis v. N. Am. Co., 299 U-S. 248, 254 (1936). Although there is no requirement that a court stay a civil action pending the outcome of a related criminal proceeding, a court may choose to do so “when the interests of justice seem | | to require such action.” Keating, 45 F.3d at 324 (quotation marks omitted). In deciding whether to grant a motion to stay civil proceedings in favor of parallel criminal proceedings, courts in the Ninth Circuit must consider the “extent to which the defendant's [F]ifth [A ]mendment rights are implicated.” Id. In addition, Keating CV-90 (10/18) CIVIL MINUTES - GENERAL Page 2 of 5
Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Page3of5 Page ID #:583 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL ‘Federal Rule of Criminal Procedure 16(b), expose the defense strategy to the prosecution before the criminal trial, or cause other prejudice. Id. at 1376. Accordingly, where the civil proceeding wholly or substantially overlaps with the criminal proceeding, a court may be justified in staying the civil case, deferring civil discovery, or taking other protective measures. Id. Il. DISCUSSION In the relator’s motion for a stay, she contends that staying the civil action until judgment is entered in the criminal proceedings against defendant Jensen would serve the interests set forth in the Keating factors because the criminal defendants have already pled guilty and final judgment entered in the criminal action estops the defendants from denying that the essential elements of the civil claims for relief are met. Dkt. 79 at 4. According to the relator, a denial of the requested stay would impose unnecessary costs on the parties and the Court by requiring the parties to litigate issues that will soon be determined by entry of judgment in the criminal action. Id. at 4-5. Weighing the relevant factors, the Court finds it appropriate to stay the civil action until judgment is entered in the criminal proceedings against Jensen. As the relator contends, a stay would further her interest in expeditiously resolving the litigation because, pursuant to 31 U.S.C. § 3731(e), a final judgment entered in the criminal proceedings would estop the civil defendants from denying the essential elements of the
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Case 2:16-cv-05504-CAS-AJW Document 82 Filed 01/13/23 Page 4of5 Page ID #:584 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘3731(e). See Keating 45 F.3d at 325 (considering “convenience of the court in management of its cases, and the efficient use of judicial resources”). Third parties who are potential subjects of discovery, including witnesses that the parties would seek to depose, would similarly benefit from the stay, as the need for discovery may be eliminated by resolution of the criminal proceedings. See id. (weighing “the interests of persons not parties to the civil litigation”). Finally, the public interest weighs in favor of granting the stay because avoiding unnecessary expenditure of judicial resources would save taxpayers costs. Additionally, the public has an interest in
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