The Second Circuit, just yesterday (March 29, 2012) has issued an opinion called Louis Vuitton v. Ly USA, Inc. (08-4483-cv(L)) sure to bring joy to the hearts of trademark counterfeiting enforcers everywhere. This was one of those major counterfeiting-ring busts, and there have been lawyers and federal marshals scuttling about for a long time on all this business. The defendants were convicted of trafficking in counterfeit goods, conspiring to do so, and smuggling. The appealed all the bad things that happened to them in the civil case — massive damages, attorneys’ fees, the usual.
There were two key holdings, both buffeted by extensive and thoughtful discussion. One was that there’s just about no way the Circuit Court will second-guess a District Court’s refusal to enter a stay of a civil action pending resolution of parallel criminal proceedings, and the court is not shy about saying so. The second concerned the split among courts as to whether a prevailing plaintiff in a trademark counterfeiting case may be awarded both statutory damages and attorneys’ fees.
First, the stay question… if “question” is the right word; this opinion sure doesn’t leave much room for doubt. After explaining all the reasons a stay of a civil case, with all that required disclosure, might be a good idea for someone concerned about compromising his Fifth Amendment rights, the court says, well, still, it would be “extraordinary” to really go ahead and enter one:
[T]he Constitution rarely, if ever, requires such a stay. . . . The existence of a civil defendant’s Fifth Amendment right arising out of a related criminal proceeding thus does not strip the court in the civil action of its broad discretion to manage its docket. . .
District courts have formulated multi-factor tests to apply in deciding whether, in light of these hazards to the defendants in the civil proceedings against them, to grant a stay of those proceedings. . . . We think the tests do little more than serve as something of a check list of factors we ought to consider as we review the district court’s action for abuse of its discretion. Even if we were to choose or formulate a test and apply it, we would not be able to reverse the district court solely because we disagreed with its application of the test. . . . A decision so firmly within the discretion of the district court will not be disturbed by us absent demonstrated prejudice so great that, as a matter of law, it vitiates a defendant’s constitutional rights or otherwise gravely and unnecessarily prejudices the defendant’s ability to defend his or her rights. There may well be cases where the Constitution requires a stay. But a plausible constitutional argument would be presented only if, at a minimum, denying a stay would cause “substantial prejudice” to the defendant.
Indeed, so heavy is the defendant’s burden in overcoming a district court’s decision to refrain from entering a stay that the defendants have pointed to only one case in which a district court’s decision to deny a stay was reversed on appeal, and that case was decided more than thirty years ago.
Bill of Rights …. docket management. Hmm. There’s a compelling juxtaposition for you! I suppose it’s the kind of “juxtaposition” that a defendant appealing a civil verdict gets when he’s been convicted of every act claimed in the civil case. This enabled the court to note the significant public benefit arising from not staying the civil case, which had already been under steam for a year before the indictment. Moreover, the District Court evidently offered significant alternatives to managing confidentiality issue to the defendants, who weren’t too eager to avail themselves of it. Plus there were lots of things — record, merchandise, computers — that got “lost.” Plus these guys were evidently well layered with lawyers.
Bad facts, or certainly bad defendants, make “bad law.” These were bad defendants, and now the Circuit is trying to be pretty clear on this: Crooks, stay away from complaining about a stay. It won’t play. Okay? [UPDATE: On the other hand, I have recently asked the Circuit to consider drawing the line at some point, in particular where all charges were dropped against my client. Still waiting for an argument date.]
The second is an important, and more groundbreaking (if unsurprising), decision on an important question: Read More…