The Catch 22 Of Defending Parallel Civil And Criminal Proceedings

• Jurisdiction: United States,Federal
• Law Firm: Crowell & Moring
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Disclosure & Electronic Discovery & Privilege, Crime
• Author: Thomas A. Hanusik, Danielle Giffuni and Andrea Charles
• Published date: 19 October 2023

The Court of International Trade recently denied a motion to add a defendant's criminal attorney to a protective order in a parallel civil regulatory case, teeing up key Fifth and Sixth Amendment concerns.

Background

In parallel civil and criminal cases filed against defendants Zhe "John" Liu and GL Paper Distribution, LLC (U.S. v. Zhe "John" Liu, CIT # 22-00215; U.S. v. Liu et al., case no. 1:23-cv-00116), the government alleges that Liu and GL Paper avoided paying duties on steel wire hangers imported into the United States by falsely declaring their country of origin. While Liu denied involvement with many of the companies alleged to have been involved in the scheme, according to the government, evidence produced in civil discovery "showed that, in fact, Liu operated and controlled the companies," including GL Paper.¹ In April 2023, the Court granted Liu's motion for a protective order. In June 2023, a search warrant was executed at Liu's residence, where Liu allegedly directed the transshipment scheme. That same day, Liu's criminal counsel notified the government that he represented Liu in the criminal case.

In July 2023, Liu filed an unopposed consent motion to stay the civil case, arguing that it was necessary to protect his Fifth Amendment right against self-incrimination and because "the Government's discovery obligations in a civil proceeding [could] impair or undermine its criminal investigation."² The Court granted the stay request.

In September 2023, Liu's civil counsel emailed the government requesting that Liu's criminal counsel be provided "access" to certain information under the protective order in the civil case. Liu's civil counsel further indicated that Liu's criminal counsel would not be filing a notice of appearance in the civil case but would be acting as a "consultant." The DOJ objected to this request, and expressed concerns that this would effectively permit Liu's criminal counsel to conduct an "end run" around criminal discovery procedures.

The government takes numerous interesting positions, including its opposition to Liu's motion to add an attorney to the protective order, after already having produced written discovery to Liu's civil counsel without seeking a protective order. It was Liu who sought (1) the protective order one month after receiving civil discovery and (2) an unopposed motion to stay the civil case. The reason for the latter appears focused on both Liu's Fifth Amendment rights and the possibility that future...