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Ninth Circuit:
Pending Criminal Action Justifies Stay in Civil Human-Trafficking Case
It’s Irrelevant That Two Cases Involve Different Defendants Where Alleged Victims, Facts Overlap, Judge Ikuta Writes
By Kimber Cooley, Staff Writer
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DANIEL FITZGERALD civil defendant |
The Ninth U.S. Circuit Court of Appeals held Friday that a stay order was properly granted by a District Court judge in a civil case brought by 10 Jane Does under the Trafficking Victims Protection Reauthorization Act due to a pending federal criminal case although the prosecution is against a different defendant.
Circuit Judge Sandra S. Ikuta explained in an opinion for a three-judge panel that the two actions are based on the same occurrences and some of the plaintiffs in the civil action are victims of the scheme in the criminal matter.
The panel also concluded that the stay order was appealable due to the length and indefinite nature of the stay which effectively put the litigants out of court.
Joining in the opinion affirming the stay ordered by District Court Judge Michael Fitzgerald of the Central District of California were Circuit Judges Ronald M. Gould and Danielle J. Forrest.
Related Facts
Appealing the stay was civil defendant Daniel Fitzgerald, chief executive officer of ConTec Development, a luxury home development company, who bills himself on social media as owner of the “biggest Influencer Homes” in Los Angeles and is known for renting out Hollywood Hills residences to media personalities.
The plaintiffs’ complaint alleges causes of action under 18 U.S.C. §1595(a), enacted in 2003 to give victims of sex trafficking a civil cause of action to seek damages from the perpetrators of criminal trafficking violations. Subsection (b) of §1595 requires courts to stay an action filed under subsection (a) “during the pendency of any criminal action arising out of the same occurrence in which the claimant is the victim.”
Although Daniel Fitzgerald has not been charged in a criminal case, in December 2020, a New York grand jury charged Peter Nygard—fashion mogul and founder of the international women’s clothing company Nygard International, headquartered in Winnipeg, Canada—with racketeering, conspiracy to commit sex trafficking, and sex trafficking, among other charges.
According to the indictment, between 1995 and 2020, Nygard “and others known and unknown” engaged in sex trafficking activities, including using “force, fraud, and coercion to cause women to engage in commercial sex with Nygard and others.” The indictment described that Nygard would use his homes, including one in Marina Del Rey, to host “pamper parties” where some of the activities would occur.
Allegations Against Defendant
The complaint against Daniel Fitzgerald alleges that the defendant was a co-conspirator in Nygard’s sex trafficking venture and participated in the “sexual swap” activities at the parties where guests were expected to bring a “date” for Nygard in exchange for him providing a “date” for the guests.
The U.S. Attorney’s Office for the Southern District of New York moved in October 2022. to intervene in, and for a stay in, the civil action. Judge Fitzgerald also granted that motion.
On Dec. 14, 2020, Nygard was arrested in Canada where he remains in custody pending extradition. He was convicted in a Toronto court of sexual assault in November of 2023 but has not yet made an appearance in the New York case.
Distinct Defendants
Ikuta looked to the text of §1595(b) to determine the applicability of the mandatory stay, saying:
“Reading these provisions together, the district court ‘shall’ stay a civil action filed under § 1595(a) if (1) a criminal action or investigation is pending; (2) the criminal action arises ‘out of the same occurrence’ as the civil action; and (3) the plaintiff in the civil action is the victim of an occurrence that is the same in the civil and criminal proceedings.”
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The photo above is taken from the complaint in a civil trafficking action against Daniel Fitzgerald. Cook is right of the woman in the center; Peter Nygard, who is facing criminal trafficking charges, is at left. The women are described in the pleading as “Nygard’s ‘girlfriends,’ i.e. sex trafficking victims.” |
Daniel Fitzgerald argued that the section imposes a “fourth requirement”: that the stay must issue only if the defendant in the civil case is a named defendant in the criminal action. Disagreeing, Ikuta wrote:
“This argument fails, because it is based on the assumption that if a civil action and criminal action arise out of the same occurrence, then the defendants in the civil action and the criminal action must be the same. But this is not necessarily the case….Here, for example, the government may decide to focus on Nygard alone, regardless whether Fitzgerald was involved in the ‘same occurrence’ giving rise to the Nygard indictment.”
She reasoned that, “[g]iven that §1595(b)(1) refers only to the identity of victims, not of perpetrators, we cannot read Fitzgerald’s proposed fourth requirement into the statute.”
Three Requirements
Turning to the three requirements, Ikuta remarked “there is no dispute that a criminal action is pending.”
As to the second requirement, the jurist said that “we must determine whether one or more of the events that took place and gave rise to the claims in the plaintiffs’ actions resembles in every relevant respect one or more of the events that gave rise to the charges in the indictment.”
Rejecting Daniel Fitzgerald’s assertion that a litigant cannot satisfy the requirement by relying on the pleadings alone, she said “courts routinely rely on pleadings to determine whether legal actions…are related.”
Examining the complaint and the indictment at issue, Ikuta noted the extensive quoting from the indictment in the civil complaint, pointing, in particular, to the allegations in the complaint that Daniel Fitzgerald is one of the “others” who participated in the coerced sexual acts described in the indictment, including those at the Marina Del Rey parties.
Based on these circumstances, she declared:
“[W]e conclude that the complaint alleges events that are identical to the events that gave rise to the claims in the indictment….[A] clear connection exists between the events alleged in the indictment and the events at issue in the complaint.”
Third Requirement
Considering the third requirement, she commented:
“The complaint alleges that seven of the plaintiffs, Jane Doe Nos. 1–4 and 7–9, ‘are survivors of the…trafficking scheme exploited by [Fitzgerald] and Nygard,’….The complaint also alleges that Jane Doe Nos. 1–4, 7, and 9 were swapped or forced by Nygard to engage in sexual acts with Fitzgerald at various events at Nygard’s Marina del Rey property.”
She said that “[t]herefore, the complaint sufficiently alleges that some of the plaintiffs were victims in some of the same occurrences that gave rise to the criminal action against Nygard.”
Ikuta found no error in the order staying the entire civil action, saying “we hold that the word ‘action’ in §1595(b)(1) reflects its ordinary meaning and encompasses the entire civil lawsuit.”
Appealability of Order
Ikuta acknowledged that a stay order is not typically an appealable final decision under 28 U.S.C. §1291, but noted that the 1983 U.S. Supreme Court decision of Moses H. Cone Memorial Hospital v. Mercury Construction Corporation creates an exception to the “final decision” rule in a case involving the staying of an action challenging the arbitrability of a contract in federal court pending resolution of the same issue in state court.
In the opinion written by Justice William J. Brennan Jr. (now deceased), the court concluded that the stay order was a final decision under the code because the stay “meant that there would be no further litigation in the federal forum.”
Ikuta explained that the Ninth Circuit, in the 2007 decision in Blue Cross & Blue Shield of Alabama v. Unity Outpatient Surgery Center, Inc., expanded the doctrine to include “lengthy and indefinite” stay orders even though the district court could be expected to resume proceedings after its stay order had expired. A delay of 18 months qualified as “lengthy” in Blue Cross.
Turning to the case before the panel, Ikuta opined:
“Since the district court issued its order in December 2022, the case has been pending for about 16 months. The government does not know when Canada may extradite Nygard, the government’s investigation into the alleged criminal enterprise is ongoing, and there is no expected start date for the Nygard criminal prosecution. The length of the district court stay is therefore indefinite….It is also lengthy, since it is nearly certain that the stay will last longer than…18 months….Because the district court’s stay order is ‘lengthy and indefinite,’…it is a final and appealable order under § 1291.”
The case is Doe v. Fitzgerald (U.S. Attorney’s Office Southern District of New York), 22-56216.
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