Omni Air Int'l, LLC v. Austin Technik 1, Inc.

• Decision Date: 11 April 2018
• Docket Number: Case No. 17-CV-163-TCK-JFJ
• Parties: OMNI AIR INTERNATIONAL, LLC, a Nevada Limited Liability Company, Plaintiff, v. AUSTIN TECHNIK 1, INC., a Texas Corporation; and BRENDAN DARLING, an individual, Defendants.
• Court: U.S. District Court — Northern District of Oklahoma

OMNI AIR INTERNATIONAL, LLC,a Nevada Limited Liability Company, Plaintiff, v. AUSTIN TECHNIK 1, INC., a Texas Corporation;and BRENDAN DARLING, an individual, Defendants.

Case No. 17-CV-163-TCK-JFJ

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

April 11, 2018

OPINION AND ORDER

Before the Court is Plaintiff's Second Motion to Compel Response to Written Discovery and for Sanctions ("Motion to Compel") (ECF No. 36). Defendant Brendan Darling ("Darling"), appearing pro se, asserted the Fifth Amendment privilege against self-incrimination rather than respond to Plaintiff's written discovery.

I. Factual Background

Plaintiff Omni International, LLC ("Omni") is a "privately owned and managed United States FAA Part 121 certificated air carrier providing worldwide passenger charter operations." ECF No. 2, ¶ 6. Defendant Austin Technik 1, Inc. ("AT1") is an aircraft repair shop and warehouse engaged in the business of buying and re-selling surplus aircraft parts. Defendant Brendan Darling ("Darling") is President of AT1. Omni alleges AT1 entered into a business relationship with Omni whereby Omni shipped surplus aircraft parts to AT1 for storage in exchange for receipt of "a fair and reasonable value to be paid upon AT1's ultimate sale" of the parts on the secondary market. Id. ¶ 9. Omni allegedly discovered, in February 2017, that AT1 was paying Omni below market value, or nothing at all, for parts AT1 sold on the secondary market. On March 29, 2017, Omni sued AT1 and Darling for actual fraud, constructive fraud, conversion, breach of fiduciary duty, and unjust enrichment. Omni also alleges that Darling "funneled portions of these ill-gotten gains from the sale of Omni Parts to certain Omni employees located in Tulsa, Oklahoma with whom he worked with most closely in an effort to further conceal the fraudulent scheme." Id. ¶ 21.

Upon receipt of Omni's Complaint, Darling entered pro se appearances and filed an Answer on behalf of himself and AT1. United States District Judge Terence Kern ruled that Darling could not appear pro se on behalf of AT1 and struck the pro se Answer filed by Darling on behalf of AT1. The Clerk entered default against AT1, and Omni moved for default judgment. In the Answer, Darling set forth a detailed, nine-page denial of wrongdoing but admitted AT1 still owes Omni $252,000.00. ECF No. 11.

On November 14, 2017, Omni filed a Motion to Compel Darling to respond to its First Set of Requests for Admission, Interrogatories, and Requests for Production of Documents, which was referred to this Court and set for hearing. On November 29, 2017, Darling filed a letter addressed to Judge Kern stating he could not come to Tulsa for a hearing and "would only plead [his] 5th amendment right" and that "I am also pleading my 5th amendment right as of the signing of this letter." ECF No. 28.

The Court conducted a hearing on the Motion to Compel, at which Darling appeared by phone. Following the hearing, the Court entered an Order requiring Darling to respond to Omni's discovery requests by December 19, 2017. The Court further stated:

In a written notice (ECF No. 28), Mr. Darling stated his intention to plead his Fifth Amendment rights at any hearing and stated that he was asserting his Fifth Amendment rights by signing the letter. This assertion was not discussed by Mr. Darling, or the Court, during the hearing. By ordering Mr. Darling to attend the hearing and in discussing his general obligations to comply with the Federal Rules of Civil Procedure, the Court did not intend to take any position as to whether Mr. Darling may assert his Fifth Amendment privilege during the discovery process. The Court merely intended to advise Mr. Darling that he must respond in somemanner to Plaintiff's discovery requests by December 19, 2017, whether it is to provide substantive responses or to invoke a privilege.

In relation to the Fifth Amendment privilege, the Court cautions Mr. Darling as follows:

(1) If Mr. Darling anticipates being criminally prosecuted in relation to the allegations in this civil lawsuit, he should consult an attorney at the earliest possible time.

(2) A civil litigant may, in certain limited circumstances, invoke the Fifth Amendment privilege during the civil discovery process. If Mr. Darling desires to do so in responding to the discovery requests, he should state the grounds for asserting this privilege and clearly assert the privilege in his written responses due December 19, 2017. Plaintiff will have an opportunity to challenge any assertion of privilege.

(3) If Mr. Darling does assert a Fifth Amendment privilege in response to discovery requests, deposition questioning, or other aspects of discovery, this may have certain adverse consequences in this civil litigation.

ECF No. 31.

By the required date, Darling responded to all of the interrogatories and requests for production of documents with the statement, "I take the fifth amendment." ECF No. 36, Ex. C. Due to what appears to be an oversight, Darling failed to respond at all to Omni's single request for admission, which relates to the amount owed by AT1 to Omni. Omni then filed the Second Motion to Compel, which is currently pending. Omni argues: (1) the Fifth Amendment privilege does not apply because Darling does not face a reasonable fear of prosecution; (2) some discovery requests do not ask for potentially incriminating information and should be answered notwithstanding Darling's assertion of privilege; (3) Defendant waived any Fifth Amendment privilege by filing the narrative Answer; and (4) if permitted to plead the Fifth Amendment, Omni is entitled to "an adverse interest against Darling as the case proceeds." ECF No. 36 at 12. In his response to the Second Motion to Compel, Darling stated:

I plead the 5th Amendment based on [Omni] accusing me of steeling [sic] millions of dollars worth of parts. If this means I have to take back my answer, then I take it back. I am working manual labor jobs that have caused me to live week to week with no money. I am also going through a divorce, have tax worries due to this lawsuit, and I have nothing to offer. Omni Air International can take a judgement against me if that is what it takes.

ECF No. 39.

II. Analysis

Omni moves to compel Darling to respond to its discovery requests pursuant to Federal Rule of Civil Procedure 37(a). Omni requests that the Court overrule Darling's assertion of his Fifth Amendment privilege on a global basis or, alternatively, as to specific requests. An order compelling discovery is proper in this case unless the requested information is protected by the Fifth Amendment privilege. See Fed. R. Civ. P. 26(b) ("Parties may obtain discovery regarding any non-privileged matter . . . .").

A. Fifth Amendment Privilege in Civil Proceedings

"The privilege against self-incrimination protects the person claiming it from being compelled to give answers that would in themselves support a conviction or that would furnish a link in the chain of evidence needed to prosecute the claimant for a crime." United States v. Jones, 703 F.2d 473, 475 (10th Cir. 1983) (internal quotation marks omitted). "The privilege extends to questions propounded in a civil action, whether the claimant is a party or a witness," and the privilege may be asserted whenever "the witness has reasonable cause to apprehend danger from a direct answer." Id. at 475-76. "The fear must be reasonable in light of the witness' specific circumstances, the content of the questions, and the setting in which the questions are asked." Id. A court must evaluate each question, and the claim of privilege cannot be sustained if the fear of self-incrimination rests on "remote and speculative possibilities" rather than "real dangers." Id.

Once a "court determines that the answers requested would tend to incriminate the witness, it should not attempt to speculate whether the witness will in fact be prosecuted." Id. at 478; see also United States v. Nipper, 210 F. Supp. 2d 1259, 1262 (N.D. Okla. 2002) ("[C]ourts should not engage in raw speculation as to whether the government will actually prosecute."). "That prosecution is possible is enough absent clear evidence of an absolute bar to prosecution." Nipper, 210 F. Supp. 2d at 1262; 8 Charles Alan Wright, et. al, Federal Practice & Procedure § 2018 (3d ed. 2014) (explaining that privilege is available "even if the risk of criminal prosecution is remote"). Examples of "absolute bars" to prosecution include an express grant of immunity by prosecutors or the expiration of the relevant statute of limitations. See generally United States v. Von Behren, 822 F.3d 1139, 1146 (10th Cir. 2016) (holding that district court erred by assuming an assurance from the government was a substitute for immunity and by speculating that witness would not be prosecuted for answers given during polygraph examination).

Based on Omni's allegations against Darling, there exists a possibility that Darling may be criminally prosecuted for the conduct alleged in the Complaint. The Complaint alleges Darling acted with fraudulent intent and failed to pay Omni for parts. It further alleges Omni shipped "thousands of parts" to AT1 in Texas and that Darling "converted at least dozens of Omni Parts by selling same to third parties without Omni's consent." ECF No. 2 at ¶¶ 29-30. Omni further alleges the existence of a conspiracy between Darling and Omni employees to conceal his fraudulent scheme. This alleged conduct could potentially violate criminal laws. See, e.g., 21 Okla. Stat. § 421 (criminal conspiracy); 21 Okla. Stat. § 1451 (embezzlement); 21 Okla. Stat. §§ 1541.1 and 1541.2 (obtaining property by trick or deception and penalties); 21 Okla. Stat. § 1701 (larceny). Further, the Complaint alleges conduct occurring as late as February 2017, and the relevant statutes of limitations have not expired. Omni argues that it is not aware of any pendingcriminal investigation. Nor has Defendant alleged he is the...