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Judge: IPI has no 5th Amendment right to self-incrimination

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DISTRICT Court for the NMI Chief Judge Ramona V. Manglona said Imperial Pacific International LLC has no 5th Amendment right to self-incrimination as she denied its request to suspend the court proceedings in the lawsuit of seven construction workers who have alleged labor and other violations.

On Sept. 18, 2020, the judge denied IPI’s motion to stay and vacate discovery sanctions. She has now issued a written order to memorialize the court’s reasoning.

The plaintiffs are Tianming Wang, Dong Han, Yongjun Meng, Liangcai Sun, Youli Wang, Qingchun Xu, and Duxin Yan. They were previously employed by IPI’s former contractor and subcontractor, MCC International Saipan Ltd. Co. and Gold Mantis Construction Decoration (CNMI).

The plaintiffs are alleging forced labor, negligence, and liability for employees of subcontractors.

The plaintiffs’ first amended complaint claimed human trafficking under the federal Trafficking Victims Protection Reauthorization Act and the CNMI Anti-Trafficking Act, as well as claims under CNMI law for the physical injuries the plaintiffs say they suffered at the construction project.

IPI was named defendant in the amended complaint.

Represented by attorneys Aaron Halegua and Bruce Berline, the defendants have asked the federal court to issue an order awarding them $3.86 million in  compensatory damages and $7.72 million in punitive damages. 

No affidavits

In her 11-page written decision, Judge Manglona said “IPI first moved for a stay — under 18 U.S.C. § 1595(b)(1) — on April 30, 2019, arguing that although the United States had not yet indicated whether it would pursue charges against IPI, the civil case could give rise to a criminal case exposing IPI to criminal prosecution.”

Yet, the judge added, no affidavits were provided from people with personal knowledge of the existence of a pending criminal investigation against IPI that arises out of the same occurrence in which the claimants are the victim, particularly a statement from the United States Attorney’s Office.

Five months after denying the motion, on Nov. 12, 2019, IPI moved for a second stay on the same legal basis, but with a different factual basis, Judge Manglona said.

The second stay relied on the November 2019 search warrant executed at IPI’s offices, a grand jury subpoena directed at IPI’s custodian of record, which seeks, among other things, all communications between IPI and the Office of the Governor, and an FBI receipt for property.

On Dec. 12, 2019, the judge denied the second motion for stay.

In that decision, Judge Manglona said IPI failed to establish that the criminal investigation arose “out of the same occurrence in which the claimant is the victim,” adding that the mere link to the casino project was insufficient. 

In July 2020, the judge entered a default judgement against IPI after it failed to fully comply with various discovery requirements related to such matters as producing bank records, employee separation dates, and paper discovery.

IPI, through attorney Michael Dotts, has requested the court to set aside the default judgement.

Dotts said IPI is willing to pay all outstanding sanctions, but needs time to pay.

IPI then filed its third motion for stay, citing the criminal indictments filed against its two executives as the reason for the request.

Dotts also questioned the reason for the federal judge continuing to handle the civil lawsuit when she is also handling and presiding the then-sealed criminal indictment against the two IPI executives that points to the same occurrence in the ongoing litigation.

Fifth Amendment rights

IPI likewise asked the court to vacate all discovery sanctions entered against the company.

IPI said constitutional issues are at play because denying IPI a stay of civil proceedings pending resolution of the indictment against its executives would violate IPI’s Fifth Amendment rights.

IPI had already asked twice for a stay in the lawsuit filed by the seven former workers because it feared that the U.S. government was also conducting a criminal investigation against IPI at the same time as this civil matter was being litigated.

In IPI’s motion to stay proceedings, Dotts said Judge Manglona had twice dismissed IPI’s fears and denied the motions for a stay.

Dotts said IPI, for the third time, moves for the mandatory stay because Judge Manglona is presiding over a criminal matter involving the same occurrence in this civil action. He asserted that Manglona has no discretion to deny a stay that is mandatory under the statute.

But in her order, the judge said IPI “has again failed to do its job to demonstrate that: (1) there is a criminal action against IPI, (2) the criminal action arises out of the same occurrence as the civil action, and (3) the claimants in the civil action are the victims of the criminal action.”

Notably, IPI has failed to show even a criminal action against IPI, the judge said. “IPI, the corporation, is not included in the criminal indictment at all. While IPI believes that criminal investigations are ongoing based on the superseding indictment’s allegations that reference IPI, the court finds that this belief is too speculative to warrant a stay. Over two years have passed since the original indictment, and IPI was never charged,” the judge added.

Mere speculation

IPI therefore cannot mandate the court to issue a stay here based on mere speculation of a potential criminal charge, the judge said.

She added that the criminal charges IPI is referencing are based on allegations that the defendants defrauded and deceived the U.S. government and its agencies, including USCIS and Customs and Border Protection, by exploiting the conditional parole program intended for business and pleasure to get Chinese laborers to the CNMI.

In contrast, the judge said, the civil complaint is based on trafficking, worker exploitation, forced labor, and egregious working conditions.

Moreover, she said, the scheme alleged in the criminal indictment involves defendants paying the airfare of workers and their companions to pose as female girlfriends or spouses during a narrow period between Feb. 26, 2017 and March 31, 2017.

She said the plaintiffs’ case  alleged a different scheme in which they paid recruitment fees predating this period.

IPI’s argument that criminal action arises out of the same occurrence as the civil action is thus belied by the record, distinguishing it from the aforementioned cases, Judge Manglona said.

As for IPI’s request to grant a discretionary stay due to Fifth Amendment concerns, the judge concluded that a stay is not warranted because a corporation has no Fifth Amendment right against self-incrimination.

“To the extent that discovery could implicate IPI’s current executives in the criminal action, IPI can appoint someone as an agent who, ‘without fear of self-incrimination,’ could furnish the requested information available to the corporation,” the judge said.

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