United States Court of Appeals,
Fifth Circuit.
No. 97-20195.
KMART CORPORATION AND BUILDERS SQUARE, INC., Plaintiffs-
Appellants,
v.
Mark J. ARONDS, et al., Defendants,
Mark J. Aronds; The Network Group; Sanco Realty Investments
Inc.; Southwest Appliances Incorporated; Conn Appliances Inc.;
Carroll W. Conn, Jr.; Planet Development Inc.; Laverne D. Hensen
a/k/a Logan d/b/a Core Properties; Geoffrey Gould, d/b/a KLM
Property Management; Bayway Land Group; Bayway Land Corp.;
Sharon A. Biles; Jo L. Marr; Marilyn Tadla; Maurice Aronds;
Sandra L. Aronds; Michael J. Garzoni; Centre Management Inc.;
Falcon Interests Realty Corp., d/b/a Falcon Group; Kyle D. Tauch;
Arnold C. Tauch; Mr. Storage Inc.; 12610 Bellaire One Ltd.;
12610 Bellaire One Inc.; K Realty Corp; K Realty One, Ltd.; K
Realty Two Corp.; K Realty Two, Ltd.; K Realty Three Corp.; K
Realty Three, Ltd.; Westheimer Square One, Inc.; Westheimer
Square One, Ltd., Defendants-Appellees.
Sept. 25, 1997.
Appeal from the United States District Court for the Southern
District of Texas.
Before DUHÉ and BARKSDALE, Circuit Judges, and COBB1, District
Judge.
DUHÉ, Circuit Judge:
Petitioners-Appellants Kmart Corporation and Builders Square,
Inc. appeal the district court's order staying this civil RICO suit
against Respondent-Appellee Mark J. Aronds, et al. pending the
resolution of related criminal matters. We are without
jurisdiction to hear Kmart's appeal and so dismiss it, and deny
mandamus.
1
District Judge of the Eastern District of Texas, sitting by
designation.
1
BACKGROUND
Appellants Kmart Corp. and Builders Square, Inc. ("Kmart")
filed a civil RICO suit against Mark J. Aronds ("Aronds"), a Texas
real estate salesman, Michael J. Garzoni ("Garzoni"), an attorney
and former Kmart in-house real estate representative, and others
(collectively "defendants") for allegedly defrauding Kmart and
Builders Square in at least fourteen transactions in eight
different states. Kmart contends that the Defendants engaged in a
series of self-interested real estate transactions, undisclosed
commission payments, embezzling and money laundering, and other
RICO and pendent state law claims.
Several months after Kmart filed its first amended complaint,
Aronds and Garzoni were indicted in the Eastern District of
Michigan for one of the transactions Kmart complained of. A second
indictment followed a month later naming Garzoni and two other
defendants. Two days later, the SEC filed a civil suit for insider
trading against Aronds and Garzoni.
Before discovery began, Aronds2 moved to stay discovery based
on the parallel criminal proceedings. Another unindicted defendant
joined in the motion. Most of the remaining defendants did not
join in the motion or file their own motion. Garzoni and the two
2
Here, Aronds includes Aronds individually and d/b/a Mr.
Storage, The Network Group, Inc., Sanco Realty Investments, Inc.,
Southwest Appliances, Inc., Planet Development, Inc., Maurice
Aronds, Sandra L. Aronds a/k/a Foote, Bayway Land Group, Bayway
Land Corp., Sharon A. Biles, Jo L. Marr, Marilyn Tadla, Centre
Management, Inc., 12610 Bellaire One, Ltd., 12610 Bellaire One,
Inc.
2
other indicted defendants filed separate motions for protection.3
In response to Aronds' motion, Kmart admitted that the
indicted defendants may have Fifth Amendment concerns. The
unindicted defendants, Kmart argues, had no basis to assert their
Fifth Amendment privilege against civil discovery because they were
unindicted. Kmart went on to contend that granting the stay would
threaten the loss of key evidence because: 1) Kmart needed to
depose several key third-party witnesses who were over seventy
and/or in poor health; 2) certain defendants had destroyed and
were continuing to destroy critical evidence; 3) certain bank
transactions in issue were more than five years old and their
documentation was subject to destruction under state and federal
law; 4) other third-party documents could be lost under different
corporate retention policies; and 5) there was no document
retention order in place. Kmart sought a hearing on the motion to
stay discovery. It also asked the court to conduct an in camera
review of evidence that the defendants had destroyed documents that
were responsive to outstanding discovery requests.
The district court granted Aronds' motion to stay discovery
against all the defendants pending the resolution of United States
v. Aronds and United States v. Garzoni. The court did not hold a
hearing or conduct an in camera examination. The order provided
that:
[D]iscovery in this case should be stayed as to all
3
The district court dismissed this motion together with all
other pending motions after it granted Aronds' motion to stay.
Kmart appeals only the propriety of the stay order.
3
Defendants, but only until resolution of United States v.
Aronds... and United States v. Garzoni .. .Accordingly the
Court ORDERS that the case is STAYED pending the resolution of
the related criminal matters.
Several days later, the district court dismissed without prejudice
all pending motions. Kmart moved for reconsideration which was
denied. The district court issued a subsequent order canceling its
scheduling order. In deference to the judge's order, a district
judge in the Eastern District of Missouri stayed discovery in a
similar suit in his court.
ANALYSIS
JURISDICTION
To establish appellate jurisdiction, Kmart must show either
that the stay order is "final" within the meaning of 28 U.S.C. §
1291 or that the order falls within a recognized exception to the
finality doctrine. If the order does not come within an exception
to the finality doctrine, then Kmart asks this court to treat its
motion as a petition for mandamus.
A. FINALITY
Generally, 28 U.S.C. § 1291 grants courts of appeal
jurisdiction only over final judgments of district courts. Kmart
concedes that the stay order is not final, but looks to two
exceptions to finality to obtain appellate jurisdiction. Those
exceptions are: 1) the death knell or "effectively out of court"
doctrine stated in Idlewild Bon Voyage Liquor Corp. v. Epstein, 370
U.S. 713, 82 S.Ct. 1294, 8 L.Ed.2d 794 (1962); and 2) the
practical finality doctrine under Gillespie v. United States Steel
4
Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964).4
The death knell or "effectively out of court" doctrine as
stated in Idlewild states that a case is final when it is
effectively out of court. The Supreme Court, however, limited the
death knell exception in Moses H. Cone Mem'l Hosp. v. Mercury
Const., 460 U.S. 1, 10 n. 11, 103 S.Ct. 927, 934 n. 11, 74 L.Ed.2d
765 (1983). The Court held that Idlewild 's reasoning was limited
to abstention or similar doctrines where all or an essential part
of the federal suit goes to a state forum. Id.
Further, this Court has stated that while it liberally
construed the death knell exception in the past, it could no longer
do so because the exception was limited to cases where the stay
requires all or essentially all of the suit to be litigated in
state court. See U.S. v. Garner, 749 F.2d 281, 288 (5th Cir.1985);
see also Kershaw v. Shalala, 9 F.3d 11, 14 (5th Cir.1993). Here,
the federal suit remains in federal court so the exception is not
applicable. We find, therefore, the death knell exception
unavailable.
As for the practical finality exception stated in Gillespie
v. United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13
L.Ed.2d 199 (1964), the Supreme Court refused to extend the
exception beyond the unique facts of Gillespie holding that doing
4
Kmart does not address the collateral order doctrine under
Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221,
93 L.Ed. 1528 (1949), so we do not discuss the applicability of
this exception. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th
Cir.1994) (stating that a party who inadequately briefs an issue
waives the claim).
5
so would strip § 1291 of all significance. Coopers and Lybrand v.
Livesay, 437 U.S. 463, 477 n. 30, 98 S.Ct. 2454, 2462 n. 30, 57
L.Ed.2d 351 (1978)(noting that Gillespie concerned a marginally
final order disposing of an unsettled issue of national
significance and that review of the issue "unquestionably
implemented the same policy Congress sought to promote in §
1292(b)"). Furthermore, this Court no longer recognizes the
exception. See Newpark Shipbuilding and Repair, Inc. v. Roundtree,
723 F.2d 399 (5th Cir.1984) (stating that pragmatic finality is in
fundamental conflict with the purpose of the finality rule) and
Sherri A.D. v. Kirby, 975 F.2d 193, 202 n. 12 (5th Cir.1992)
(calling practical finality more chimerical than real). Thus, we
hold that there is no jurisdiction under the practical finality
exception.
B. WRIT OF MANDAMUS
Kmart argues in the alternative that we should treat the
appeal as a petition for a writ of mandamus.
28 U.S.C. § 1651(a) states:
The Supreme Court and all courts established by an Act of
Congress may issue all writs necessary or appropriate in aid
of their respective jurisdictions and agreeable to the usages
and principles of law.
A writ of mandamus is an extraordinary remedy. Gulfstream
Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 289, 108 S.Ct.
1133, 1143-44, 99 L.Ed.2d 296 (1988). Traditionally, an appellate
court used the writ, both at common law and in the federal courts,
to aid jurisdiction either in confining an inferior court to its
prescribed jurisdiction or in compelling that court to exercise its
6
authority when it has a duty to do so. Will v. Calvert Fire Ins.,
437 U.S. 655, 661, 98 S.Ct. 2552, 2556, 57 L.Ed.2d 504 (1978). The
party requesting mandamus has the burden of proving a "clear and
indisputable" right to the writ. Bankers Life and Cas. Co. v.
Holland, 346 U.S. 379, 384, 74 S.Ct. 145, 148-49, 98 L.Ed. 106
(1953). In Will, the Supreme Court refused to issue a writ because
Calvert remained free, as the state case progressed, to reurge the
district court to reconsider its decision to defer. There deferral
was not the equivalent of dismissal. Id. at 665, 98 S.Ct. at 2558.
The Court went on to hold that if a matter is within the district
court's discretion, the litigant's right to a particular result
cannot be "clear and indisputable." Id. at 666, 98 S.Ct. at 2559.
While the Will decision is a plurality opinion, the Court confirmed
Will 's reasoning by citing it in a later majority opinion. See
Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct.
188, 190-91, 66 L.Ed.2d 193 (1980).
Here, like the Will case, the district court is free to
revisit its decision. More importantly, the district court's
decision to stay is within its discretion. Mayo v. Tri-Bell
Indus., 787 F.2d 1007, 1012 (5th Cir.1986). As a result, Kmart
does not have the required "clear and indisputable" right to the
writ.
CONCLUSION
It may have been wiser for the district court to have held a
hearing and conducted an in camera review of evidence that
documents had been destroyed, but we lack appellate jurisdiction
7
and the very high mandamus threshold is not met.
APPEAL DISMISSED, MANDAMUS DENIED.
8