Kolon 5

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA

(Alexandria Division)
E.I. du Pont de Nemours and Company, )
)
Plaintiff, )
)
v. ) Civil Action No. 3:09-cv-00058
) [Hon. Anthony J. Trenga]
Kolon Industries, Inc., )
Defendant. )
__________________________________________)
REPLY MEMORANDUM IN SUPPORT OF KOLON INDUSTRIES, INC.S
MOTION FOR TEMPORARY STAY OF PROCEEDINGS

J eff G. Randall (admitted pro hac vice)
PAUL HASTINGS LLP
875 15th Street, N.W.
Washington, D.C. 20005
Telephone: (202) 551-1700
Facsimile: (202) 551-1705
jeffrandall@paulhastings.com

Gretchen C. Byrd (VA Bar No. 72789)
LECLAIRRYAN, A PROFESSIONAL
CORPORATION
Riverfront Plaza East Tower
951 East Byrd Street, Eighth Floor
Richmond, VA 23219
Telephone: (804) 783-7553
Facsimile: (804) 783-7653
gretchen.byrd@leclairryan.com

Attorneys for Kolon Industries, Inc.

Case 3:09-cv-00058-AJT-JFA Document 2526 Filed 07/28/14 Page 1 of 20 PageID# 45774

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I. INTRODUCTION
Courts have the discretion to stay civil proceedings in light of a pending criminal
prosecution when the interests of justice seem to require such action. Securities & Exch.
Commn v. Dresser Indus., 628 F.2d 1368, 1375 (D.C. Cir. 1980) (quoting United States v.
Kordel, 397 U.S. 1, 12 n.27 (1970)) (brackets omitted); In re Phillips, Beckwith & Hall, 896 F.
Supp. 553, 558 (E.D. Va. 1995). In its initial memorandum, defendant Kolon Industries, Inc.
(Kolon) demonstrated that the circumstances of this remanded civil action justify a stay. The
grand jury has indicted Kolon since the first civil trial; virtually all of the factual allegations of
the indictment are at issue in the civil case; absent a stay, the government will have access to
civil discovery that is unavailable under the Federal Rule of Criminal Procedure 16; and the
specter of future investigation and indictment creates a substantial risk that Kolon or third-party
witnesses will either refuse to testify or sit for depositions, or will invoke the Fifth Amendment,
even if safe passage is granted. For all these reasons, this Court should stay this action.
The government has filed its non-joinder to Kolons motion to stay as a purported
intervenor in this civil action between DuPont and Kolon. However, the government sought and
obtained the right to intervene only for the limited purpose of amending the Protective Order
so that the grand jury could have access to discovery material that would be produced in the civil
case. See D.I. 695; see also Order at D.I. 911. It is unclear why the government should have any
interest in whether the civil action is stayed or why, having been granted only a narrow right of
intervention, it considers itself to have a right to brief issues affecting only the rights of the
parties to the civil action. Having not moved to intervene to brief this issue, the governments
submission should be stricken. Regardless, the governments declaration that it will not join

2
Kolons stay motion, D.I. 2501 at 1, is unsurprising; the government apparently hopes to profit
from additional civil discovery from Kolon, and recognizes that it is not entitled to such
information directly from Kolon under Federal Rule of Criminal Procedure 16. The government
also may see an advantage to having Kolon bear the burden of preparing to defend simultaneous
civil and criminal proceedings. Of course, Kolons motion for stay is not intended to promote
the interests of the prosecution; it is to maintain a fair opportunity to defend the civil action, and
to keep the government from using civil discovery as an end-run around the strictures of the
Federal Rules of Criminal Procedure. See D.I. 2479 at 18-20. A stay is necessary and justified.
As for plaintiff E.I. du Pont de Nemours & Company (DuPont), it is apparent from this
and other remand filings that DuPont will devote a substantial part of every brief to hyperbolic
mudslinging at Kolon rather than simply addressing the merits of the motion. Try as it may, D.I
2519. at 1-2, DuPont cannot pin the five years that have passed since the filing of the complaint
upon Kolon. The jury rendered its verdict in September 2011; the district court took nearly a
year to resolve DuPonts motion for permanent injunction in August 2012; and on appeal the
Fourth Circuit finally ruled against DuPont almost two years later in April 2014. DuPont has
only itself to blame for the invited and highly prejudicial error regarding exclusion of evidence
that caused the court of appeals to vacate the judgment. In any event, the relevant consideration
is not the time elapsed since the complaint but the relative timing of the civil retrial with or
without a stay.
That timing will ultimately depend on the Courts resolution of Kolons forthcoming
motion in the criminal case, after Kolon is served with the criminal summons, to vacate the
Courts prior rulings under Federal Rule of Criminal Procedure 4 and quash service. If the Court
rules, in accord with the Rules plain language, that the current Rule 4 does not provide for

3
extraterritorial service, and requires compliance with the mailing requirement, Fed. R. Crim. P.
4(c)(2) & (3)(C), then the criminal prosecution will be postponed, in which case a further stay of
the civil case may no longer be appropriate. On the other hand, if the Court concludes that the
governments forthcoming service attempts are in compliance with the existing criminal rules,
the proposed stay will be a matter of months, not years. Such a limited delay would not
overcome the substantial prejudice to Kolon of proceeding with the civil action now, including
the prospect of defending the civil and criminal actions simultaneously.
This Court has considerable equitable discretion to structure the stay to avoid any
conceivable prejudice to DuPont. Kolon has asked for a stay of the civil action subject to
revisitation upon resolution of the service issues in the criminal action. D.I. 2479 at 2.
Moreover, while a full stay is warranted, this Court could also simply stay discovery (or just
discovery from Kolon that is relevant to the criminal trial) until the likely date of the criminal
trial becomes clear. This Court presides over both the civil and criminal trials, and thus will be
aware of developments in the criminal case that may justify dissolving the stay. It can also
require periodic briefing from the parties (perhaps every 90 or 120 days) on the propriety of
continuing the stay, much like DuPont submits in another trade-secret action. See D.I. 2479, Ex.
2 (E.I. du Pont de Nemours & Co. v. USA Performance Tech., Inc., 2007 WL 2481291, D.I. 80,
at 1-2 (N.D. Cal. J une 23, 2014)). In all events, the Court should grant a stay to ensure that the
ultimate criminal and civil trials are conducted fairly and without unnecessary prejudice to
Kolon.
II. EQUITABLE FACTORS DECIDEDLY FAVOR GRANTING A STAY
A. The Substantial Similarity of the Civil Case to a Pending Criminal Case
Favors a Stay.
The major reasons to stay a civil action pending a criminal prosecution are to prevent

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government access to civil discovery, and to prevent witnesses from refusing to testify regarding
matters that are also the subject of the criminal prosecution. D.I. 2479 at 9-10. Accordingly,
courts look to the substantial similarity of the factual issues that will be presented in the civil and
criminal trials. A show[ing] that the parallel proceedings are related and involve substantially
similar issues supports the granting of a stay. See Ashworth v. Albers Med., Inc., 229 F.R.D.
527, 530-531 (S.D. W. Va. 2005) (citing United States v. Mellon Bank, N.A., 545 F.2d 869 (3d
Cir. 1976)) (additional citations omitted) (courts have noted the importance that the party
moving for a stay show that the parallel proceedings are related and involve substantially similar
issues).
Here, neither the government nor DuPont can credibly argue that the criminal and civil
cases are unrelated or do not involve substantially similar issues. See id. Indeed, the
government has conceded as much during the initial proceedings and in its most recent filing.
See D.I. 696 (Governments Memorandum in Support of Motion to Intervene) at 1 (the criminal
investigation relates to the same subject matter as the civil case); id. at 3 (The subject matter of
the criminal investigation is substantially the same as the civil case.) (emphasis added); D.I.
2501 at 5 (conceding that both cases arise from the same basic fact pattern).
It is difficult to exaggerate[] the overlap between the civil and criminal cases as DuPont
contends. Cf. Opp. at 14. Unsurprisingly, both the government and DuPont fail to address the
comprehensive chart attached to Kolons opening memorandum showing, in great detail, the
extent of the overlap. See D.I. 2479, Ex. 14. Instead, the government and DuPont argue that the
nature and scope of the claims brought in the two cases differ. D.I. 2519. at 14-15; D.I. 2501 at
5. For example, the government points out that it has alleged trade secret theft of only four
economic trade secrets supplied by one consultant, whereas the civil action involves the alleged

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misappropriation of 149 trade secrets, many of which are technical. D.I. 2501 at 5. These
contentions lack force.
First, the relevant test is overlap of issues, not perfect identity, and here the overlap of the
criminal prosecution by the civil action is essentially complete. In determining whether a stay is
appropriate, it does not matter, as the government and DuPont contend, that the elements of a
conspiracy offense differ from the elements of a civil misappropriation claim. The question is
whether the same conduct is at issue, and thus whether the civil discovery and witness testimony
will pertain to the alleged conduct in the governments case in chief. See Va. Code 59.1-336
(Misappropriation) (setting forth mens rea elements of misappropriation); see also 800537
Ontario, Inc. v. World Imports U.S.A. Inc., 145 F. Supp. 2d 288, 291 (W.D.N.Y. 2001) (citing
Landis v. N. Am. Co, 299 U.S. 248, 256 (1936)) ([E]ven if as the plaintiffs argue, the required
elements of proof in each of the actions are not identical, there is no question that the
fundamental issues to be resolved are substantially similar and a stay is appropriate). And while
the formal charges of misappropriation in the indictment focus on business-related trade
secrets, the governments indictment contains detailed allegations that Kolon received the very
same documents alleged to contain technical trade secrets in the civil matter. See, e.g., D.I.
2479, Ex. 10 (Superseding Indictment, United States v. Kolon Industries, Inc., No. 3:12-cr-137,
D.I. 46) (hereinafter Superseding Indictment) at 13-17.
Second, the criminal prosecution is not limited to the conspiracy count or the four
substantive counts of theft. The government also seeks forfeiture of Kolon revenues from its
Heracron para-aramid-fiber products on the grounds that the revenues are property constituting
or derived from any proceeds obtained directly or indirectly as a result of the commission of the
charged trade secret offense. 18 U.S.C. 1834, 2323(a)(1)(C); see D.I. 2479, Ex. 10

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(Superseding Indictment) at 36. Although Kolon and the government will likely dispute the
standard for proving forfeiture and the legal viability of its forfeiture claim, the government
cannot prove a derivative-proceeds forfeiture claim without submitting evidence that Kolon
actually used DuPonts technical trade secrets throughout its production lines; the government is
thus not going to be able to skirt the issue of whether the asserted DuPont process technologies
are actually used and constitute trade secrets. Likewise, DuPont must present similar proof (and
more) if it seeks any form of production injunction.
B. Kolon Will be Materially Prejudiced if Required to Litigate This Civil Case
prior to (or in Parallel with) Defending against the Criminal Prosecution.
1. Kolon will be substantially prejudiced by the disclosure of additional
civil discovery to the prosecution.

In its opening memorandum, Kolon recounted the history of the governments close
coordination with DuPont and its interference with the civil case prior to trial to illustrate the
prejudice Kolon suffered. The Fourth Circuits decision in In re Grand Jury Subpoenas, 646
F.3d 159 (4th Cir. 2011), does not contradict Kolons claim of prejudice. The Fourth Circuit
held only that the grand jury has the power to subpoena civil discovery within its jurisdiction,
even if the defendant produced the discovery under protective order, so long as the government
does not direct the civil discovery. Id. at 167-69. However, the Fourth Circuit acknowledged
that a party might face adverse criminal consequences as a result of its participation in the Civil
Litigation, but that materials generated in civil litigation are generally available for use in
future criminal prosecutions. Id. at 168.
But it is precisely because civil discovery is available for use in future prosecutions that
courts will grant stays of civil actions to prevent the generation of civil discovery that the
government can exploit in later criminal trials. See, e.g., Dresser Indus., 628 F.2d at 1375-76
(purpose of civil stay is to prevent the government from expand[ing] rights of criminal

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discovery beyond the limits of Federal Rule of Criminal Procedure 16(b)); Ashworth, 229
F.R.D. at 531-32 (stay proper where the defendants may conceivably be forced to disclose
matters that otherwise would not be available to the United States through the criminal rules of
procedure). If the civil defendant is enmeshed in civil litigation, and is merely being
investigated, then the prospect of a criminal prosecution is too dim to warrant a stay even if
conceivably the grand jury can subpoena the civil discovery and use it in a future prosecution.
See Maryland v. Universal Elections, Inc., 729 F.3d 370, 379-80 (4th Cir. 2013) (The district
courts denial of defendants motion to stay is in keeping with the bulk of judicial authority,
which holds that stays are generally not granted before indictments have issued.); United States
v. S.E.C., Civ. No. 2:13CV16, 2014 WL 61398, at *2 (E.D. Va. J an. 6, 2014) (denying stay
because this case does not involve concurrent criminal and civil proceedings, but instead
involves only the potential for the future filing of criminal charges against Defendant). But the
balance shifts where the criminal prosecution has been initiated by indictment, and a Court
(absent undue delay) should not facilitate discovery in the civil action that cannot be obtained in
the criminal discovery. See D.I. 2479 at 14-15. The government, having indicted Kolon, should
stay within the confines of Criminal Rule 16.
1

2. Kolon will be substantially prejudiced by the unavailability of
witnesses.

In addition to the near certainty that whatever documents Kolon produces in the remand
proceedings will be turned over to the government by way of friendly subpoenas, Kolon faces

1
DuPont suggests that the government is free to obtain evidence from Kolon directly through
the Mutual Legal Assistance Treaty (MLAT) between the United States and the Republic of
Korea, D.I. 2519. at 7 n.4 (citing In re Grand Jury Subpoena, 646 F.3d at 165). The MLAT only
authorizes compulsion of witness testimony and the equivalent of a subpoena duces te cum, and
searches and seizures, and does not authorize anything resembling civil discovery in the United
States. U.S.-South Korea Mutual Assistance Treaty, arts. 8, 15. See Ex. 3 United States v. Kolon
Industries, Inc., No. 3:12-cr-137, D.I. 37-1.

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substantial prejudice on remand by virtue of the simple fact that employees Kolon may seek to
call as witnesses in the retrial may refuse to enter the United States to testify of their own accord.
See D.I. 2479 at 16-17 (under Korean law, Kolon has no power to compel its employee-
witnesses to travel to the United States to testify).
It may be true that in the first civil trial, [m]ost of the governments witnesses have []
testified under oath, and that DuPont developed ample deposition testimony of Kolon witnesses
for its purposes. D.I. 2501 at 5. But Kolon has not deposed many of its employee witnesses, and
DuPont successfully blocked the use of testimony of the few witnesses that Kolon did directly
examine in their depositions.
2
Kolon should not be deprived of a full and fair opportunity to call
employees as live witnesses during the retrial merely because the witnesses did not testify live in
the first trial.
Moreover, even as to the few Kolon employees that Kolon had the opportunity to depose,
it could not elicit significant favorable testimony necessary for its defense that it would otherwise
seek from a live trial witness. For example, the depositions of Kolons five managing agents
took place from late October to early November 2010. That was contemporaneous with
DuPonts October 25, 2010 trade secret disclosure, and over three months prior to its February
23, 2011 listing. See D.I. 943, Ex. 3 (10/25 Listing); D.I. 949, Ex. 1 (2/23 Listing). In both
instances, DuPont dramatically expanded its alleged trade secrets beyond the scope of the
Complaint and any prior trade secret identification. See D.I. 827 at 3; D.I. 943, Ex. A. Thus,
while Kolon had some opportunity to question its technical witnesses regarding Kolons

2
The question of whether Kolon may introduce deposition testimony of its employees at the
retrial is an issue that may later come before this Court; whether a witness is unavailable
within the meaning of Rule 32(a)(4) must be determined at the time of trial. See, e.g., Hartman
v. United States, 538 F.2d 1336, 1345 (8th Cir. 1976); 8A Charles A. Wright et al., Federal
Practice and Procedure 2146 at 645 (2010).

9
independent development and non-use defenses, it lacked any opportunity to question the
employees about the specific details that DuPont ultimately alleged as trade secrets.
3

If Kolon were forced to rely solely on deposition testimony from its employee-witnesses,
it would be further prejudiced by the inability to tailor the testimony offered during its defense to
correspond to the proof presented in DuPonts case-in-chief. This prejudice is underscored by
DuPonts demonstrated propensity to transform its trade secret allegations into moving targets,
even as trial was well underway. See D.I. 1737, Ex. 1 (differences between DuPonts trial proof
and its pre-trial trade secret identifications); Ex. 2 (Trial Tr. at 4546:12-4550:24) (DuPonts
counsel refusing Kolons request to provide pin-cites within alleged trade secret documents out
of concern of becoming locked in).
In any event, video playback of deposition testimony in this case would be a poor
substitute for live trial witnesses in Kolons defense. J udge Learned Hand proclaimed the
deposition to be second best, not to be used when the original is at hand. If possible, it is
always better if the jury can observe the witness firsthand to judge his or her demeanor. Loinaz
v. EG & G, Inc., 910 F.2d 1, 8 (1st Cir. 1990) (quoting 8 C. Wright & A. Miller, Federal Practice
and Procedure 2142 (1970)). Kolon should not be denied a full and fair opportunity to present

3
For example, DuPont alleged that the
was a trade secret in its Second Supplemental Interrogatory Response on
March 16, 2010. See D.I. 943, Ex. 2 at 28.xviii. This understanding of the alleged trade secret
drove the testimony that Kolon sought to elicit from employee-witness Kyeong-Hwan Rho
during his deposition in October 2010. See Ex. 1 (10/30/2010 Dep. of KH Rho at 503:3-504:23)
(testifying about Kolons independent understanding of
). Counsel for Kolon never askedand had no reason to askMr. Rho about
the specific criterion Kolon established for its Indeed, it was not until over
three months after Mr. Rhos depositionon February 23, 2011, that DuPont first alleged the

See D.I. 949, Ex. 1 at TS 25, bullet 4 (2/23 Listing); D.I. 943, Ex.
A at 2.

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live, employee-witnesses in its defense on remand merely because those witnesses did not testify
live in the first trial.
The safe-passage letters that the government issued for the first trial, which both the
government and DuPont tout as safeguards, will do little to ensure witness availability. The safe-
passage letters simply guarantee that the government will not arrest, detain, question, or serve
process upon the witnesses during their time in the United States, see D.I. 2501 at 7-10 & Exs. 1-
5; they provide no immunity from future investigation or indictment. DuPont and the
government discount the risk of future investigation or indictment, but an individual employee
from a foreign nation is likely to be less sanguine in accounting for risks of indictment,
extradition, and prosecution by the United States. Where (as shown below) DuPont will suffer
little prejudice from a brief delay, and where DuPont seeks nearly a billion dollars in damages
and a permanent, worldwide injunction shutting down Kolons para-aramid fiber business, Kolon
should not be forced to suffer avoidable prejudice in litigating this civil action.
2. The risk that third-party or employee witnesses may invoke the Fifth
Amendment compromises Kolons defense of the civil action

Kolon witnesses or third-party witnesses may also invoke the Fifth Amendment, to
Kolons prejudice, if they perceive any risk of criminal investigation or indictment. See
Avalonbay Cmtys, Inc. v. San Jose Water Conservation Corp., No. 07-306, 2007 WL 2481291, at
*3 (E.D. Va. Aug. 27, 2007) (noting that, even if corporation does not possess Fifth Amendment
rights, the invocation of the Fifth Amendment by individual witnesses can compromise the
corporations ability to mount a defense); Golden Quality Ice Cream Co. v. Deerfield Specialty
Papers, Inc., 87 F.R.D. 53, 58 (E.D. Pa. 1980).
As Kolon demonstrated, Kolon suffered substantial prejudice from the Fifth Amendment
invocation of witness in the first trial. D.I. 2479, at 6-7, 20-21. DuPont

11
falsely suggests the contrary because the district court admitted some testimony. But the
prejudice occurred because (1) the prior district judge (improperly) allowed the jury to draw
adverse inferences against Kolon from invocation of the privilege against self-
incrimination, and then (2) barred Kolon from introducing the critical portions of
deposition testimony and related documents that favored Kolon and contradicted the inference,
such as his direct statements to Kolon assuring the company that he was providing public
information, his explanation of DuPonts public disclosure of the trade-secret information, and
his role and receipt of documents in the Akzo litigation. D.I. 1255, Ex. 1.
The government states that circumstances have changed because it will soon enter into a
plea agreement with , and that the government would not object if DuPont or Kolon
sought to depose the former DuPont employee or call him to testify in the civil case. D.I. 2501
at 11. As a practical matter, Kolon has not yet received or reviewed a copy of the statement of
facts to which agreed in connection with his plea agreement. Moreover, the mere fact
that may soon plead guilty to a crime will not necessarily extinguish his Fifth
Amendment privilege against self-incrimination; there may be separate facts outside of his plea
statement and relevant to sentencing as to which the privilege might be asserted. See Mitchell v.
United States, 526 U.S. 314, 321 (1999).
Regardless, it is not just but other third parties to this litigation such as
equipment vendors and other consultants who shared information on para-aramid technology
with Kolon who may invoke the privilege (particularly after witnessing fate).
An attorney might advise her or his client not to answer questions simply as a safety measure
lest the client disclose information that she or he may not even know to be criminal. Farace v.
Indep. Fire Ins., 699 F.2d 204, 210-11 (5th Cir. 1983); see Allstate Ins. v. James, 845 F.2d 315,

12
320 (11th Cir. 1988). It is therefore highly conceivable that future proceedings on remand
may touch on the Fifth Amendment rights of witnesses who are not parties to the civil action
but who may be targets of the criminal investigations. Ashworth, 229 F.R.D. at 532. This factor
heavily favors a stay. See id.
C. The Public Interest Is Served By A Stay
A stay also promotes the public interest. See D.I. 2479 at 21-22. Contrary to DuPonts
claims, D.I. 2519. at 28-29, the public interest in the vigorous prosecution of private [ ] claims
must be less acute where, as here, the United States has decided to devote a part of its
prosecutorial resources to bringing a criminal action. Golden Quality Ice Cream, 87 F.R.D. at
58. Furthermore, any public interest in speedy resolution of DuPonts claims is minimal where
DuPont has already had its day in court, but invited error that required a new trial, and any such
minimal interest is also trumped by the greater public interest in a fair and accurate resolution of
those claims, which a stay supports. These considerations, coupled with the publics interest in
constraining the government to the limited discovery contemplated by the Federal Rules of
Criminal Procedure, weigh strongly in favor of a stay.
D. The Convenience of the Court Favors a Stay
The most efficient use of the Courts resources is to ascertain whether the criminal trial
may move forward despite the governments inability to comply with Criminal Rule 4, rather
than engage in duplicative proceedings. As explained in Kolons opening brief, even just a
likelihood of at least some duplicative judicial effort weighs in favor of staying the civil case.
Golden Quality Ice Cream, 87 F.R.D. at 57. This Courts policy of efficient and expeditious
resolution of cases, Avalonbay Cmtys., 2007 WL 2481291, at *4, will be furthered by avoiding
unnecessarily duplicative proceedings. See Golden Quality Ice Cream, 87 F.R.D. at 57.
DuPonts concern that this efficiency boost is merely speculative because a trial date has not

13
been set in the criminal proceedings, D.I. 2519. at 27, is not a reason to deny the stay; any
concern about an indefinite stay may be alleviated by allowing the parties [to] petition the Court
to lift or modify the stay if there is a change in circumstances. Walsh Sec., Inc. v. Cristo Prop.
Mgmt., Ltd., 7 F. Supp. 2d 523, 529 (D.N.J . 1998).
E. DuPonts Interests Will Not Be Significantly Prejudiced by First
Ascertaining the Status of the Governments Prosecution of Kolon
DuPonts protestation that it will be substantially prejudiced by any delay of the civil
action is unavailing. In the event that the Court concludes that the government cannot comply
with the current criminal rules pertaining to service of the summons, which will result in
significant delay (if not preclusion) of any criminal trial, then the Court and parties can revisit
the issue of a stay of the civil case.
If, however, the Court concludes that the government has complied with the criminal
rules pertaining to service after the governments forthcoming attempts at service of the
summons, the civil trial will not be subject to a lengthy or indefinite period of delay. The
government reports that it has re-commenced efforts with the South Korean authorities to serve a
summons upon Kolon, which it anticipates will be accomplished in the next several months.
D.I. 2501 at 12. Kolon would be arraigned soon after service is upheld, and then the Speedy
Trial Act would guarantee a reasonably prompt trial. Moreover, because DuPont initially chose
to delay the filing of its complaint in 2007 while the government conducted the criminal
investigation DuPont had requested, DuPont should not be heard to complain of delay now that
the indictment has been handed down.
Because criminal trials proceed expeditiously, courts generally do not countenance
claims of indefinite delay once the indictment has issued, absent extraordinary circumstances.
DuPont relies on In re 650 Fifth Avenue for the proposition that a key question was whether

14
the criminal proceedings had progressed to the point where there is an imminent likelihood that
the defendant will be subject to a criminal proceeding, including a trial, in the very near future.
D.I. 2519. at 16 (quoting In re 650 Fifth Avenue, No. 1:08-CV-10934, 2011 WL 3586169, at *3
(S.D.N.Y. Aug. 12, 2011)). However, the very next sentence states [t]hus district courts in this
Circuit generally grant the extraordinary remedy of a stay only after the defendant seeking a stay
has been indicted. 650 Fifth Avenue, 2011 WL 3586169 at *3 (internal quotations omitted); see
also id. (Granting a stay of discovery may be especially appropriate where a party under
criminal indictment is also required to defend a civil suit involving the same matter.) (quoting
Am. Ex. Bus. Fin. Corp. v. RW Prof'l Leasing Servs. Corp., 225 F. Supp. 2d 263, 265
(E.D.N.Y.2002)). Similarly, in Avalonbay, the court was reluctant to grant a stay because [a]t
present, the Court has no knowledge of whether the investigation and forfeiture proceeding
against Defendant San J ose will lead to a criminal indictment against Defendants. Avalonbay
Cmtys, 2007 WL 2481291 at *3. In stark contrast, Kolon and several individual defendants have
been indicted.
Moreover, the lone case cited by DuPont where a court found an indeterminate stay
despite the issuance of an indictment is readily distinguishable. A key concern of the Anderson
court was the defendants dilatory behavior in bringing the motion to stay. In re Anderson
349 B.R. 448, 459 (Bankr. E.D. Va. 2006). The district court, reviewing the bankruptcy courts
determination for abuse of discretion, found that the bankruptcy court reasonably may have
believed that [defendant] intentionally delayed filing his motion to stay for strategic reasons and
thusly weighed in favor of denying the motion. Id. The defendant waited more than three
months after issuance of the courts scheduling order and only raised his concerns over the
parallel proceedings two weeks before his one and only hearing date. Id. Here, Kolon moved as

15
soon as practicable indeed, immediately after reassignment and not on the eve of a hearing
date.
Thus, the age of a few of DuPonts witnesses (none of whom are alleged to be in poor
health) is immaterial; in any event, the testimony of those witnesses (which is preserved in the
first trial) deals mostly with DuPonts technology and asserted trade secrets, not recall of remote
historical facts, and there are a number of witnesses who can testify as to those subjects. Nor do
DuPonts complaints about past spoliation have weight. Although the prior district judge found
that certain Kolon executives had deleted documents notwithstanding a litigation hold issued by
Kolon, he found no evidence that Kolon encouraged and countenanced a policy of widespread
deletion, or that Kolons employees engaged in a conspiracy to delete relevant files and email
items. D.I. 1249 at 65-66 (Mem. Opinion). Moreover, Kolon recovered or produced copies of
most of the documents, and they were marginally relevant at best. D.I. 1249 at 76-79 (describing
recovery in Mem. Opinion); D.I. 1650, Ex. 3 at 1-3 (Flicker Decl. describing recovery).
Similarly, while in a recent motion DuPont claims that Kolon has concealed and failed to
disclose discoverable material, D.I. 2506 at 2, this Court will deal with those disputed allegations
in due course. DuPonts complaints about spoliation and concealment are immaterial to this
motion.
Lastly, should the government prevail in its criminal prosecution, DuPont will receive
adequate relief and to the extent it does not receive the relief it wants, DuPont will be free to
continue with its civil litigation. First, DuPont gives too little weight to the fact that under the
Mandatory Victims Restitution Act (MVRA) the government is required to seek restitution
sufficient to account for DuPonts actual losses stemming from the alleged criminal activity
without consideration for the economic circumstances of the defendant. See 18 U.S.C. 1834,

16
2323(c), 3663(f)(1)(A); United States v. Harvey, 532 F.3d 326, 339 (4th Cir. 2008). Second,
DuPonts argument that it is injured by Kolons alleged continued use of the trade secrets is
belied by DuPonts failure to seek a preliminary injunction banning such use. Further, in
addition to the required restitution, the government has indicated that it intends to seek forfeiture
of the gross proceeds of the sale of Heracron. D.I. 2479, Ex. 10 (Superseding Indictment)
at 36. Thus, should the government be successful on all fronts, DuPont will receive
compensation for its actual losses, and Kolon will be subject to criminal forfeiture.
In summary, in the coming months, after the criminal summons is served upon Kolon
(and barring a successful motion to quash), this action and an overlapping criminal prosecution
will both be heading to trial, and both of which are critical to Kolons future. Because of the
parallelism, this Court should act to avert prejudice, and should stay this action at least until there
is a determination as to whether the criminal prosecution will proceed. Moreover, even though a
full stay is warranted, as set forth in Kolons Statement of Issues To Be Decided on Remand,
D.I. 2497 at 4, this Court could simply stay discovery (or discovery relevant to the criminal
prosecution) and the trial pending resolution of the criminal prosecution. In all events, this Court
should ensure a just trial in both the civil and criminal proceedings.
III. CONCLUSION
For the reasons discussed above and in its initial memorandum, Kolon respectfully
requests that the Court grant its motion to stay this action.


17
Respectfully Submitted this 28th day of J uly, 2014.
By: /s/___________________
LECLAIRRYAN, A PROFESSIONAL CORPORATION
Richmond, VA 23219
Telephone: (804) 783-7553
Facsimile: (804) 783-7653

J eff G. Randall (admitted pro hac vice)
PAUL HASTINGS LLP
875 15th Street, N.W.
Telephone: (202) 551-1700
Facsimile: (202) 551-1705
jeffrandall@paulhastings.com



CERTIFICATE OF SERVICE

I hereby certify that on the 28thday of J uly, 2014, I electronically the foregoing with the
Clerk of Court using the CM/ECF system, which will then send a notification of such filing
(NEF) to counsel named below.

Rodney A. Satterwhite, Esq.
Brian C. Riopelle, Esq.
MCGUIREWOODS LLP
One J ames Center
901 East Cary Street
Richmond, VA 23219
Telephone: (804) 775-1000
Facsimile: (804) 775-1061
rsatterwhite@mcguirewoods.com
briopelle@mcguirewoods.com

Kent A. Gardiner, Esq.
CROWELL & MORING LLP
1001 Pennsylvania Avenue, N.W.
Telephone: (202) 624-2500
Facsimile: (202) 628-5116
kgardiner@crowell.com

Attorneys for E. I. du Pont de Nemours and Company

I hereby certify that on the 28th day of J uly, 2014, I served an unredacted version of the
foregoing by hand delivery on the following counsel:

Rodney A. Satterwhite, Esq.
Brian C. Riopelle, Esq.
MCGUIREWOODS LLP
One J ames Center
901 East Cary Street
Richmond, VA 23219
Telephone: (804) 775-1000
Facsimile: (804) 775-1061
rsatterwhite@mcguirewoods.com
briopelle@mcguirewoods.com

Attorneys for E. I. du Pont de Nemours and Company


By: /s/ ___________________
LECLAIRRYAN, A PROFESSIONAL CORPORATION
Richmond, VA 23219
Telephone: (804) 783-7553
Facsimile: (804) 783-7653



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