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Lyons Trading, LLC v. United States

April 3, 2008


The opinion of the court was delivered by: Thomas W. Phillips United States District Judge


This matter is before the court on petitioner's motion to stay judgment enforcing summons pending appeal [Doc. 40], to which the government responded [Doc. 41] and petitioner replied [Doc. 42]. For the reasons that follow, petitioner's motion is DENIED.


Petitioner initiated this action to quash summons on July 13, 2007. In response, the government filed a motion to deny petition to quash summons and for enforcement of summons. On February 8, 2008, this court granted the government's motion to enforce summons and denied the petition to quash summons.

Petitioner appealed the court's decision on February 15, 2008, and on March 10, 2008, moved this court to stay the enforcement of the summons pending its appeal to the Sixth Circuit, or alternatively to grant a stay pending an application for a stay to the Sixth Circuit.


A. Stay Pending Appeal

When considering a motion to stay pending appeal, the court balances the four following factors:

(1) whether the defendant has a strong or substantial likelihood of success on the merits; (2) whether the defendant will suffer irreparable harm if the district court proceedings are not stayed; (3) whether staying the district court proceedings will substantially injure other parties; and (4) where the public interest lies.

Family Trust Found. of Ky., Inc. v. Ky. Judicial Conduct Comm'n, 388 F.3d 224, 227 (6th Cir. 2004) (quoting Baker v. Adams County/Ohio Valley School Bd., 310 F.3d 927, 928 (6th Cir. 2002)). In considering these factors, "a movant need not always establish a high probability of success on the merits. The probability of success that must be demonstrated is inversely proportional to the amount of irreparable injury [the movant] will suffer absent the stay. Simply stated, more of one excuses less of the other." Mich. Coal. of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991) (inner citations omitted); accord, e.g., Family Trust Found., 388 F.3d at 227; Grutter v. Bollinger, 247 F.3d 631, 633 (6th Cir. 2001). However, the movant is always required to demonstrate more than the mere "possibility" of success on the merits. For example, even if a movant demonstrates irreparable harm that decidedly outweighs any potential harm to the defendant if a stay is granted, he is still required to show, at a minimum, "serious questions going to the merits."

Mich. Coal., 945 F.2d at 153-54 (inner citation omitted) (quoting In re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir. 1985)). Petitioner has failed to meet its burden on any of these elements.

1. Likelihood of Success on the Merits

First, petitioner has failed to demonstrate a likelihood of success on the merits. Petitioner first argues that it will likely succeed on appeal due to this court's failure to permit petitioner to conduct discovery or grant an evidentiary hearing. The court fully explored the merits of this argument, however, in its Memorandum Opinion of February 8, 2008, whereby the court held that petitioner has failed to make a substantial showing of abuse by the government such that it is permitted to discovery. [Doc. 34 at 15-16]. The court likewise determined that the extensive evidence before it precluded the need for an evidentiary hearing. [Doc. 34 at 16-17].

Moreover, the new "evidence" to which petitioner cites in its brief fails to raise "serious questions going to the merits." Petitioner argues that Agent Weinger, the Internal Revenue Service ("IRS") agent assigned to this case, admitted that the summoned party should have information about the motives underlying the transactions in question. Petitioner then devolves into a convoluted argument regarding whether the underlying motives are a proper grounds of establishing relevancy. This court, however, already fully discussed the government's prima facie case, in important part the relevancy of the summoned documents. [See discussion Doc. 34 at 5-10]. Because the government has established a prima facie case for issuing the summons, petitioner must meet a heavy burden of establishing that enforcement thereof would nevertheless constitute an abuse of process. [See ...

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