Aleynikov v. McSwain
| Decision Date | 15 June 2016 |
| Docket Number | Civ. No. 15-1170 (KM) |
| Parties | SERGEY ALEYNIKOV, Plaintiff, v. MICHAEL McSWAIN, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
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This is an action brought pursuant to Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999 (1971). The plaintiff, Sergey Aleynikov, alleges that two FBI Special Agents, Michael McSwain and Eugene Casey, along with various John Does, violated his constitutional rights by maliciously prosecuting him in state and federal court. He also alleges that the treatment of his personal property violated his constitutional rights.
Before the Court is defendants' motion to dismiss the complaint under FED. R. CIV. P. 12(b)(6). (ECF no. 13) For the reasons discussed below, I will grant defendants' motion in part.
I. Factual Background 2
II. Motion to Dismiss Standard 6
III. Malicious Prosecution - Federal Charges (Counts 1-4) 7
IV. Malicious Prosecution - NY State Charges (Counts 6-9) 25
V. Retention of Property (Count 5) 28
VI. Bivens Conspiracy (Count 10) 31
VII. Conclusion 32
I. FACTUAL BACKGROUND
For purposes of this motion to dismiss only, I take the allegations of the complaint to be true. See p.6, infra.
Sergey Aleynikov is a computer programmer who was employed by Goldman Sachs from May 2007 through June 2009. He worked as part of a team responsible for developing source code relating to Goldman's high frequency trading ("HFT") system.
In April 2009, Aleynikov accepted an employment offer from Teza Technologies, a start-up company based in Chicago. While he was still employed by Goldman, Aleynikov uploaded source code from Goldman's HFT system to a server in Germany on two occasions; he did this on June 1 and June 5, 2009. (ECF no. 8-2 p. 4) Aleynikov then downloaded the material from the server to his home computer in New Jersey. (Id. p. 19) Aleynikov attempted to delete his internet history relating to the uploaded data. (Id. p. 20) Nevertheless, Goldman Sachs discovered Aleynikov's uploads on June 29, and it contacted the FBI two days later.
Special Agent McSwain from the FBI's New York office was assigned to investigate Aleynikov's conduct; Special Agent Casey is McSwain's supervisor. (Am. Cplt. ¶ 2) As part of his investigation into Aleynikov's conduct, Agent McSwain learned that Aleynikov had traveled to Chicago on July 2 and would return on July 3, 2009. (Id. ¶ 66) When Aleynikov arrived at Newark airport on July 3, McSwain, Casey, and a team of other FBI agents arrested him. (ECF no. 8-1 p. 6) The search of Aleynikov incident to that arrest yielded a thumb drive and laptop containing downloaded source code. (ECF no. 8-1 pp. 9-10, 15) McSwain interviewed Aleynikov after his arrest, and Aleynikov admitted (among other things) that he took source code from Goldman Sachs, that he knew his actions violated Goldman's policies, and that he had attempted to delete the history on his computer to cover his tracks. (ECF no. 8-1 pp. 14-16)
On July 4, 2009, a criminal complaint was filed in the Southern District of New York charging Aleynikov with one count of violating the Economic Espionage Act of 1996, 18 U.S.C. § 1832 ("EEA"), and one count of violating the National Stolen Property Act, 18 U.S.C. § 2314 ("NSPA"). (Am. Cplt. ¶ 70) Aleynikov was later indicted on these charges.1 Before trial, Aleynikov moved to dismiss the charges against him, arguing that these statutes did not apply to his conduct. (Am. Cplt. ¶ 79) Judge Cote, in a lengthy written opinion, ruled that the NSPA and EEA did apply. See U.S. v. Aleynikov, 737 F. Supp. 2d 173 (S.D.N.Y. 2010), rev'd, 676 F.3d 71 (2d Cir. 2012). Aleynikov was convicted on both counts at trial. See U.S. v. Aleynikov, 785 F. Supp. 2d 46, 55 (S.D.N.Y. 2011), rev'd, 676 F.3d 71 (2d Cir. 2012). In post-trial motions, Aleynikov again argued that the NSPA and EEA did not apply to his conduct, and Judge Cote again rejected his legal arguments. Id. at 60-61. Aleynikov was sentenced to 97 months' imprisonment. (Am. Cplt ¶ 79)
Aleynikov appealed his convictions to the Second Circuit, relying on the legal arguments he had made before Judge Cote. On February 16, 2012, the United States Court of Appeals for the Second Circuit filed an order in which it agreed with Aleynikov. It reversed his convictions and ordered him releasedfrom custody after serving 51 weeks of his sentence. (Am. Cplt. ¶¶ 79-80) The Second Circuit subsequently filed an opinion in which it found that although Aleynikov had breached his confidentiality obligations to Goldman, his conduct did not fall within the scope of the charged federal offenses. Specifically, the Court of Appeals held that (a) intangible property such as source code does not constitute stolen "goods," "wares" or "merchandise" under the NSPA, and (b) the government had failed to establish that Goldman's high frequency trading system was intended for interstate commerce, as required by the EEA. See U.S. v. Aleynikov, 676 F.3d 71, 76-82 (2d Cir. 2012).
Shortly after Aleynikov's federal convictions were overturned, the District Attorney for New York County began investigating Aleynikov's conduct. (Am. Cplt. ¶ 81) On June 22, 2012, Aleynikov's attorney called McSwain to request the return of Aleynikov's passport and other personal property that had been retained in connection with the federal proceeding. (Id. ¶ 82) McSwain referred Aleynikov's counsel to the U.S. Attorney's Office. In late June and early July, 2012, Aleynikov's lawyer communicated with an AUSA in the Southern District of New York about the property. (Am. Cplt. ¶¶ 82-84) On July 12, 2012, AUSA Thomas Brown filed an ex parte application to Judge Cote, requesting to unseal the materials from the federal case. The application indicated that the materials were to be provided to the District Attorney's Office. (ECF no. 13-3; Am. Cplt. ¶ 85)2 Judge Cote granted the application. Her order unsealing the materials was itself unsealed on November 26, 2012. (ECF no. 13-3 p. 2)
On August 2, 2012, Aleynikov was rearrested on state charges stemming from the same conduct that precipitated the federal prosecution. He wascharged with two counts of Unlawful Use of Secret Scientific Material in violation of N.Y. Penal Law § 165.07 and one count of Unlawful Duplication of Computer Related Material under N.Y. Penal Law § 156.30(1). (See ECF no. 13-4) Aleynikov moved to dismiss the charges on legal grounds, but the motion was denied. (See ECF no. 13-5)3
In the state court proceeding, the jury found Aleynikov guilty of the first count of Unlawful Use of Secret Scientific Material; failed to reach a verdict on the other Unlawful Use count; and acquitted him on the Unlawful Duplication charge. (See ECF no. 8-2 p. 1) After trial, Aleynikov renewed his application to dismiss the Unlawful Use counts, arguing that his conduct was not covered by that law. In July 2015, in another lengthy opinion, the state court granted Aleynikov's motion and set aside his conviction. (Id. at 24-72).4 The State has appealed that decision, and the appeal is pending. (Am. Cplt. ¶ 45)
The gist of Aleynikov's allegations here is that Agent McSwain, supervised by Agent Casey, did not properly investigate whether the federal statutes under which Aleynikov was charged applied to his conduct. (See, e.g., Am. Cplt. ¶¶ 68, 70) He contends that McSwain blindly relied upon the complaints of Goldman Sachs and that McSwain should have known that Aleynikov did not violate the law. Therefore, Aleynikov says, McSwain should have known that he was violating Aleynikov's constitutional rights by pursuing his federal prosecution. In addition, Aleynikov alleges that upon the Second Circuit's decision reversing his federal convictions, McSwain took steps to ensure that Aleynikov would be prosecuted in state court, this time under state laws that McSwain knew did not apply. (See e.g., Am. Cplt. ¶¶ 20, 22, 23)Aleynikov also alleges that McSwain knowingly violated his constitutional rights by orchestrating a plan to deprive Aleynikov of his property, not returning it to him as required, but instead transferring it to the New York District Attorney's Office for use in his state prosecution. (See e.g., Am. Cplt. ¶¶ 17, 39, 82)
II. MOTION TO DISMISS STANDARD
FED. R. CIV. P. 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss, a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998); see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) ().
FED. R. CIV. P. 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and formulaic recitation of the elements of a cause of action will not do.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, such that it is "plausible on its face." See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59,...
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