Democratic Nat'l Comm. v. Russian Fed'n

• Decision Date: 30 July 2019
• Docket Number: 18cv3501 (JGK)
• Parties: DEMOCRATIC NATIONAL COMMITTEE, Plaintiff, v. The RUSSIAN FEDERATION et al., Defendants.
• Court: U.S. District Court — Southern District of New York

392 F.Supp.3d 410

DEMOCRATIC NATIONAL COMMITTEE, Plaintiff,

v.The RUSSIAN FEDERATION et al., Defendants.

18cv3501 (JGK)

United States District Court, S.D. New York.

Signed July 30, 2019

Geoffrey A Graber, Joseph M. Sellers, Alison Deich, Eric Steven Berelovich, Julia Ann Horwitz, Cohen Milstein Sellers & Toll, Washington, DC, Michael Benjamin Eisenkraft, Cohen Milstein Sellers & Toll PLLC, New York, NY, for Plaintiff.

Scott Sonny Balber, Jonathan Christopher Cross, Michael Paul Jones, Pamela Kathleen Terry, Herbert Smith Freehills New York LLP, Joshua Lewis Dratel, Law Offices of Joshua L. Dratel, P.C., James Matthew Gross, Jones Day, Alan Samuel Futerfas, Law Offices of Alan S. Futerfas, Caroline Johnston Polisi, Eric M. Creizman, Christopher Norman Lavigne, Jeffrey Alexander, Shira Lauren Feldman, Pierce Bainbridge Beck Price & Hecht LLP, New York, NY, Michael A. Carvin, William D. Coglianese, Mary Ellen Powers, Pro Hac Vice, Jones Day, Abbe David Lowell, Norton Rose Fulbright, Christopher D. Man, Winston & Strawn LLP, Washington, DC, Robert C. Buschel, Buschel Gibbons, P.A., Grant Jeffrey Smith, Strategysmith, P.A, Fort Lauderdale, FL, for Defendants.

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

The plaintiff, the Democratic National Committee ("DNC"), brings this action against Donald J. Trump For President, Inc. ("the Campaign"); Donald J. Trump, Jr. ("Trump Jr."); Paul J. Manafort, Jr.; Jared C. Kushner; George Papadopoulos; and Richard W. Gates, III (collectively, the "campaign defendants"); Roger J. Stone, Jr.; the Russian Federation; Aras Iskenerovich Agalarov; Emin Araz Agalarov; Joseph Mifsud; WikiLeaks; and Julian Assange.¹

The action arises out of the alleged actions of the Russian Federation in unlawfully hacking into the DNC's computers in connection with the 2016 presidential election and thereafter distributing stolen materials from those computers, particularly through WikiLeaks, who in turn made those materials publicly available. While there are no plausible allegations that the remaining defendants participated in the unlawful hacking or in the dissemination of the materials by WikiLeaks, the DNC alleges that the dissemination of those materials furthered the prospects of the Trump Campaign and that the remaining defendants "welcomed" the assistance in various ways.

In the Second Amended Complaint, the DNC asserts claims under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 ; Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 ("RICO"); Wiretap Act, 18 U.S.C. §§ 2510 - 22 ; Stored Communications Act, 18 U.S.C. §§ 2701 - 12 ; Digital Millennium Copyright Act, 17 U.S.C. § 1201 et seq. ; Defend Trade Secrets Act, 18 U.S.C. § 1831 et seq. ; Washington, D.C. Uniform Trade Secrets Act, D.C. Code Ann. §§ 36-401 to 46-410 ; and Virginia Computer Crimes Act, Va. Code Ann. § 18.2-152.5 et seq. The DNC also asserts claims under Washington, D.C. common law for trespass and conversion and claims under Virginia common law for conversion, trespass to chattels, and conspiracy to commit trespass to chattels.

The primary wrongdoer in this alleged criminal enterprise is undoubtably the Russian Federation, the first named defendant in the case and the entity that surreptitiously and illegally hacked into the DNC's computers and thereafter disseminated the results of its theft. But, as explained below, under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq. ("FSIA"), the Russian Federation cannot be sued in the courts of the United States for governmental actions, subject to certain limited exceptions not present in this case, just as the United States government generally cannot be sued in courts abroad for its actions. The remedies for hostile actions by foreign governments are state actions, including sanctions imposed by the executive and legislative branches of government.

The DNC seeks to hold the second-level participants in this alleged activity -- the Campaign, the Campaign defendants, WikiLeaks, Assange, the Agalarovs, Mifsud, and Stone -- liable for dissemination of the stolen materials. But, as also explained below, the First Amendment prevents such liability in the same way it would preclude liability for press outlets that publish materials of public interest despite defects in the way the materials were obtained so long as the disseminator did not participate in any wrongdoing in obtaining the materials in the first place. The plausible allegations against the remaining defendants are insufficient to hold them liable for the illegality that occurred in obtaining the materials from the DNC. Therefore, for the reasons explained below, the defendants' motion to dismiss the Second Amended Complaint is granted .

Additionally, the Campaign has moved for sanctions against the DNC and its attorneys pursuant to Federal Rule of Civil Procedure 11. For the reasons explained below, the Campaign's motion is denied.

I.

In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiff's favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). The Court's function on a motion to dismiss is "not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient."

Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). The Court should not dismiss the complaint if the plaintiff has stated "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While courts should construe the factual allegations in the light most favorable to the plaintiff, "the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions." Id.

In deciding a motion to dismiss, a court may consider documents of which judicial notice may be taken. Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002). A court may also consider documents incorporated by reference in the complaint as well as documents the plaintiff either had in the plaintiff's possession or had knowledge of and upon which the plaintiff relied in bringing suit. See Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991).

II.

The following facts are taken from the Second Amended Complaint and are accepted as true for purposes of this motion to dismiss.

In the run up to the 2016 United States presidential election, Russian intelligence services hacked into the DNC's computers, penetrated its phone systems, and stole tens of thousands of documents. (SAC ¶ 1.) The DNC claims that the Trump Campaign welcomed the Russian Federation's help and was prepared to use the stolen information with the intent of hurting Hillary Clinton's presidential campaign and helping Donald Trump win the presidency. (Id. ¶¶ 1-2.)

A.

Over a year before the 2016 United States presidential election, on June 16, 2015, Donald Trump announced his candidacy for President of the United States. (Id. ¶ 84.) Soon after, in July of 2015, a Russian intelligence agent -- codenamed "Cozy Bear"² -- used stolen credentials to access the DNC's computer systems in Washington, D.C. and Virginia (the "2015 hack"). (Id. ¶¶ 81, 115.) Once in the system, Cozy Bear focused on collecting information from the DNC systems that were used primarily for communications, such as the systems providing email, email support, backup servers, voiceover internet protocol, and chat. (Id. ¶ 116.) Cozy Bear maintained access in the DNC system for almost a year. (Id. ¶ 81.)

On April 18, 2016, members of Russia's military intelligence agency, the General Staff of the Armed Forces of the Russian Federation ("GRU"), engaged another cyberattack on the DNC's Washington, D.C. and Virginia computer servers (the "April 2016 hack"). (Id. ¶ 101.) The agents that participated in the hack were part of two GRU units, Units 26165 and 74455, based in Moscow. (Id. ¶ 48.) At least ten GRU agents from Units 26165 and 74455 prepared for or participated in the hack. (Id. ¶ 49.) The DNC alleges that these agents were acting pursuant to military orders. (Id. ¶¶ 49, 101.) To prepare for the hack, the GRU agents developed a malware -- "software that damages, disables, or spies upon computer systems" -- called "X-Agent." (Id. ¶ 49.) X-Agent allowed the GRU agents to monitor target computers in real time -- meaning they could see the screens and keystrokes of target computers as they were being used. (Id. ¶ 103.) On April 18, 2016, GRU agents accessed the DNC system and installed X-Agent onto the computer network. (Id. ¶¶ 101, 103.) Once X-Agent was installed on the DNC's computers, it was always on; the software captured the contents of communications going to and from the affected computers as they were being sent. (Id. ¶ 129.)³

Four days after the hack, on April 22, 2016, GRU agents prepared several gigabytes of DNC data for exfiltration. (Id. ¶ 104.) The GRU used another malware that it had developed, called "X-Tunnel," to transfer the data through encrypted channels to a GRU-leased computer in Illinois. (Id. ¶¶ 104, 121.) The Russian GRU agents remained in the DNC system for over a month, stealing documents and data until at least June 2016. (Id. ¶¶ 81, 105.)⁴ Between May 25 and June 1, 2016, the GRU gained access to the DNC's email server and stole thousands of emails from the accounts of DNC employees. (Id. ¶ 123.)

During the April 2016 hack, GRU agents gained access to at least thirty-three of the DNC's computers. (Id. ¶ 105.) The GRU agents also accessed the DNC's ...