Grove Press, Inc. v. Central Intelligence Agcy.

• Decision Date: 15 January 1980
• Docket Number: No. 76 Civ. 5509 (VLB).,76 Civ. 5509 (VLB).
• Citation: 483 F. Supp. 132
• Parties: GROVE PRESS, INC. et al., Plaintiffs, v. CENTRAL INTELLIGENCE AGENCY et al., Defendants.
• Court: U.S. District Court — Southern District of New York

483 F. Supp. 132

GROVE PRESS, INC. et al., Plaintiffs, v. CENTRAL INTELLIGENCE AGENCY et al., Defendants.

No. 76 Civ. 5509 (VLB).

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

January 15, 1980.

Frankfort, Garbus, Klein & Selz, New York City by Arthur J. Ginsburg, New York City, for plaintiffs.

Robert B. Fiske, Jr., U. S. Atty., Southern District of New York, New York City by William G. Ballaine, Asst. U. S. Atty., New York City, for defendants.

Carter, Ledyard & Milburn, New York City, for William F. Raborn, Jr. and Thomas H. Karamessines.

Cadwalader, Wickersham & Taft, New York City, for defendants Colby and Schlesinger.

Michael I. Saltzman, New York City, for James J. Angleton and Raymond Rocca.

Mortimer Todel, New York City, for Richard Ober and Newton Scott Miler.

MEMORANDUM ORDER

VINCENT L. BRODERICK, District Judge.

Facts

Plaintiffs Grove Press, Inc. ("Grove Press"), a New York publishing company, its president and principal stockholder, and one of its editors, brought this action against the CIA and various former employees of the CIA.

The complaint alleges that certain counterintelligence activities that the defendants conducted from 1955 to 1976 violated constitutional rights of plaintiffs and violated federal statutes governing CIA activities. These activities include a mail intercept program carried on in New York from 1955 to 1973 with the plaintiff company as one of its many targets, and "Operation Chaos" and "Project 2", information gathering schemes pursuant to which a file was opened on the plaintiffs and various forms of harassment were practiced against them. The complaint seeks, inter alia, money damages against the individual defendants.

Previously, the individual defendants moved before this court to dismiss the case against them for lack of personal jurisdiction. The plaintiffs responded, predicating jurisdiction alternatively on 28 U.S.C. § 1391(e) and N.Y. CPLR § 302(a), a New York long arm statute. I denied the defendants' motion, finding jurisdiction under § 1391(e). Accordingly, I found no need to address jurisdiction under the New York long arm statute. I certified the question of § 1391(e) jurisdiction to the Court of Appeals. That court reversed on September 10, 1979, holding § 1391(e) inapplicable to damage suits against government officials sued as individuals. The case is now before me on remand to determine whether jurisdiction exists under the New York long arm statute.¹

For the reasons which follow, I hold that the court does have jurisdiction as to all the defendants with the exception of Raborn, Schlesinger and Ober. The motion to dismiss is granted as to Raborn, Schlesinger and Ober and denied as to the remaining defendants — without prejudice to renewal after discovery has been conducted.²

Discussion

Plaintiffs have urged that jurisdiction may be predicated on any of the three grounds enumerated in CPLR § 302(a). I find that jurisdiction exists under § 302(a)(2) and accordingly do not address the other potential grounds.

Section 302(a)(2) provides:

(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nondomiciliary, or his executor or administrator, who in person or through an agent: . . .

2. commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act;

The defendants do not contest the proposition that the alleged acts, if proven, would constitute "tortious acts" within the state. Instead, they attack this basis of jurisdiction on two fronts. They contend (1) that any tortious acts were committed by them in their capacities as CIA officials and cannot form the predicate for jurisdiction over them in their individual capacities, and (2) that the in-state acts complained of were not committed by them personally, but by other CIA employees who were acting as agents of the CIA and not as agents of the individual defendants. The answer to both of these contentions really depends on the resolution of a single issue: In what capacity were the tortious acts performed for jurisdictional purposes?

A number of decisions address this issue as it arises in the corporate context. In that context the following rule has emerged: The acts of a corporate officer or employee taken in his corporate capacity within the jurisdiction generally cannot form the predicate for jurisdiction over him in his individual capacity.

That rule has been applied to tortious acts of corporate officers, CPLR § 302(a)(2), e. g. Lehigh Valley Industries, Inc. v. Birenbaum, 527 F.2d 87 (2d Cir. 1975); Schenin v. Micro Copper Corp., 272 F.Supp. 523 (S.D. N.Y.1967), as well as to acts which would constitute "transacting business" within the meaning of CPLR § 302(a)(1), e. g. U. S. v. Montreal Trust Co., 358 F.2d 239 (2d Cir.), cert. denied, 384 U.S. 919, 86 S.Ct. 1366, 16 L.Ed.2d 440 (1966); Louis Marx & Co. v. Fuji Seiko Co., Ltd., 453 F.Supp. 385 (S.D. N.Y.1978). While at least one district court has reasoned persuasively that it is far less fair to permit the corporate officer who enters the jurisdiction to commit a tort to hide behind the "fiduciary shield" than it is so to permit the corporate officer who enters the jurisdiction to "transact business" legitimately, Merkel Associates, Inc. v. Bellofram Corp., 437 F.Supp. 612 (W.D.N.Y. 1977), that distinction does not appear to be the law in New York or in this circuit.

If the corporate officer commits a tort in furtherance of the corporation's business, only the corporation will be subject to jurisdiction. Unicon Management Corp. v. Koppers Co., 250 F.Supp. 850 (S.D. N.Y.1966). Torts committed in his own rather than the corporation's best interests, however, will subject him to jurisdiction even if he purported to be acting for the corporation, e.g. U. S. v. Montreal Trust Co., supra, 358 F.2d at 243 (defendant could not have been acting as agent for the corporation of which he was general manager while he was actively diverting funds from the corporation to his friends and relatives).

While the rules developed in a corporate context have been applied to government officers, e. g. Marsh v. Kitchen, 480 F.2d 1270 (2d Cir. 1973), they cannot be transferred without some thought to their underlying rationale. In the corporate context the illegality or tortious nature of an employee's act may accrue to the benefit of the corporation — at least so long as the tort does not become the subject of litigation. The business of a corporation is to make money and its profits will often be enhanced by tortious conduct. The rule articulated in cases like Unicon, supra, reflects a policy that it is unfair to subject an individual to jurisdiction on account of an act from which his employer derived the primary benefit.³

The same policy is not nearly so persuasive in a government context. A government agency is created by statute to exercise enumerated powers. Its aim is not to make a profit but to exercise those powers, consistent with law, for the benefit of the public. The government officer who engages in illegal conduct may never be said to be acting for the "benefit" of a government agency since its only "benefits" are defined and circumscribed by the laws which are being breached.

The CIA was established and its powers enumerated in the National Security Act, 50 U.S.C. § 403. Section 403 also places express limitations on these powers by providing that: "the Agency shall have no police, subpena, law-enforcement powers, or internal-security functions," 50 U.S.C. § 403(d)(3) (emphasis supplied). The plaintiffs have alleged that those prohibitions were contravened by the intelligence activities directed at them and that the defendants were aware of their illegality at the time they directed or condoned the activities. Those allegations are amply supported by the affidavits submitted by the plaintiffs; indeed, as a result of a 1975 report by the Commission on CIA Activities Within the United States, they are now a matter of public record.⁴

On the basis of these allegations, I find that the plaintiffs have made out a prima facie case that certain of the defendants committed acts for which they may be subjected to jurisdiction as individuals. Concededly, there is nothing to suggest that those defendants expected to benefit as individuals from their allegedly illegal activities. Yet neither can they be said to have acted on behalf of the United States when they knowingly exercised powers explicitly denied them by the United State Congress.

The record suggests that the defendants acted in what they conceived to be the best interests of the United States, notwithstanding the limited scope of their mandate. The traditional distinction between "personal" and "corporate" acts is an inadequate one for dealing with such motivations. Accordingly, I am guided by the general principles of "fairness" which have ultimately informed all of the case law in this area. I find that an action taken by a government agent in knowing contravention of a statutory mandate for the benefit of his administration or the aggrandizement of his agency is no less the product of an individual decision for which it is fair to subject him to jurisdiction than such an action would be if taken solely for personal gain.

Similar reasoning counsels against accepting the defendants' second argument: that actions taken by CIA agents in New York may not be attributed to the defendants in Washington, but only to their common employer, the CIA. The New York CIA agents could not have been acting on behalf of the United States government if they were acting on the instruction of Washington officials who knowingly exceeded their authority.

To establish that the New York CIA employees were the "agents" of these defendants for jurisdictional purposes, the plaintiffs need not establish the existence of a...