Xi v. Haugen

Decision Date31 March 2021
Docket NumberCIVIL ACTION NO. 17-2132
PartiesXIAOXING XI, ET AL. v. FBI SPECIAL AGENT ANDREW HAUGEN, ET AL.
CourtUnited States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
MEMORANDUM

SURRICK, J.

I. INTRODUCTION

This lawsuit arises from the United States government's investigation, arrest, and subsequently dismissed indictment of Temple University physics Professor Xiaoxing Xi ("Xi") on charges that essentially accused him of being a "technological spy" for China. (See Second Am. Complaint ("SAC") ¶ 1, ECF No. 26; see also United States v. Xi, No. 15-cr-204 (E.D. Pa.).) In this action, Xi and his wife and adult daughter, Qi Li and Joyce Xi, respectively, seek redress for the harms they suffered as a result of the government's allegedly unfounded and malicious investigation and prosecution of Xi.

Xi asserts constitutional claims under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), against FBI Special Agent Andrew Haugen, the lead agent in the investigation,1 and Xi and the other Plaintiffs assert claims against the United Statesunder the Federal Tort Claims Act ("FTCA").2 Plaintiffs also assert a constitutional claim against FBI Director Christopher A. Wray, U.S. Attorney General William P. Barr, and National Security Agency ("NSA") Director/Central Security Service Chief General Paul M. Nakasone, in their official capacities ("the "Official Capacity Defendants"), seeking declaratory and injunctive relief regarding the government's search, seizure, and retention of Plaintiffs' information and property.3

Presently before the Court are the following motions by Haugen and the United States seeking dismissal of all claims asserted against them in the SAC: Haugen's Motion to Dismiss Xi's Bivens claims pursuant to Federal Rule of Civil Procedure 12(b)(6) (Haugen Mot., ECF No. 35); and the United States' Motion to Dismiss Plaintiffs' FTCA claims pursuant to Rules 12(b)(1) and 12(b)(6) (U.S. Mot., ECF No. 34).4 These motions implicate, among other issues, the evolving decisional law regarding the availability of a Bivens remedy to plaintiffs alleging constitutional violations by federal agents, and the scope of the "discretionary function" exception under the FTCA. Regarding Xi's Fourth and Fifth Amendment Bivens claims, in particular, the current legal standards are "perplexing" to say the least. See Graber v. Dales, No.18-3168, 2019 WL 4805241, at *3 (E.D. Pa. Sept. 30, 2019) (describing the current Bivens analysis as "perplexing"). Given the current state of the law, our analysis includes a survey of relevant decisions by the Supreme Court and other federal courts, followed by application of the principles gleaned therefrom to the unique facts of this case. Based on our application of the current law, we are compelled to dismiss Plaintiff's Bivens claims against Haugen and their FTCA claims against the United States.

II. BACKGROUND
A. Factual Background5

Xi is an internationally recognized expert in the field of thin film superconducting technology. (SAC ¶¶ 1, 25.) Xi alleges that in his capacity as a professor and researcher, he engaged in appropriate communications and collaboration with other scientists in China. (Id. ¶¶ 3-4.) Xi and Qi Li, a physics professor at the Pennsylvania State University, are naturalized U.S. citizens who emigrated from China and have lived in the United States since 1989. (Id. ¶¶ 12-13.) Joyce Xi, the eldest daughter of Xi and Qi Li, was born in the United States and is a 2016 graduate of Yale University. (Id. ¶ 14.) Xi and Qi Li also have another daughter, who is a minor and is not a Plaintiff in this case. During the time relevant to this lawsuit, Xi and his wife and daughters resided together in Penn Valley, Pennsylvania. (Id. ¶¶ 12-14.) According tothe SAC, Haugen has been an FBI Special Agent since approximately 2011 and is assigned to Chinese counterintelligence out of a field office in this District. (Id. ¶ 16.)

1. Xi's Indictment and Arrest

On May 14, 2015, a grand jury in this District returned a sealed Indictment against Xi, alleging that he fraudulently obtained and shared with entities in China information concerning a "pocket heater" belonging to Superconductor Technologies, Inc. ("STI"), a U.S. company. (Id. ¶¶ 1, 24; see also United States v. Xi, Indictment, ECF No. 1.) The STI pocket heater is a device used for depositing magnesium diboride thin films on flat surfaces. (SAC ¶ 27.) The Indictment alleged that Xi:

reproduced, sold, transferred, distributed, and otherwise shared the [pocket heater] and the technology of the [pocket heater] with and exploited it for the benefit of third parties in China, including government entities, and attempted to do so, both personally and through the assistance of his post-doctoral students from China, in an effort to help Chinese entities become world leaders in the field of superconductivity.

(Indictment ¶ 11; see also SAC ¶¶ 30-31.) The Indictment charged Xi with four counts of wire fraud, each based on a separate email from Xi to individuals in China. (SAC ¶¶ 30-31.) The emails upon which the Indictment was based are described therein as follows:

May 14, 2010 [e]-mail communication from [Xi] to J.L., an associate in China, confirming that certain technology had been delivered to a laboratory in China, and offering his personal assistance therewith (Count One);
June 2, 2010 [e]-mail communication from [Xi] to Y.W., an associate in China, offering to build a world-class thin film laboratory in China (Count Two);
June 2, 2010 [e]-mail communication from [Xi] to X.J., and associate in China, offering to build a world-class thin film laboratory in China (Count Three); and
December 9, 2010 [e]-mail communication from [Xi] to J.Z, and associate in China, offering to build a world-class thin film laboratory in China (Count Four).

(Indictment ¶ 13.)

The same day that the Indictment was filed, United States Magistrate Judge Richard A. Lloret issued a bench warrant for Xi's arrest. (See United States v. Xi, Dkt., 5/14/2015 text entry.) In the early morning hours of May 21, 2015, FBI agents arrested Xi at his home on the charges alleged in the Indictment.6 (SAC ¶¶ 32-33.) Xi's wife and daughters were at home and were detained at gunpoint during Xi's arrest. (Id. ¶ 34.) After his arrest, Xi was taken to the FBI's Philadelphia field office, where he underwent DNA sampling, was photographed and fingerprinted, and was interrogated for two hours. (Id. ¶ 36.) Xi was then placed in the custody of the U.S. Marshal's Service and was required to disrobe and submit to a visual body cavity search. (Id. ¶ 37.) After his initial court appearance, Xi was released on bond, subject to travel and other restrictions. (Id. ¶ 39.) The U.S. Attorney's Office issued a press release announcing Xi's Indictment, which he alleges caused him "to be falsely portrayed as an economic spy for China." (Id. ¶ 40.) Xi's indictment and arrest were also widely reported in national and international news media. (Id. ¶¶ 40, 87.) As a result of his arrest, Temple placed Xi on administrative leave and suspended him as interim chair of the university's physics department. (Id. ¶ 89.)

On September 11, 2015, the government moved to dismiss the Indictment without prejudice, referring to "additional information [that had come] to the attention of the government." (United States v. Xi, ECF No. 29.) Xi alleges that the government abandoned the prosecution after Xi's attorneys demonstrated that the emails underlying the Indictment were innocent and did not pertain to the pocket heater technology. (SAC ¶¶ 42-52.) On September18, 2015, the Court dismissed the Indictment without prejudice as requested in the government's motion. (United States v. Xi, ECF No. 30.)

2. Plaintiffs' Allegations Regarding the Investigation and Indictment

As the essential basis for this lawsuit, Plaintiffs allege that the criminal charges against Xi were false and based on Haugen's intentional, knowing, and/or reckless false statements and representations and material omissions of facts in connection with the investigation and Indictment. (SAC ¶¶ 41, 54.) Plaintiffs further allege that Haugen's investigation of Xi was motivated at least in part by Xi's race and ethnicity, specifically, his Chinese heritage. (Id. ¶¶ 69-70.)

Plaintiffs allege that contrary to the Indictment, Xi did not "share any information regarding the STI pocket heater in violation of federal law." (Id. ¶ 42.) Specifically, Plaintiffs assert that the STI pocket heater, its components, and its related technology were based on a prior invention, were widely known and publicly accessible, were not considered trade secrets, and were not otherwise protected from disclosure by federal law. (Id. ¶¶ 43-45.) According to Plaintiffs, Xi purchased a version of the STI pocket heater in 2006 from Shoreline Technologies, a company owned by one of the two inventors of the device. (Id. ¶ 47.) In connection with that purchase, Xi agreed "not to reproduce, sell, transfer or otherwise distribute" the pocket heater "to any third party" for a period of twelve months. (Id.) Xi complied in all respects with that agreement. (Id.)

Plaintiffs allege that all four of the emails that were the basis for the Indictment referred not to the STI pocket heater but to other unrelated technologies, and all were part of normal, appropriate academic collaboration. (Id. ¶¶ 49-51.) As described in the SAC, the email that was the basis of Count One of the Indictment referred to a device being tested in connection with aprocess—Hybrid Physical Chemical Vapor Deposition ("HPCVD")—that Xi and colleagues at the Shanghai Institute of Applied Physics ("SINAP") invented as part of normal academic collaboration. (Id. ¶ 49.) The emails underlying Counts Two through Four also were unrelated to the pocket heater and involved the creation of a laboratory for research of oxide thin films, an entirely distinct technology for which the pocket heater would have...

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