ALEYNIKOV v. THE GOLDMAN SACHS GROUP, INC.

Filing 312

OPINION. Signed by Judge Kevin McNulty on 10/28/16. (DD, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SERGEY ALEYNIKOV,

Civ. No. 12-5994 (KM-MAR)

Plaintiff,
V.

THE GOLDMAN SACHS GROUP, INC.,

OPINION

Defendant.

THE GOLDMAN SACHS GROUP, INC.,
and GOLDMAN, SACHS & CO.,
Counterclaim Plaintiffs,
V.

SERGEY ALEYNIKOV,
Counterclaim Defendant.

KEVIN MCNULTY, U.S.D.J.:

I.

INTRODUCTION
This matter comes before the court on the motion (ECF no. 307) of

Goldman, Sachs & Co. (“GSC0”) and The Goldman Sachs Group, Inc. (“GS
Group”) (together, “Goldman”) to strike or dismiss the Counterclaim in Reply
(ECF no. 286)1 of Sergey Aleynikov. For the reasons set forth below, the motion

Citations to pleadings and other documents will be abbreviated as follows:
“CIR”
Aleynikov’s Answer to Counterclaims and Counterclaims in Reply
(ECF No. 286)
—

“GS CC”

Goldman’s Answer and Counterclaims (ECF No. 51)

“GS Br.” Goldman’s Brief in Support of its Motion to Dismiss and/or Strike
Aleynikov’s Reply Counterclaims (ECF No. 307-1)
—

1

to strike is DENIED. The motion to dismiss the CIR is GRANTED as to Counts
2, 3, and 4; DENIED as to Counts 1 and 6; ADMINISTRATIVELY TERMINATED
WITHOUT PREJUDICE as to Count 5; and GRANTED in part and DENIED in
part as to Count 7.
A.

Procedural Background

This action, and related ones, have been the subject of too many
opinions to require any extended factual summary. I briefly state the
procedural history relevant to this motion.
On September 25, 2012, Aleynikov filed a complaint seeking
advancement and indemnification of attorney’s fees from GS Group.
(ECF No. 1) The attorneys’ fees were incurred in federal and state criminal
cases brought against Aleynikov based on his alleged misappropriation of
source code from Goldman, his former employer. I denied Aleynikov’s
application for a preliminary injunction, and later denied early cross-motions
for summary judgment, finding that there were issues of fact requiring
exploration in discovery. (ECF nos. 44, 45) My opinion ordered expedited
discovery on Aleynikov’s claims. On December 21, 2012, Magistrate Judge
Hammer set out a schedule of expedited fact discovery. (ECF no. 52)
Also on December 21, 2012, GS Group filed its Answer. (ECF no. 51)
That answer included a counterclaim. (GSCC, ECF no. 51 at 11) GS Group
brought three counterclaims for breach of contract, misappropriation of trade
secrets, and conversion. The fourth counterclaim, brought on behalf of both GS
Group and GSCo, sought a declaratory judgment that they were not liable to
Aleynikov for malicious prosecution.

Aleynikov’s Brief in Opposition to Goldman’s Motion to
“Aleynikov Br.”
Dismiss and/or Strike Aleynikov’s Reply Counterclaims (ECF No. 308)
Goldman’s Brief in Reply in Further Support of its Motion to
“GS Reply Br.”
Dismiss and/or Strike Aleynikov’s Reply Counterclaims (ECF No. 309)
—

—

2

Aleynikov did not initially respond to the Counterclaim by filing an
answer (which would have included any compulsory counterclaims in reply).
Rather, on January 11, 2013, Aleynikov filed a motion to dismiss the
Counterclaim. (ECF no. 62)
On January 30, 2013, Magistrate Judge Hammer confirmed that
expedited discovery had been ordered only as to advancement of fees, a form of
emergent or immediate relief. Discovery, he ruled, would not be expanded to
encompass Goldman’s Counterclaim. (ECF no. 74) In effect, proceedings on
Goldman’s Counterclaim were stayed.
After discovery I granted partial summary judgment awarding interim
advancement of fees. (ECF no. 174) On October 24, 2013, that ruling was
appealed by Goldman. (ECF no. 176)
On October 29, 2013, in an Opinion (ECF no. 192) and Order
(ECF no. 193), I denied Aleynikov’s motion (ECF no. 62) to dismiss the
Counterclaim of GSCo and GS Group. Aleynikov’s time to answer the
Counterclaim began to run at that time.
On November 26, 2013, however, Aleynikov moved to stay the
Counterclaim and merits-related affirmative defenses. He did so in order to
preserve his Fifth Amendment rights in the then-pending New York State
criminal prosecution. (ECF no. 211) Goldman opposed that motion, but crossmoved in the alternative to stay this entire civil case. (ECF no. 214) That stay
motion was assigned to Magistrate Judge Hammer.
Throughout this period, the appeal of summary judgment on
advancement of fees remained pending. On January 24, 2014, the U.S. Court
of Appeals for the Third Circuit stayed my summary judgment decision. (ECF
no. 232) Magistrate Judge Hammer, seeing the handwriting on the wall,
responded as follows: On March 20, 2014, finding that the Third Circuit’s
eventual ruling might fundamentally alter the posture of the case, Judge
Hammer administratively terminated the motion to stay the Counterclaim
3

also
without prejudice, pending the outcome of the appeal. (ECF no. 234) He
of
adjourned a scheduled conference without date. (ECF no. 233) The sense
d, but
these rulings was not that litigation of the Counterclaim would go forwar
the
rather the opposite—i.e., that further proceedings would have to await
outcome of the appeal.
On September 3, 2014, the Third Circuit reversed my grant of partial
Group,
summary judgment. (ECF nos. 241, 243; Aleynikov v. Goldman Sachs
ry
Inc., 765 F.3d 350 (3d Cir. 2014)). On remand, Aleynikov moved for summa
Circuit.
judgment on issues that he believed had been left open by the Third
(ECF no. 263) On January 16, 2015, I denied that motion. (ECF no. 266)
On February 5, 2015, Magistrate Judge Hammer set the case back on
stay
track. His order set forth a briefing schedule for any renewed motion to
the counterclaims and affirmative defenses pending the outcome of the
criminal case in New York. That order provided that discovery on the
decided.
counterclaims would be stayed in the interim, until that motion was
(ECF no. 272) On February 25, 2015, Aleynikov filed his motion to stay.
(ECF no. 277)
On August 26, 2015, however, Aleynikov’s counsel informed the court
That
that Aleynikov had been acquitted in the New York state criminal case.
letter stated that Aleynikov would withdraw his motion to stay and file an
answer and counterclaim in reply to Goldman’s counterclaim. (ECF no. 285)
The same day, Aleynikov did file his Answer and Counterclaim in Reply.
(ECF no. 286) In accordance with a procedural order of Judge Hammer
(ECF no. 299), Goldman’s current motion to strike or dismiss Aleynikov’s
Counterclaim in Reply was filed as a package, fully briefed by both sides, on
January 22, 2016. (ECF nos. 307, 308, 309)

4

B.

The Counterclaim in Reply (CIR)

The allegations of Aleynikov’s CIR may be summarized briefly as follows.
Aleynikov worked for Goldman as a programmer until June 2009. On
July 1, 2009, Goldman contacted the FBI and persuaded them to arrest
Aleynikov by falsely telling them that he had stolen Goldman’s entire HPI’
infrastructure, worth a billion dollars. FBI Special Agent McSwain and his
supervisor, Casey, took the lead, and they did arrest Aleynikov. At Goldm
an’s
urging, they swore out a federal criminal complaint in the Southern Distric
t of
New York for violation of the NSPA and the EEA. (CIR
¶J 58-70)
On July 14, 2009, Goldman CFO David Viniar admitted that Goldman
still had use of the code, and that any loss to the firm was not material.
Goldman nevertheless continued to press the federal prosecution, taking an
active role at every stage. (CIR

¶f

74-80)

Aleynikov was convicted by a federal jury. District Judge Cote rejected
his pretrial and post-trial motions to dismiss the charges. Judge Cote twice
held that the relevant federal statutes, the National Stolen Property Act, the
Economic Espionage Act, and the Computer Fraud and Abuse Act, covere
d the
alleged conduct. See United States v. Aleynikov, 737 F. Supp. 2d 173 (S.D.N
.Y.
2010); United States v. Aleynikov, 785 F. Supp. 2d 46, 55 (S.D.N.Y. 2011).
The
Second Circuit disagreed, and reversed Aleynikov’s conviction, holding that
his
actions did not fall within the scope of the federal statutes he had been
accused of violating. See United States v. Aleyriikov, 676 F.3d 71 (2d Cir. 2012).
Aleynikov, who had been imprisoned for 51 weeks, was ordered to be release
d.
On remand, Judge Cote entered a judgment of acquittal on June 5, 2012.
The property seized from Aleynikov as evidence, including his passport,
was not returned to him. Rather, it was transferred to the New York County
District Attorney’s Office (NYDA) pursuant to an ex pafle emergency applica
tion
by McSwain. (CIR

¶J

30, 38, 81-89)

5

nd
Goldman successfully importuned McSwain to instigate a seco
the same facts,
d
prosecution of Aleynikov. This second prosecution, base on
man and McSwain
was brought by the NYDA in New York State court. Gold
violate state law,
allegedly knew at the time that Aleynikov’s conduct did not
ined in custody for
either. Aleynikov was charged and again arrested, and rema
el suppressed
a week in August 2012. In the state prosecution, Justice Zweib
physical evidence seized from Aleynikov. (CIR ¶J 29, 78, 90, 92)
ined
The State case went to trial on three charges. Goldman rema
allegedly falsely,
involved at every step. Goldman’s representatives testified,
able source code.
that Aleynikov had intentionally misappropriated highly valu
acquitted him on a
A jury convicted Aleynikov on one count, hung on one, and
ion in which he
third. On July 6, 2015, Justice Conviser filed a 72-page decis
tion, finding that the
granted Aleynikov’s post-trial motion to dismiss the convic
State’s appeal of
acts proven against Aleynikov did not violate State law. The
Aleynikov is not
Judge Conviser’s decision is pending. The upshot is that
43-44, 74,
currently convicted of any of the charges, state or federal. (CIR ¶J
98)
on in relation to
Count 1 of the CIR asserts a claim of malicious prosecuti
claim of abuse of
the federal criminal case. (CIR ¶{ 10 1—06) Count 2 asserts a
Counts 5 and 6
process in connection with the federal case. (CIR ¶j 107—11)
ess in relation to the
assert claims of malicious prosecution and abuse of proc
State criminal case. (CIR ¶J 123—33)
nt 4 alleges
Count 3 alleges tortious interference with contract and Cou
2) Count 7
interference with prospective economic advantage. (CIR ¶J 112—2
asserts a claim of defamation. (CIR

¶J

134—38)

6

II.

MOTION TO STRIKE
Goldman first moves to strike Aleynikov’s CIR, saying that its filing

comes far too late, and without leave of court. Aleynikov first alluded to a
forthcoming claim for malicious prosecution on December 21, 2012, yet did not
answer and assert the CIR until some 21 months later, on August 26, 2015.
That, says Goldman, exceeds the bounds of “good cause” and/or “excusable
neglect” under Fed. R. Civ. p. 6 and the corresponding Local Rule. As
2
Goldman sees the case, Aleynikov never fulfilled the Rule 6(1)(B) prerequisite of
“mak[ing] a formal motion for extension of time,” after which the district court
would have been called upon to “make a finding of excusable neglect, using the
Pioneer factors.” Drippe v. Tobelinski, 604 F.3d 778 (3d Cir. 2010) (citing
Pioneer mv. Servs. Co. v. Brunswick Assocs., 507 U.S. 380, 395, 113 S. Ct.
1489 (1993)). I analyze the matter differently, however. I conclude (a) that
Count 5 of the CIR, alleging malicious prosecution in relation to the state
criminal case, has not yet ripened and therefore cannot have been untimely
asserted; and (b) that the counterclaims were, for practical purposes, stayed by
the Magistrate Judge during the relevant period, suspending Aleynikov’s time
to respond to them.
As noted above, Goldman’s motion to dismiss comes before the Court in
a peculiar procedural posture. It was on October 29, 2013, that I denied
Aleynikov’s motion to dismiss Goldman’s counterclaim. Aleynikov’s deadline to
file an Answer to the Counterclaim (and any counterclaim in reply,

2

Federal Rule 6 provides:
(b) Extending Time.
(1) In General. When an act may or must be done within a specified time,
the court may, for good cause, extend the time:
(A) with or without motion or notice if the court acts, or if a request is
made, before the original time or its extension expires; or
(B) on motion made after the time has expired if the party failed to act
because of excusable neglect.

Fed. R. Civ. p. 6(b).
7

presumably) would have started running from that date. The time limit would
have been 21 days, see Fed. R. Civ. P. 12(a), with an automatic extension of 14
days available from the clerk, see Loc. Civ. R. 6.1. On November 26, 2013,
however, Aleynikov moved on Fifth Amendment grounds to stay the
Counterclaim and merits-related affirmative defenses while the New York
criminal case was pending. Goldman opposed that motion, but cross-moved in
the alternative to stay the entire case. Judge Hammer administratively
terminated the stay motions without prejudice pending the outcome of the
Third Circuit appeal. (ECF no. 234)
Part of the confusion here appears to arise from the fact that Goldman’s
Counterclaim was stayed (or stayable) for more than one reason. At the outset,
proceedings on the emergent remedy of advancement of fees were given
priority. Magistrate Judge Hammer’s subsequent orders shared a common
premise: that litigation of the Counterclaim would not go forward while the
appeal remained pending. That being the case, Judge Hammer administratively
terminated Aleynikov’s motion to stay the counterclaims based on his Fifth
Amendment rights in the pending, parallel criminal case in New York. He
restored that motion to the calendar only after the conclusion of the Third
Circuit appeal.
When the matter was remanded from the Court of Appeals, on February
5, 2015, Magistrate Judge Hammer set forth a briefing schedule for any
renewed motion to stay the matter based on the pendency of the criminal case
in New York. (ECF no. 272) That order provided that, in the interim, “Discovery
shall be stayed pending adjudication of any such motion to stay.” Id. Aleynikov
filed his motion to stay on Fifth Amendment grounds. (ECF no. 277)3 That
motion, however, was again overtaken by events when Aleynikov was acquitted

In general, such a stay of discovery would be appropriate where the civil and
criminal matters were closely intertwined and the party seeking the stay was actually,
currently standing trial in the criminal case. See generally Walsh Sec., Inc. v. Cristo
Prop. Mgmt., Ltd., 7 F. Supp. 2d 523, 527 (D.N.J. 1998).
8

in New York. On August 26, 2015, Aleynikov’s counsel withdrew
the stay
motion and filed the Answer and CIR at issue here.
For all intents and purposes, litigation of Goldman’s counte
rclaims was
stayed in the relevant period, albeit on shifting grounds. I therefo
re find that
the CIR was timely filed, and I will not strike it. Now it is true
that Aleynikov
did not rigorously ensure that a stay specifically directed to his
time to
answer/counterclaim was in place at all times. Rather, everyo
ne spoke in
terms of staying “discovery” on Goldman’s Counterclaim, becaus
e that was the
issue at hand. My review of the record, however, satisfies me
that litigation of
Goldman’s Counterclaim was more generally suspended. As
a practical matter,
the counterclaims were not answered or otherwise responded
to, and did not
move forward.
4
Permitting the pleading of the CIR causes no particular prejud
ice to
Goldman. There has been no extensive litigation of Goldman’s
counterclaim,
and permitting the CIR would entail no duplication of effort. Fair
warning,
particularly as to malicious prosecution, is not really an issue.
Goldman’s
counterclaim seeks, inter alia, a declaratory judgment that
Goldman is not
liable for malicious prosecution; Count 1 of the CIR mirrors the
counterclaim
by asserting that Goldman is liable for malicious prosecution
regarding the
federal prosecution.
I view this as an issue of the scope of Judge Hammer’s stay. Viewed throug
h the
prism of Rule 6, however, this was not a case where the opposing party
was
sandbagged by a motion made after the expiration of a deadline. In
that situation,
Rule 6 requires a formal motion and a judicial finding of excusable
neglect. See Fed. R.
Civ. P. 6(b)(1)(B); Dippe, supra. This situation fits more comfortably
under Rule
6(b)(1)(A), which provides that where, as here, “the court acts, or if
a request is made,
before the original time or its extension expires,” an extension is permis
sible with or
without a formal motion or finding of excusable neglect. Fed. R.
Civ. P. 6(b)(1)(A). A
“request [was] made” for a stay while the deadline was running. In
substance, a stay
pending the appeal was granted, and everyone proceeded in a manne
r consistent with
the understanding that the counterclaim was stayed. Even today, for
example,
Goldman has not, e.g., moved for a default because Aleynikov’s answer
(which
contained the CIR) was late.

9

s prosecution in relation
With respect to Count 5, which asserts maliciou
seems to agree that the cause of
to the New York State criminal case, Goldman
here). See Opinions and Orders
action has not yet ripened (as I have ruled elsew
nos. 38—39, as amended, 52—
in Aleynikov V. McSwain, Civ. No. 15-1170, ECF
untimely asserted. As to the
53). This particular claim, then, cannot have been
abuse of process, tortious
remainder of the CIR, which asserts claims for
notice of Aleynikov’s factual
interference, and defamation, Goldman had fair
and legal theories, as detailed below.

was for practical
Finding that a stay of Goldman’s counterclaims
prejudiced, I will excuse the
purposes in effect, and that Goldman has not been
the merits, as is the Court’s
delay in filing the CIR and address the claims on
1. The motion to strike is
strong preference. See generally Fed. R. Civ. p.
denied.
IlL

STATUTE OF LIMITATIONS

of the unripe malicious
Goldman next argues that (with the exception
Aleynikov’s CIRs are time
prosecution claim based on the state prosecution)
ly because they relate back to
barred. Aleynikov responds that his CIRs are time
can be asserted under the
Goldman’s counterclaims and, even if untimely,
doctrine of equitable recoupment.
ations is an affirmative
Under Fed. R. Civ. P. 8(c), the statute of limit
ess be raised on a motion under
defense. The limitations defense may neverthel
statement of a claim shows
Rule 12(b)(6), but only if “the time alleged in the
in the statute of limitations.”
that the cause of action has not been brought with
1174 (3d Cir. 1978) (quoting
Bethel v. Jendoco Const. Corp., 570 F.2d 1168,
1092, 1094 (3d Cir. 1975)
Hanna v. U.S. Veterans’Admin. Hosp., 514 F.2d
ter Twp. Police Dep’t, 892 F.2d
(internal quotations omitted)); Cito v. Bridgewa
on the face of the complaint,
23, 25 (3d Cir. 1989). “If the bar is not apparent
of the complaint under Rule
then it may not afford the basis for a dismissal
12(b)(6).” Bethel, 570 F.2d at 1174.

10

For the reasons set forth below, CIR Counts 2 and 3 have not been
brought within the applicable statute of limitations and are therefore dismissed
with prejudice. Count 6, however, has been brought within the statute of
limitations. So too has Count 7, to the extent it is based on defamatory
statements Goldman allegedly made during the state prosecution. The
resolution of Goldman’s statute of limitations challenge to Count 4 is
impracticable based on that Count’s rather undetailed allegations; and indeed
the motion to dismiss Count 4 on Twombly/Iqbal grounds for failure to state a
claim is granted. See Part IV.C., infra.
A.

Relation Back

The statute of limitations calculation depends initially on the date that
the CIR is deemed “filed” in this Court. Aleynikov argues that the CIR relates
back to December 21, 2012, the date on which Goldman filed its
5
counterclaims. The CIR, in Aleynikov’s reckoning, asserts compulsory
counterclaims under Rule 13(a)—that is, counterclaims in reply that arise out
of the same “transaction or occurrence” as Goldman’s counterclaims. See Fed.
R. Civ. P. 13(a). Like an amended pleading under Fed. R. Civ. P. 15(c), he says,
the CIR must relate back to the date of filing of the counterclaim to which it
responds. Cf Fed. R. Civ. P. 15(c)(1)(B).
In principle, I agree that the relation-back doctrine can apply to
compulsory counterclaims. See, e.g., Wright & Miller, 6 Fed. Prac. & Proc. Civ.
§ 1419 (3d ed) (“[T]he majority view appears to be that the institution of a
plaintiff’s suit tolls or suspends the running of the statute of limitations
governing a compulsory counterclaim.”); Burlington Indust. v. Milliken & Co.,
690 F.2d 380, 389 (4th Cir. 1982); Girodano v. Claudio, 714 F. Supp. 2d 508,
522-23 (E.D. Pa. 2010). I accept as well that the “same transaction or
occurrence” test is common to both Rule 13(a) and Rule 15(c), and that any
Relation back is a question of federal law. Nelson v. County ofAllegheny, 60
F.3d 1010, 1014 n.5 (3d Cir. 1995). In any event, New Jersey law is similar. N.J. Ct. R.
4:9-3.
11

USX Corp. v. Barn hart
claim that satisfies one is likely to satisfy the other. See
“involves a search
395 F.3d 161, 167 (3d Cir. 2004) (application of Rule 15(c)
”); Transamerica
for a common core of operative facts in the two pleadings
F.3d 384, 389-90 (3d
Occidental Life. Ins. Co., v. Aviation Office of Am., Inc., 292
determine whether “a
Cir. 2002) (application of Rule 13(a) requires a court to
rate trials on each of
logical relationship between the claims exist where sepa
t and time by the
the claims would involve a substantial duplication of effor
6
parties and the courts.”)
tortious
Nevertheless, Goldman argues that the abuse of process,
the CIR are so distinct
interference, and defamation counterclaims asserted in
to have had “fair
from Goldman’s own counterclaims that it cannot be said
which the CIR rests.
notice of the general fact situation and legal theory” upon
is “common nucleus of
Bamhart, 395 F.3d at 167. Aleynikov retorts that there
’s counterclaims.
operative facts” at the heart of both the CIR and Goldman
source code and
That nucleus consists of “the alleged theft of Goldman’s
prevented from
[Goldman’s] campaign to have Aleynikov prosecuted and
ecute and defend the
working for a competitor.” The discovery needed to pros
prosecute and
CIR, adds Aleynikov, is virtually identical to that needed to
defend Goldman’s counterclaims. (Aleynikov Br. 8)
claims asserted
For the reasons set forth below, I agree that each of the
that they therefore are
in the CIR relates back to Goldman’s counterclaims, and
.
timely if they would have been timely on December 21, 2012
not permit a
Goldman argues in passing that that the Fed. R. Civ. P. 7(a) does
Fargo Bank, 947
counterclaim in reply. I do not agree. See Pennington v. Wells
13 ‘in conjunction with [Rule 7(a)]
F.Supp.2d 529, 533 (E.D. Pa. 2013) (“Rule
r party. It is
authorizes a counterclaim in a reply to a counterclaim of the othe
g of a counterclaim in
concomitantly clear that [Rule 7(a)] does not prohibit the pleadin
Civ. § 1188 (3d ed) (“If
reply”) (citation omitted); Wright & Miller, 5 Fed. Prac. & Proc.
as the one involved in the
the plaintiff has a claim arising from the same transaction
titute a compulsory counterclaim
defendant’s counterclaim—a claim that would cons
risk being barred from
under Rule 13(a)—the plaintiff must assert it in the reply or
ning attorney’s fees.
bringing a later action on it.”) This was a standalone action concer
es of action.
It was Goldman that raised the ante by injecting substantive caus

6

12

1.

Malicious Prosecution

—

Federal & State (Counts 1 & 5)

Goldman admits it had notice of the malicious prosecution claim based
on Aleynikov’s federal prosecution. (OS Reply Br. 5) Indeed, Goldman’s
counterclaims included a declaratory judgment claim anticipating that very
malicious prosecution claim and seeking an adjudication of non-liability.
Accordingly, there can be no doubt that CIR Count 1 relates back.
CIR Count 5, the malicious prosecution claim based on the state
proceeding, has not yet accrued. See pp. 9—10, supra; p. 29, infra. Relation
back is therefore not an issue.
2.

Abuse of Process

—

Federal & State (Counts 2 & 6)

Aleynikov’s abuse of process CIR based on the federal prosecution is
based on virtually the same conduct as malicious prosecution: Goldman’s
alleged employment of federal criminal proceedings to “(i) confine[] Aleynikov to
prevent any risk of competition to Goldman Sachs; (ii) make[1 an example out of
Aleynikov to deter any future conduct that Goldman Sachs deemed harmful to
its commercial interests; and (iii) restrain[] Aleynikov from lawfully assisting a
start-up company, Teza, that planned to participate in the [high frequency
trading] space.” (CIR

¶

110) As noted above, Goldman cannot claim to be

surprised that Aleynikov alleges that Goldman, motivated by actual malice,
initiated and continued the federal criminal proceeding with the “improper
motive to further its own commercial interests rather than the interests of
justice.” (CIR

¶

105). Goldman itself asserted a preemptive counterclaim for a

declaratory judgment that it had not done this, albeit under the rubric of
malicious prosecution. I find that, as of December 21, 2012, Goldman had fair
notice of the abuse of process claim based on the federal prosecution.
The same logic holds with respect to the abuse of process counterclaim
based on the state prosecution. (CIR

¶J

132, 127) It is true that Goldman’s

counterclaim primarily focuses on the events surrounding the federal
prosecution. (GS CC ¶J32-33) But Aleynikov alleges that Goldman engaged in

13

substantially the same conduct (i.e., relaying false information to law
enforcement officers and playing an unusually prominent role) in the state
prosecution as well. (CIR

¶J 90-95) And the conduct, transactions, and

occurrences underlying the alleged theft (i.e., Aleynikov’s copying of computer
code in June 2009) are common to both the federal and state abuse of process
claims.
In short, the abuse of process counterclaim based on the state
prosecution is an “offshoot[1 of the same basic controversy between the parties”
that is embodied in Goldman’s counterclaim. Transamerican Occidental, 292
F.3d at 389 (“For a claim to qualify as a compulsory counterclaim [here, CIR],
there need not be a precise identity of issues and facts between claim and
counter claim . . . [T]he objective of Rule 13(a) is promote judicial economy, so
the term ‘transaction or occurrence’ is construed generously to further this
purpose.”).
Because Goldman had fair notice of the state abuse of process CIR,
which is closely related to Goldman’s own malicious process counterclaim, it
relates back to the date of Goldman’s counterclaims.
3.

Tortious interference (Counts 3 & 4)

Aleynikov alleges that “Goldman Sachs directed its efforts towards
convincing Teza to breach its Employment Agreement with Aleynikov” and
“interfered with Aleynikov’s prospective business relations.

.

.

by provoking

and instituting his malicious prosecutions for crimes he did not commit.”
(CIR ¶f 116, 121) This tortious interference claim, of course, is Aleynikov’s spin
on the same factual situation that, in Goldman’s telling, entitled it to “pursu[eJ
its right to report Aleynikov’s conduct” to law enforcement, protect its
“legitimate economic self-interests,” and recover damages for breach of
contract, conversion and misappropriation of trade secrets. (GS Br. 3, GS Reply
Br. 30) Goldman’s counterclaim alleges that Aleynikov “resigned from GSCo. to
take a position with a competitor and, on his way out of the door, stole
proprietary source code

.

.

.

.“

(GS CC

¶ 1) (emphasis added)) Aleynikov’s
14

alleged theft of the Goldman’s computer code, his relationship to Teza, and the
actions Goldman took upon discovering Aleynikov’s alleged misconduct are
factual issues common to Goldman’s counterclaims and Aleynikov’s tortious
interference CIR. I find that Goldman had fair notice of their factual and legal
basis. Relation back is appropriate.
4.

Defamation (Count 7)

Aleynikov argues that, to bring about his prosecution, Goldman falsely
informed law enforcement officers and prosecutors that he had stolen
Goldman’s billion-dollar HFT infrastructure, and that Goldman knowingly
maintained this lie and others throughout the federal and state prosecutions.
These false statements, he says, “were defamatory per se because they falsely
conveyed that Aleynikov had committed a crime and disparaged him in the way
of his office, profession, and trade.” (CIR ¶J 12, 95, 135, 136)
This count presents a closer call than the others. As a legal theory,
defamation is not so naturally allied to malicious prosecution as is, e.g., abuse
of process. Nevertheless, I think that Goldman had sufficient notice of
Aleynikov’s defamation claim. At this pleading stage, it appears that defamation
under these circumstances is an alternative legal theory imposed on the same
set of facts.
Throughout, Aleynikov has maintained that his dispute with Goldman
essentially arises from alleged falsehoods. He has consistently accused
Goldman of making false statements to investigators about the importance of
Goldman’s computer code, his motivations in uploading it, and so on. These
falsehoods, viewed as the vehicle for the alleged malicious prosecution, may
plausibly be considered to be amplifications of the allegations in Goldman’s
own counterclaim. Cf Bertsel v. Allied Pilots Ass’n, 387 F.3d 298, 310 (3d Cir.
2004) (allegations that “amplify the factual circumstances surrounding the
pertinent conduct, transaction or occurrence in the preceding pleading” meet
the analogous relation-back test of Rule 15(c)). At any rate, the two are closely
intertwined. To look at it another way, I estimate that any attempt to split off
15

the defamation claims and bring them in a standalone action would have met a
frosty judicial reception.
I therefore find that Aleynikov’s defamation claim, too, benefits from
relation back.
B.

Statute of Limitations: Particular Counts

Having found that the counts of the CIR relate back to December 21,
2012, I analyze the applicability of the statute of limitations to each.
1.

Malicious Prosecution

—

Federal & State (Counts 1 & 5)

CIR Count 1 alleges malicious prosecution in relation to the federal
criminal case. Under New York law, malicious prosecution is subject to a one7
year statute of limitations. Aleynikov’s cause of action accrued when the
federal criminal proceeding terminated in his favor. Williams v. CVS Pharmacy,
Inc., 6 N.Y.S.3d 78 (2d Dep’t 2015). That date of accrual is thus June 5, 2012.
As to this claim only, Goldman concedes relation back to December 21, 2012.

Because only seven months elapsed between accrual and the conceded relevant
filing date, Aleynikov’s federal malicious prosecution is timely. Goldman’s
motion to dismiss CIR Count 1 on statute of limitations grounds is denied.
Count 5, the malicious prosecution claim based on the state proceeding,
has not yet accrued. See pp. 9—lU, supra; p. 29, infra. As to that count, the
statute of limitations has not yet begun to run.

Although New Jersey provides for a six-year statute of limitations for malicious
prosecution claims, the parties agree that New York law governs (GS Br. 13, Aleynikov
Br. 9), and I agree with them. See, e.g., Pitcock v. Kasowitz, Benson, Torres, &
Freidman, L.L.P., 426 N.J. Super 582, 589 (App. Div. 2012) (holding that New Jersey
had “no substantial interest” in applying New Jersey law to malicious prosecution
claim based on New York prosecution); Restatement (Second) of Confficts of Laws §
155 (“The rights and liabilities of the parties for malicious prosecution or abuse of
process are determined by the local law of the state where the proceeding complained
of occurred.”).
16

2.

Abuse of Process

-

Federal & State (Counts 2 & 6)

CIR Counts 2 and 6 allege abuse of process in relation to the federal and
state criminal prosecutions. Under New York law, abuse of process claims are
subject to a one-year statute of limitations.
8
The parties disagree as to the date that Aleynikov’s abuse of process
claims accrued. Goldman argues that abuse of process claims accrued when
the criminal processes were set in motion; Aleynikov says the claims accrued
when the proceedings terminated in his favor.
In general, “favorable termination is not an element of the abuse of
process.” Pinter v. City of N.Y., 976 F. Supp. 2d 539, 570 (S.D.N.Y. 2013). And
the cases are clear that “the accrual of a cause of action for abuse of process
need not await the termination of an action in claimant’s favor.” Cunningham v.
New York, 53 N.Y.2d 851, 853 (1981). Although stray cases seem to lump
abuse of process with malicious prosecution, the better and more persuasive
view is that accrual of an abuse of process claim need not await favorable
termination

.

There is conflict between New York and New Jersey law, which provides for a
six-year statute of limitations. Earl v. Winne, 14 N.J. 119, 13 1-32 (1953) (applying sixyear statute of limitations for abuse of process claim.) However, the parties do not
dispute—and I agree—that New York has a more substantial relationship to this
action, and that New York law therefore applies. (GS Br. 13, Aleynikov Br. 9). See also
n.8, supra.
8

As one case, surveying the case law, put it: “it is far from clear that, under New
York law, the one-year statute of limitations governing a cause of action for abuse of
process begins to run termination of the underlying proceeding, as opposed to
initiation of that proceeding.” Douglas v. N.Y. State Adirondack Park Agency, No. 10-cv0299, 2012 WL 5364644, at *7 (N.D.N.Y. Oct. 30, 2012).
I think that Aleynikov overstates the case, however, when he cites Muro-Light v.
Farley, 944 N.Y.S.2d 57]. (2d Dep’t 2012) and lOEllicot Sq. Ct. Corp., v. Violet Realty,
Inc., 916 N.Y.S.2d 705 (4th Dep’t 2011), for the proposition that “New York courts have
held that it is long settled that abuse of process claims, like claims for malicious
prosecution, accrue when there is a determination favorable to plaintiff.” (Aleynikov
Br. 9-10) (internal quotations and citations omitted)) Muro-Light and 10 Ellicot fail to
persuade, because they themselves rest on citations to inapposite malicious
prosecution case law. See 10 Ellicot, at 708 (citing Lombardo v. Cnty. of Nassau, 791
17

I follow the rule articulated by a number of New York federal courts: An
abuse of process claim accrues “at such time as the criminal process is set in
motion, unless the plaintiff is unaware, through no fault of his own, of facts
supporting the claim, in which case the cause of action accrues upon
discovery.” Pinter, 976 F. Supp. 2d at 570; see also Tchatat v. City of N.Y., No.
14-cv-02385, 2015 WL5091197, at *14 (S.D.N.Y. Aug. 28, 2015); Duamutef v.
Morris, 956 F. Supp. 1112, 1118 (S.D.N.Y. 1997). This approach, in my view,
best preserves the traditional distinction between malicious prosecution and
abuse of process. See generally Keller v. Butler, 246 N.Y. 249, 158 N.E. 510
(1927) (“[T]he difference [between malicious prosecution and abuse of process
is] that in the one the initial litigation must be terminated, while in the other it
is the abuse of an incidental process which has cause the unjustifiable damage
and the initial proceedings need not be terminated to give a cause of action”).
And the “discovery” proviso fairly accommodates the atypical case where a
defendant does not find out until later that the criminal process was perverted
to serve an illegitimate collateral objective. 10

N.Y.S. 2d 292 (Sup. Ct. 2004) (analogizing malicious prosecution case law in an action
by drunk driver seeking to recover damages from municipality after the ordinance
under which his car was seized was declared unconstitutional); Marks v. Townsend,
97 N.Y. 590 (1885) (addressing false imprisonment and malicious prosecution claims)).
See Muro-Light at 847 (citing 347 Cent. Park. Assoc. v. Pine Top Assoc., 919 N.Y.S.2d
892 (2d Dep’t 2011) (addressing malicious prosecution claim)); Camp v. Wolosin, 622
N.Y.S.2d 291 (2d Dep’t 2011) (addressing malicious prosecution claim)).
Other courts have assumed, without really deciding, that the clock begins to
tick when the underlying action terminates in the claimant’s favor because the claim
was untimely even with the benefit of later date. See Benyo v. Sikoorjak, 858 N.Y.S.2d
215, 218 (2d Dep’t 2008); Beninati v. Nicotra, 657 N.Y.S.2d 414 (1st Dep’t 1999);
Bittner v. Cummings, 591 N.Y.S.2d 429, 430-3 1 (2d Dep’t 1992); Village of Valley
Stream v. Zulu, 406 N.Y.S.2d 534 (2d Dep’t 1978).
10
One New York court seems to have articulated an exception to the rule. An
abuse of process claim may accrue upon favorable termination, it held, if the claimant
“would not have been able to allege that he suffered an injury without justification
until the proceeding was terminated.” Dobies v. Brefka, 694 N.Y.S.2d 499, 50 1-502
(3rd Dep’t 1999). I read this exception, however, as being consistent with the
“discovery” rule stated above. At any rate, Aleynikov’s case does not fall within this
exception. To be sure, his allegation of injury is strengthened by the addition of a
18

Here, Aleynikov alleges that Goldman was invo
lved in initiating the
federal prosecution no later than July 2009, the
month in which he was
arrested and the criminal complaint was filed
against him. (See, e.g., CIR
¶J 2,
12, 32-33, 35, 36, 6 1-68, 70) He also alleges that
Goldman was involved in
instituting the state prosecution no later than
August 2012, the month in
which he was again arrested and the state crim
inal complaint was filed against
him. (See, e.g. id. at ¶j 90-95) Aleynikov surel
y knew these facts at the time. At
any rate, he has not alleged that he remained
unaware of Goldman’s
involvement in these prosecution until a later
date.
The limitation period for CIR Count 2, the abus
e of process claim based
on the federal prosecution, expired no later than
July 2010, so it is timebarred. The motion to dismiss CIR Count
2 on statute of limitations grounds is
therefore granted.
CIR Count 6, the abuse of process claim base
d on the state prosecution,
was brought within the year preceding the relat
ion-back date of December 21,
2012. The motion to dismiss CIR Count 6 on
statute of limitations grounds is
therefore denied.

favorable termination. That, however, would be true
in any abuse of process case, and
the exception would swallow the rule. Aleynikov claim
s that he always knew that
Goldman’s allegations against him were false, and
the resulting injury—undergoing
criminal prosecution—was immediately apparent.
To look at it another way, favorable termination seem
s to be virtually the only
distinction between Aleynikov’s malicious prosecuti
on and abuse of process theories.
It there is no such distinction, the abuse of process
claim may be superfluous.
19

3.
CIR Count

pective
Tortious Interference with Contract and Pros
Economic Advantage (Counts 3 & 4)
and Count 4
3 alleges tortious interference with contract,

economic advantage.
alleges tortious interference with prospective
York law, is subject to a
Tortious interference with contract, under New
Ellicot, 916 N.Y.S.2d at 707.
three-year statute of limitations.” See, e.g., 10
actual damage as a result of the
The claim accrues when the claimant suffers
N.Y.2d 90, 97, 595 N.Y.S.2d 931
tortious conduct. Kronos, Inc. v. AVX Corp., 81
statute of limitations does not
(1992). It is not a continuing tort; that is, the
Spinap Corp., Inc. v. Cafagno,
restart upon on each instance of wrongdoing.
tortious interference with contract
756 N.Y.S.2d 86, 87 (1st Dep’t 2003) (“Since
plaintiff to argue that Cafagno
is not a continuing tort, it does not avail the
time of the filing of the
continued to solicit its customers up until the

rned Goldman’s breach of
As I observed when I ruled that New York law gove
ersion counterclaims, “[vlirtuaily
contract, misappropriation of trade secrets, and conv
ed, occurred in New York.” Opinion,
all of the relevant events, whether disputed or agre
94 (ECF’ No. 192). But because
Aleynikov v. Goldman Sad-is Group, Inc., No. 12-cv-59
of limitations, Aleynikov contends
New Jersey has a more capacious six-year statute
ce CIRs. At least with respect to
that New Jersey law applies to his tortious interferen
.
tortious interference with contract, I am not persuaded
to identify the error in the
A full-blown choice of law analysis is not required
here, a federal court sits in diversity,
argument. Aleynikov contends that (1) where, as
New Jersey applies the “most
it applies the forum state’s choice of law rules; (2)
l conflict between two laws; and (3)
significant relationship” where there in an actua
New York with respect to the
there is an actual conflict between New Jersey and
ce claims. See Warriner v. Stanton,
statute of limitations governing tortious interferen
Jaycee, 197 N.J. 132 (2008). So
475 F.3d 497, 499-500 (3d Cir. 2007); P.V. v. Camp
es New Jersey law should be
far so good, but here is the misstep: Aleynikov argu
ent (Second) of Conflict of Laws,
presumed to apply under Section 150 of the Restatem
d by book, newspaper, radio
which addresses multistate defamation communicate
Aleynikov, however, has not alleged
broadcast, or “similar aggregate communication”.
s” by aggregate communication.
that Goldman disseminated any “injurious falsehood
d in Section 145, Aleynikov has
With respect to balancing the factors enumerate
mption that New Jersey law
provided no reason (other than an inapplicable presu
sis. See Aleynikov v. Goldman
should govern) for me to depart from my prior analy
In sum, I find that New York law
Sachs Group, Inc., 6-7, No. 12-cv-5994 (ECF 192).
ract CIR and is therefore subject
applies to Aleynikov’s tortious interference with cont
to a three-year state of limitations.
11

20

complaint, or that most of the solicitations occurred in 1997, 1998, and
1999.”).
As to Count 3, Aleynikov alleges that Goldman instigated federal criminal
proceedings as of July 5, 2009, and that, as a result, Teza cancelled its
employment agreement with Aleynikov sometime in July 2009. (CIR

¶

1 13-

122) A limitations period of three years running from July 2009 brings us only
to July 2012. That is some five months before the relation-back date of
December 21, 2012. CIR Count 3, Aleynikov’s claim of tortious interference
with contract, is therefore time-barred. The motion to dismiss CIR Count 3 on
statute of limitations grounds is granted, with prejudice.
As to Count 4, the picture is less clear. Aleynikov alleges that Goldman’s
acts had the effect of interfering with other prospective business relationships
between July 5, 2009, and December 2010, a period that overlaps the
limitations period. (CIR ¶ 119) The CIR, however, does not identify these
employers, state where they might be located, or specify the particular
relationships interfered with. These facts, if pled, might affect the choice of law
analysis. See Camp Jaycee, 197 N.J. at 143; Restatement (Second) of Conflict
of Laws

§

6, 145. More fundamentally, however, this lack of specificity will
require dismissal of CIR Count 4 for failure to state a claim. See Part IV.C.,
infra.

4.

Defamation (Count 7)

CIR Count 7 alleges the tort of defamation. Under New Jersey law, the
statute of limitations for defamation is one year.’ Aleynikov concedes that a
2
defamation cause of action based on any statements Goldman made before or
during the federal prosecution are now time-barred. (Aleynikov Br. 15) But he

The parties agree that the court should default to New Jersey law, because that
there is no conifict between New Jersey and New York law on this point. Lawrence v.
Bauer Pub., & Printing, Ltd., 78 N.J. 371, 374-75 (1979) (one-year statute of limitation
for defamation); Wilson v. En-a, 942 N.Y.S.2d 127, 129 (2d Dep’t 2012) (one-year
statute of limitation for defamation).
12

21

the
argues that a defamation claim based on statements Goldman made during
3
state prosecution is timely.’ (CIR ¶ 135, 136) Aleynikov focuses on one
allegation: that in September 2012 Goldman made “knowingly false”
statements that he “had violated the Unlawful Duplication and Unlawful Use
90-95) Such statements, Aleynikov says, are “defamatory p
se because they falsely conveyed that Aleynikov had committed a crime and
disparaged in the way of his office, profession, and trade.” (CIR ¶ 136)

statutes.” (CIR

¶{

For its part, Goldman argues that these statements should not count for
,
statute of limitations purposes; they were made to a law enforcement officer

and hence are subject to an absolute or qualified privilege. See Hawkins v.
Harris, 141 N.J. 207, 289 (1997) (absolute privilege applies to “any
communication (1) made in judicial or quasi-judicial proceedings; (2) by
litigants or other participants authorized by law; (3) to achieve the objects of
”)
litigation; and (4) that have some connection or logical relation to the action.
That contention, a fair statement of tort law as far as it goes, nevertheless
depends on facts outside the pleadings. It may be that the defamation claim
er, I
would be vulnerable to a summary judgment motion. At this stage, howev
consider only whether there is an allegation of a defamatory statement within
the limitations period.
Such is the case here. Aleynikov pleads that Goldman “knowingly made
false statements” that Aleynikov violated the Unlawful Duplication and
Unlawful Use statutes, which implied “that Aleynikov had committed a crime
and disparaged him in the way of his office, profession, and trade.” Aleynikov
also alleges that Goldman did so sometime around September 2012, which is

Indeed, because the state prosecution continued into 2015, Aleynikov argues
that a defamation claim might be timely even without the benefit of relation back. It is
not necessary to reach that argument.
13

22

well within the one year preceding December 21, 2012. (CIR
¶J 135-36, 95)
Allowing for relation back, see supra, the defamation claim is time
4
ly.’
C.

Equitable Recoupment

Aleynikov next argues that, even if some or all of his CIRs are
barred by
the applicable statutes of limitations, they are saved to the extent
that they
reduce any judgment Goldman might obtain for its counterclaims.
As I noted
when I denied Aleynikov’s motion to dismiss Goldman’s counterclaim
s, the
doctrine of equitable recoupment permits assertion, to some
extent, of
otherwise untimely claims. Equitable recoupment, if applicable,
might thus
allow Aleynikov’s CIRs to proceed even if they would have been
time-barred as
of December 21, 2012, or indeed even if they did not relate
back at all.
Aleynikov v. Goldman Sachs Group, Inc., No. 12-5994, at 9-10
& n. 5. Under the
circumstances, however, I find that the equitable recoupment
doctrine does not
apply to the relevant claims.

Equitable recoupment is available by statute in New York and
by
common law in New Jersey. Unlike federal relation-back doctrin
e, equitab

le

recoupment is limited and strictly construed. New York law provid
es:
A defense or counterclaim is interposed when a
pleading is not barred if it was not barred at the time
the claims asserted in the complaint were interposed,
except that if the defense or counterclaim arose from
the transactions, occurrences, or series of transactions
or occurrences, upon which a claim asserted in the

Citing Palladino ex ret. U.S. v. VNA of Southern N.J., Inc., Goldman
argues
Aleynikov has failed to plead a defamation counterclaim based on
statements made
during the state prosecution because he has not identified “facts suffici
ent to identify
the defamatory words, their utterer, and the fact of their publication.”
68 F. Supp.
244, 474-75 (D.N.J. 1999). However, as the court in Palladino recogn
ized, “while state
law may define the general substance of the pleading for a claim based
on state law, it
does not govern the standard of pleading.” Id. Under Rule 8, all
that is required is a
“short and plain statement of the claim showing that the pleader
is entitled to relief’
sufficient to give the defendant notice of the allegations against
him and the grounds
on which they are based. Fed. R. Civ. P. Rule 8(a)(2). He has suffici
ently discharged
that obligation here.
‘4

23

the
complaint depends, it is not barred to the extent of
it
demand in the complaint notwithstanding that that
in the
was barred at the time the claims were asserted
complaint were interposed.
N.Y. C.P.L.R.

No. 2005/08307
§ 203(d); LaLoggia v. Document Sec. Sys. Co.,

2006) (“The recoupment
2006 WL 1465595, at *2.3 (N.Y. Sup. Ct. Mar. 22,
trued. Thus, even where
doctrine is a limited one and should be narrowly cons
upment will not be available
claims arise from the same contract, equitable reco
action.”) (internal citations
where the claims do not arise from the same trans
larly, New Jersey law provides:
and quotations omitted) (emphasis added). Simi
[AJny claim for recoupment must arise out of the
identical transaction that provided plaintiff with a
cause of action, and no affirmative relief may be
The
granted independent of plaintiff’s claim.
d by the statute
defense of recoupment is never barre
of limitations so long as the main action itself is
timely.
.

.

.

Super. 254, 27 1-72 (App.
Assocs. Home Equity Servs. Inc. v. Troup, 343 N.J.
s omitted) (emphasis in
Div. 2001) (internal citations and quotation mark
original)).
e that “recoupment”
In addition, New Jersey and New York both recogniz
allows a timely counterclaim to
is a concept distinct from that of “setoff.” Setoff
her or not it arises from
recover damages in excess of an opposing claim, whet
permits an otherwisethe same transaction or occurrence. Recoupment
from the same transaction,
untimely counterclaim, but only one that arises
ages recovered by the
and recovery is limited to a diminution in the dam
is a defensive and narrow
5
opposing party.’ In short, equitable recoupment
200, 203 (1949)
See, e.g., Nat’l Cash Register Co. v. Joseph, 299 N.Y.
through a process whereby
(“Recoupment means a deduction from a money claim
allowed to compensate one
cross demands arising out of the same transaction are
se, such a process does not
another and the balance only to be recovered. Of cour
but only permits a transaction
allow one transaction to be offset against another,
examined in all its aspects, and
which is made the subject of a suit by a plaintiff to be
one transaction as whole.”)
judgment to be rendered that does justice in view of the
15

24

remedy. Wright & Miller, 6 Fed. Prac. & Proc. Civ

§

1401 (3d ed) (“At common

law the term ‘recoupment’ described a claim that defendant could assert
against plaintiff only if it arose from the same transaction as plaintiff’s claim. It
was purely defensive in character and could be used only to defeat or diminish
plaintiff’s recovery; recoupment could not be the basis for affirmative relief.”).
Here, Goldman’s counterclaims for breach of contract, conversion, and
misappropriation of trade secrets arise from a series of transactions and
occurrences from May 1, 2009, to June 5, 2009. During that time Aleynikov
allegedly (1) told Goldman that he intended to seek employment opportunities
elsewhere; (2) uploaded Goldman’s computer code to an outside server; and (3)
copied the code to his home computer and other devices. (GS CC
23—32) By

¶J

contrast, Aleynikov’s CIRs for federal abuse of process, tortious interference,
and defamation arise from a series of transactions and occurrences that began
on July 1, 2009 (when Goldman allegedly contacted the FBI), and extended for
some months thereafter. (CIR ¶J 61-100) Surely the events alleged by Goldman
are related to the sequelae alleged by Aleynikov—but they are not identical.
What Aleynikov’s CIR seeks is best characterized as a set-off, not
equitable recoupment. (See CIR ¶J 106, 117, 122, 128, 133, 138 (requesting
compensatory and punitive damages)) Set-off (unlike equitable recoupment)
provides no escape from the statute of limitations. And, as I have already
found, Aleynikov’s CIR Counts 2, 3, and 7 (to the extent it relates to the federal
prosecution) are untimely.

(internal citations omitted); Ins. Restoration Specialists, Inc. v. 26 Kenndy Blvd.

Assocs., Ltd., No. L-5326-11, 2016 WL 1418113, at *3 (N.J. Super. Ct. App. Div. Apr.

12, 2016) (“Equitable recoupment is the reduction of a claim because of an offsetting
claim arising out of exactly the same transaction. In contrast, a setoff is an offsetting
claim arising out of a completely independent and unrelated transaction.
Setoffs
are subject to statutes of limitations. In contrast, recoupment is never barred by the
statute of limitations so long as the main action itself is timely.”) (internal citations
and quotations omitted).
.

25

.

.

*

*

*

Despite Aleynikov’s invocation of equitable recoupment, I will therefore
grant Goldman’s motion to dismiss CIR Counts 2, 3, and 7 (to the extent it
relates to the federal prosecution), on statute of limitations grounds. To the
extent the motion is denied, that denial is without prejudice to a later
reassertion of the statute of limitations based on a factual record.
IV.

FAILURE TO STATE A CLAIM

Even if the CIR is timely filed and pled, Goldman argues, it fails to state a
claim upon which relief can be granted under Fed. R. Civ. P. 12(b)(6).
Goldman, as 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.
of
2005). In deciding a Rule 12(b)(6) motion, a court must take the allegations
the complaint as true and draw reasonable inferences in the light most
(3d
favorable to the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 231
Cir. 2008) (traditional “reasonable inferences” principle not undermined by
Twombly, see infra).

Rule 8(a) does not require that a complaint contain detailed factual
allegations. Nevertheless, “a plaintiffs obligation to provide the ‘grounds’ of his
‘entitlement to relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Bell Ati.
Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint’s factual
allegations must be sufficient to raise a plaintiffs right to relief above a
speculative level, so that a claim is “plausible on its face.” Id. at 570; see also
Umland v. PLANCO Fin. Sen.’., Inc., 542 F.3d 59, 64 (3d Cir. 2008). That facialplausibility standard is met “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 (2009) (citing
Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a

26

‘probability requirement’.

.

.

it asks for more than a sheer possibility.” Iqbal,

556 U.S. at 678.
A.

Malicious Prosecution (Counts 1 & 5)

The parties essentially agree on the elements of malicious prosecution. A
plaintiff must adequately allege: “(1) the initiation or continuation of a crimin
al
proceeding against plaintiff; (2) termination of the proceeding in plaintiff’s
favor; (3) lack of probable cause for commencing the proceeding; and (4)
actual
malice as a motivation for defendant’s actions.” Manganiello v. City of New
York, 612 F.3d 149, 161 (2d Cir. 2010). See also Bermudez v. City of New York,
790 F.3d 368, 376-77 (2d Cir. 2015); Sankin v. Abeshouse, 545 F. Supp. 2d
324, 327 (S.D.N.Y. 2008). Goldman asserts that the complaint fails to allege
that it initiated (Goldman says “controlled”) the prosecutions; that probable
cause was lacking; and that Goldman acted with malice.
A private party may “initiate” a prosecution by “play[ing] an active role in
the prosecution, such as giving advice and encouragement or importuning
the
authorities to act.” Williams, 6 N.Y.S.3d at 80. Merely lodging a complaint,
or
furnishing information to the police or prosecutors that turns out to be false

is

not tortious. Du Chateau v. Metro-N. Commuter R.R. Co., 688 N.Y.S.2d 12, 15
(1st Dep’t 1999). It may be tortious, however, to furnish the police or
prosecutors with information that the complainant then knew to be false.
Williams, 6 N.Y.S.3d at 81. Embedded within this concept is also a causati
on
element. For a private party to have “initiated” the prosecution, its false
information must have been the cause of the prosecution. Gilman v. Marsh
&
McLennan Cos., 868 F. Supp. 2d 118, 128 (S.D.N.Y. 2012).
As to the federal prosecution, the initiation element is pled. Aleynikov’s
CIR alleges that Goldman furnished the following facts to the FBI and
prosecutors, knowing them to be false; that Aleynikov committed a federal
offense; that he was not authorized to copy the source code; that he copied
the
“entire platform” for Goldman’s HFT business; that the code was worth a
billion
dollars; and that it empowered the person who held it to unfairly manipu
late
27

the financial markets. (CIR

an
¶11 2, 12, 33) It also alleges that Goldman took

unusually active role in the ongoing prosecution.
at this stage.
As an allegation, that is sufficient; nothing more is required
cause of the
Such issues as whether Goldman’s information was in fact the
of causation,
prosecution, whether the prosecutors’ decisions broke the chain
and summary
and so on, are factual disputes. They must await discovery
judgment or trial.
alleges that
Lack of probable cause, too, is adequately alleged. The CIR
were knowingly false.
the facts supplied to the investigators, as outlined above,
inal offense as a
It also alleges that they these facts failed to make out a crim
ting factual
matter of law. At a later stage, these claims may face daun
1983 and Bivens
obstacles. In another context, I have dismissed analogous §
ts. (See Aleynikov
malicious prosecution allegations as against the federal agen
52—53). Those
v. McSwain, Civ. No. 15-1170 (ECF nos. 38—39, as amended,
les and
agents, however, enjoyed qualified immunity, a doctrine that enab
to dismiss stage.
indeed requires the Court to dispose of claims at the motion
s were false, whereas
And Goldman here is alleged to have known its allegation
claim that they
the agents, who were not firsthand witnesses, might plausibly
id.
had little choice but to rely on Goldman’s statements. See
s. (E.g.,
Counts 1 (and 5) of the CIR allege malice in more general term
in advising,
CIR ¶ 11 (“Goldman Sachs acted maliciously, not reasonably,
advised
encouraging....”); CIR ¶ 12 (“After Goldman Sachs maliciously
Prosecution ....“))
Agents McSwain and Casey to initiate the malicious Federal
htened fraud
That is not unusual. Cf. Fed. R. Civ. P. 9(b) (even as to heig
r conditions of a
pleading requirements, “[mialice, intent, knowledge, and othe
permissibly
person’s mind may be alleged generally”). Malice also may be
an lacked a
(though not necessarily) inferred from allegations that Goldm
hoods to the
probable cause basis for its allegations, or purposely relayed false
uately alleged.
authorities. The malice element, though far from proven, is adeq

28

As to CIR Count 1, malicious prosecution in relation to the federal
criminal case, I will therefore deny the motion to dismiss.
The malicious prosecution claim with respect to the state prosecution is
parallel, but procedurally as well as factually distinct. To begin with, the
element of a final decision in plaintiff’s favor is lacking. The state jury convicted
on one count, hung on a second, and acquitted Aleynikov on a third. The trial
judge vacated the conviction, and the State has appealed from that ruling.
Under the circumstances, I will stay further litigation of CIR Count 5. My
reasons are essentially the same as those expressed in the parallel case against
the FBI agents, incorporated here by reference. See Aleynikov v. McSwain, Civ.
No. 15-1170 (ECF no. 38 at 26—28, as amended, ECF no. 52) (citing, inter alia,
Kossler v. Cristani, 564 F.3d 181, 187 (3d Cir. 2009) (discussing favorable
termination element); Linnen v. Armainis, 991 F.2d 1102, 1107 (3d Cir. 1993)
(noting a “preference for holding federal civil rights claims in abeyance until
state appellate proceedings that may affect the outcome of the federal action
are decided”); Herrera v. City of New Brunswick, Civ. No. 04-3002, 2008 WL
305275, at *10 (D.N.J. Feb. 1, 2008) (staying

§ 1983 malicious prosecution

claim pending the outcome of defendant’s appeal of her conviction)).
As to CIR Count 5, the motion to dismiss is administratively terminated
without prejudice. Proceedings as to Count 5 are stayed pending the outcome
of the State appeal.
B.

Abuse of Process

—

State (Count 6)

The parties largely agree as to the three elements of abuse of process: “(1)
regularly issued process, either criminal or civil, (2) an intent to do harm
without excuse of justification, and (3) use of process in a perverted manner to
obtain a collateral objective.”’ Curiano V. Souzzi, 63 N.Y.2d 113, 116 (1984);
6

New York law applies because there is an actual conflict between the elements
of abuse of process in New York and New Jersey, and New York has a more
substantial relationship to this action. See Stolinski v. Peru-i ypacker, 772 F. Supp. 2d
626 (D.N.J. 2011) (“The establish a claim for abuse of process, Plaintiff must show: “(1)
16

29

ng
see also Savnio v. City of New York, 331 F.3d 63, 76 (2d Cir. 2003) (restati
the
the third element as “in order to obtain a collateral objective that is outside
legitimate ends of the process”). Goldman asserts that Alyenikov has not
adequately alleged (1) that Goldman abused the state criminal proceedings
an
after they were commenced, or (2) that Goldman used the proceedings for
illegitimate collateral objective. (GS Br. 24)
The parties disagree as to whether, as a matter of law, any abuse must
l
have occurred after the state criminal proceeding commenced. Like the accrua
issue discussed above, that is an open question under New York law. See
Parkin v. Cornell Univ. Inc., 78 N.Y.2d 523, 530 (1991) (noting that “nothing in
this Court’s holdings would seem to preclude an abuse of process claim based
on the issuance of the process itself.”). Goldman argues, however, that I am
s
bound by Cook v. Sheldon, 41 F.3d 73 (2d Cir. 1994). There, in the proces of
holding that abuse of process claims can be brought under 42 U.S.C. § 1983,
the U.S. Court of Appeals for the Second Circuit observed that “the gist of the
action for abuse of process lies in the improper use of process after it is
issued.” Id. at 80 (citing New York Pattern Jury Instructions from 1968)). Some
federal district courts within the Second Circuit have thought themselves
7
bound by that language; others have not.’ The most recent statement from a
an ulterior motive and (2) some further act after issuance of process representing the
perversion of the legitimate use of process”). See n.7 & 8, supra.
17
E.g. Gilman, F. Supp. at 131-32 (recognizing the Parkin dicta but ruling that
“this Court is bound by the law of the Circuit” and Parkin “does not alter the
established law governing malicious abuse of process claims”) (quoting Richardson v.
25,
N. Y.C. Health and Hospital Corp., No. 05-cv-6278, 2009 WL 804096 (S.D.N.Y. Mar.
Poughkeepsie, No. 12-cv-3459,
2009) (internal quotations omitted); Widget v. Town of
z
2013 WL 1104273, at *8 n.7 (S.D.N.Y. Mar. 18, 2013) (citing Gilman); Mosdos Chofet
Chaim, Inc. v. RBS Citizens, N.A., 14 F. Supp. 3d 191, 213 (S.D.N.Y. 2014) (citing
Richardson and Gilman); but see, e.g., Crockett u. City of N. Y., No. 1 1-cv-4378, 2015
WL 5719737, at *10 (E.D.N.Y. Sept. 29, 2015) (recognizing the Parkin dicta and ruling
that a “a jury could find that Plaintiff’s alleged false arrest, if executed by the
s’,
Defendant-Officers for a ‘collateral objective outside the legitimate ends of the proces
satisfies the first element of an abuse of process claim”); TADCO Construction Corp. V.
plaintiff
Dormitory Auth. of N. Y., 700 F. Supp. 2d 253, 272 (E.D.N.Y. 2010) (ruling that
and the split of
plausibly alleged abuse of process claim in light of Pczrkin dicta
30

New York appellate court suggests that Cook may have it right: “In general,
such a claim will only lie for improperly using process after it is issued.” Place
v. Ciccotelli, 995 N.Y.S.2d 348, 551 (3d Dep’t 2014).
But because Aleynikov pleads that Godman abused the state criminal
process both before and after it was initiated, this issue need not be resolved
now. The CIR alleges that Agent McSwain knowingly made false statements to
obtain an arrest warrant and presented false testimony before a grand jury at
Goldman’s “behest and with its advice, encouragement, and importuning.” It
also alleges that Goldman “played an active role in and was integrally involved
in all stages of the investigation and State Prosecution of Aleynikov, taking
steps that included.

.

.

engaging counsel who met with and assisted state

prosecutors and who attended Aleynikov’s trial.” (CIR

¶J

91, 98) Aleynikov

further alleges that Goldman representatives falsely testified that “Aleynikov
intended to and did appropriate valuable computer code to Goldman Sachs’s
HFT platform.” (Id.

¶

98) That is enough to sustain CIR Count 6 at this stage.

The collateral objective element, too, is pled. “[Tb
of criminal process

.

.

.

state a claim for abuse

[the plaintiffj must claim that they aimed to achieve a

collateral purpose beyond or in addition to his criminal prosecution.” Savino,
331 F.3d 78. Aleynikov alleges that Goldman’s objectives included “confining
Aleynikov to prevent any risk of competition to Goldman”; “making an example
out of Aleynkov to deter any future conduct that Goldman Sachs deemed
harmful to its commercial interests”; and “restraining him from lawfully
assisting a start-up company, Teza, that planned to participate in the HF]’
space.” (CIR

¶J

110, 132)

Goldman protests that these are not collateral objectives, but “the very
goals for which the criminal processes are designed.” (GS Br. 25; GS Reply. Br.

authority on this issue); Giannattasio v. Artuz, No. 97-civ-7606, 2000 WL 335242, at
*7 (S.D.N.Y. Mar. 30, 2000) (“In light of the Court of Appeals’ observation in Parkin,
proof of a defendant’s actions after the process has been issued is not required for an
abuse of process claim.”) (emphasis in original)).
31

28) In a general sense it is true that the criminal law protects, inter alia, certain
commercial and property rights. But the purposeful infliction of economic harm
and squelching of lawful competition are beyond the legitimate purposes of a
criminal prosecution, which is brought on behalf of the state, not a private
party. See TADCO, 700 F. Supp. 2d at 272 (denying motion to dismiss where
the complaint alleged that defendant had plaintiff arrested and charged with
trespassing “in order to intimidate and frustrate [plaintiffs] and thereby obtain
an advantage over them in the ongoing contractual and construction
disputes”); Del Col v. Rice, No. 11-cv-5138, 2012 WL 6589839, at *9.40
(E.D.N.Y. Dec. 18, 2012) (sustaining allegations that defendants unjustifiably
initiated criminal proceedings against the plaintiff for the purpose of gaining
control of plaintiff’s claim to a patent). Drawing all reasonable inferences in
Aleynikov’s favor and accepting his allegations as true, I find that the CIR
alleges the elements of abuse of process. Goldman’s motion to dismiss CIR
8
Count 6 is denied.’

Goldman also argues that Aleynikov’s allegations that Goldman acted with an
intent to do harm without justification (element two) are “threadbare recitals.” Iqbal,
556 U.S. at 678. But, as noted above, malice is pled generally throughout the
complaint and can be inferred from allegations that Goldman lacked a probable cause
or purposely relayed falsehoods to the authorities. He also alleges that Goldman
initiated the state prosecution to “make an example out of him.” (CIR ¶J 110, 132).
The second element of abuse of process is pled adequately. See TADCO, 700 F. Supp.
2d at 272.
18

32

C.

Tortious Interference with Prospective Economic Advantage
(Count 4)

The parties disagree whether New York or New Jersey law governs the
CIR Count 4, tortious interference with economic advantage.’ The distinction,
9
however, makes no difference. Aleynikov has failed to adequately plead this
claim under either state’s substantive law.
Aleynikov alleges that, between July 2009 and December 2010, he had
“business relations with prospective employers as reflected in his interviews for
programming positions.” (CIR

¶

119) As noted above, absent from the CIR are

key facts, such as the identities of those employers, their relationship to
Aleynikov, the nature of the jobs for which he allegedly interviewed, and the
prospective employers’ level of interest. There are no allegations that any of the
positions he interviewed for involved high-frequency trading. Besides the bare
allegation that he “lost job opportunities” and income because of Goldman’s
conduct, there is no allegation that any of these unidentified employers
actually offered or were likely to offer him a job. (CIR

¶J

122) Nor is there any

allegation that Goldman knew about or had reason to know about these
interviews. (Compare CIR

¶J

113 with 118-122)

Under New York law, such deficiencies are fatal to a claim of tortious
interference with prospective economic advantage. See, e.g., Plasticware, LLC v.
Flint Hills Resources, LP 852 F. Supp. 2d 398, 402-03 (S.D.N.Y. 2012) (“There
19

Under New York law, Aleynikov must allege that “(1) it had a business
relationship with a third party, (2) the defendant knew of that relationship and
intentionally interfered with it; (3) the defendant acted solely out of malice, or used
dishonest, unfair, or improper means, and (4) the defendant’s interference caused
injury to the relationship.” Carvel Corp. v. Noonan, 350 F.3d 6, 17 (2d Cir. 2003),
certified question answered, 3 N.Y.3d 182 (2004). In New Jersey, Aleynikov must allege
(1) “a reasonable expectation of economic benefit or advantage, (2) the defendant’s
knowledge of that expectancy, (3) the defendant’s wrongful, intentional interference
with that expectancy, (4) in the absence of interference, the reasonable probability that
the plaintiff would have received the anticipated economic benefit, and (5) damages
resulting from the defendant’s interference. Fineman v. Armstrong World Indus., Inc.,
g80 F.2d 171 (3d Cir. 1992) (citing Printing Mart—Morristown v. Sharp Elec. Corp., 116
N.J. 739 (N.J. 1989) and Restatement (2d) of Torts § 766B)).
33

are several deficiencies in Plaintiff’s complaint. First, Plaintiff has not
adequately alleged specific business relationships with which the Defendant
allegedly interfered.”) (emphasis in original)); Burns Jackson Miller Summit &
Spitzer v. Linder, 452 N.Y.S.2d 80, 93 (2d Dep’t 1988) (“[E]ven in [this tort’s]
most liberal formulation, the relationships must be specified, as must the
defendant’s knowledge and interference.”). And while New Jersey courts tend
be more generous at the motion to dismiss stage, the tort still requires an
allegation that the defendant knew about plaintiff’s relationship with the third
party and a proffer of facts “giving rise to some reasonable expectation of
economic advantage.” Printing Mart, 116 N.J. at 7511.20 That Aleynikov
interviewed with some unknown employers in unknown fields for an
unspecified position for which he may never have been likely to receive an offer

Aleynikov is correct that a number of New Jersey courts have ruled that a
plaintiff need not identify the specific third parties with which she was prevented from
interacting. But in these cases, the plaintiff actually alleged with some particularity
the nature of economic benefit she was wrongfully denied, and that the defendant

20

knew of that benefit. See, e.g., Church v. Dwight Co., v. SPD Swiss Precision Diagnostics
*4 (D.N.J. Dec. 16, 2010) (denying
GmBH, Civ. No. 10-453, 2010 WL 5239238, at

motion to dismiss where plaintiff alleged “ongoing and expected sales to the public at
large” and that defendant knew of plaintiff’s reasonable expectation of economic
benefit); Teva v. Pharmaceutical Indust. Ltd., v. Apotex, Inc., Civ. No. 07-55 14, 2008 WL
3413862, at *9 (D.N.J. Aug. 8, 2008) (denying motion to dismiss where plaintiff alleged
that had a “continuing, economically advantageous relationship with the supply of
carvediol for use in its carvedilol products” and defendant “knowingly interfered with
this relationship by filing lawsuits for the purpose of barring others from beginning or
continuing to supply carvedilol.”) (internal quotations omitted); Slim CD, Inc. v.
*3 (D.N.J. Aug.
Heartland Payment Sys., Inc., Civ. No. 06-2256, 2007 WL 2459349, at
24, 2007) (denying motion to dismiss where plaintiff alleged that it “could sell all or
part of [its] company to a successor or potential acquirer” and that defendant “had
knowledge of such expectations because [plaintiff] notified [defendant] that
‘[defendant’s] failure to accept [plaintiffs] software and satisfy other provisions of the
Contract threatened to undermine the sale of all or part of [plaintiff] to a successor or
potential acquirer.”); Syncosort v. Innovative Routines, Int’l, mc,. No. Civ. 04-3634,
2005 WL 1076043, at *12 (D.N.J. May 6, 2005) (denying motion to dismiss where
defendant alleged that plaintiff “induced prospective customers of defendant to breach
non-disclosure agreements they had entered into with defendant for the purpose of
learing pricing information so that plaintiff could sell its product to those consumers
at a lower price” and had offered to provide “a free copy of plaintiffs product and to
pay off any debt that customer owed to defendant” to a prospective customer).
34

at some time between July 2009 and December 2010 is not sufficient to
establish that he had a reasonable expectancy of an economic advantage.
As to CIR Count 4, then, Goldman’s motion to dismiss is granted. This
dismissal on pleading grounds is without prejudice to the filing within No wo of
an amended CIR that remedies the deficiencies of Count 4.
D.

Defamation (Count 7)

CIR Count 7 alleges the tort of defamation with respect to Goldman’s
statements in connection with the federal and state prosecutions. Aleynikov
concedes that the allegations regarding the federal prosecution are time-barred,
and they have been dismissed. See Section III.B.4, supra. I deal here with the
state aspect only.
The elements of defamation under New Jersey law are well-settled: “(1)
’
2
the assertion of a false and defamatory statement concerning another; (2) the
unprivileged publication of that statement to a third party; and (3) fault
amounting at least to negligence by the publisher.” Leang v. Jersey City Bd. of
Educ., 198 N.J. 557, 558 (2009). The CIR alleges that that Goldman relayed to
Agent McSwain “knowingly false allegations” that he “had violated the Unlawful
Duplication and Unlawful Use Statues”. (CIR

¶

95) Goldman says that this fails

to set forth the first element of defamation because it is a non-actionable
statement of opinion.
“Whether the statement is susceptible of a defamatory meaning is a
question of law for the court.” Ward v. Zelikovsky, 136 N.J. 516, 529 (1994). “In
making this determination, courts must consider three factors: (1) the content,
(2) the verifiability, and (3) the context of the challenged statement.” DeAngelis
v. Hill, 180 N.J. 1, 14 (2004). To qualify as defamatory, the statement must be
capable of being proven true or false. Mangan v. Corporate Synergies Grp.,

21

Because the elements of defamation in New Jersey and New York do not
conflict, I default to New Jersey law. Kersey v. Becton Dickinson, Co., 433 F. App’x 105,
109-110 (3rd Cir. 2011).
35

Lynch v.
Inc., 834 F. Supp. 2d 199, 204—05 (D.N.J. 2011) (quoting and citing
ents,
N.J. Educ. Assoc., 161 N.J. 152, 167 (1999)). “Certain kinds of statem
defamatory
however, denote such defamatory meaning that they are considered
example of
as a matter of law. The false attribution of criminality is a prime
2326209,
such a statement.” Ciemniecki v. Parker, Civ. No. 09-6450, 2010 WL
109 N.J.
at *9 (D.N.J. June 7, 2010) (quoting and citing Romaine v. Kallinger,
, one who
282 (1988) (internal citations and quotations omitted)). “Furthermore
ascribes to
falsely and without privilege to do so publishes a slander which
proper
another conduct, characteristics or a condition incompatible with the
r per se.”
conduct of his lawful business, trade, or profession is liable for slande
Solokay v. Edlin, 65 N.J. Super 112, 216 (App. Div. 1961).
The statement that Aleynikov committed a crime is susceptible of a
Lanham
defamatory meaning. Relying on cases involving disputes under the
Unlawful
Act, Goldman argues that its statement that Aleynikov violated the
be proven
Use and Unlawful Duplication statutes is a legal opinion that cannot
173 F.3d
true or false. See Coastal Abstract Sew., Inc. v. First Am. Title. Ins. Co.,
from a court
725, 731 (9th Cir. 1999) (“Absent a clear and unambiguous ruling
purport to
or agency of competent jurisdiction, statements by lay persons that
and not
interpret the meaning of a statue or regulation are opinion statements,
F.2d
statements of fact.”); Sandoz Pharm. Corp. v. Richardson-Vicks, Inc., 902
222, 230-3 1 (3d Cir. 1990).
But the alleged statement that “Aleynikov violated the Unlawful Use and
t is
Unlawful Duplication statutes” was made in a factual context. That contex
that Goldman was accusing Aleynikov of outright thievery. Consider, for
is
example, Smith’s statement that Jones “stole” his car. That statement
ng
susceptible of a defamatory meaning, even if Jones says that he was joyridi
an
or that he had Smith’s implied permission to borrow the car. What Goldm
Aleynikov,
was saying—accurately, it says, though Aleynikov says not—is that
an without
a successful programmer, took valuable computer code from Goldm
authorization to shop his services to a competitor. (CIR
36

¶

58, GS CC ¶J25-31)

Whether Aleynikov did that is indeed an issue of fact. That
he took the code
without authorization is a falsifiable proposition. And if false,
it has the obvious
potential to harm Aleynikov in his business, profession
and trade.
As noted above, there may be factual and legal hurdles, such
as privilege,
that Aleynikov will need to face at later stage. For now, takin
g the allegations
as true and drawing all reasonable inferences in Aleynikov’s
favor, I find that
the elements of defamation are pled. Goldman’s motion
to dismiss CIR Count 7
(to the extent it relates to statements made in connectio
n with the State
criminal proceeding) is denied.
V.

CONCLUSION
For the foregoing reasons,
1) Goldman’s motion to strike the CIR as untimely pled
is DENIED.

2) Goldman’s motion to dismiss for failure to state a claim
under
Fed. R. Civ. P. 12(b)(6) is GRANTED IN PART, DENIED IN
PART, and
ADMINISTRATIVELY TERMINATED IN PART, as follows:
(a) The motion to dismiss on statute of limitations grou
nds is
GRANTED as to CIR Counts 2 and 3, which are dismissed
with
prejudice;
(b) The motion to dismiss is GRANTED as to CIR Count 4,
which is
dismissed without prejudice to the filing within 30 days
of an amended
CIR that remedies the deficiencies of CIR Count.
(c) The motion to dismiss is DENIED as to CIR Count 7 to
the
extent it relates to statements made during the state crim
inal proceeding,
and GRANTED on consent to the extent CIR Count 7 relat
es to
statements made during the federal criminal proceeding.
(d) The motion to dismiss is DENIED as to CIR Counts 1
and 6.
(e) The motion to dismiss is ADMINISTRATIVELY TERMINATE
D
WITHOUT PREJUDICE as to CIR Count 5, and proc
eedings on CIR Cou

nt

37

York State criminal
5 are STAYED pending the outcome of the New
appeal.
nion.
An appropriate Order is filed with this Opi
Dated: October 28, 2016

KEVIN MCNULTY
United States District Judge.

38