ALEYNIKOV v. THE GOLDMAN SACHS GROUP, INC.

Filing 339

MEMORANDUM OPINION/ORDER denying 316 Motion for Reconsideration of this Courts Order (ECF no. 313) and Opinion (CIR Op., ECF no. 312), filed on October 28, 2016. Signed by Judge Kevin McNulty on 2/15/17. (DD, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SERGEY ALEYNIKOV,

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

Plaintiff,
V.

THE GOLDMAN SACHS GROUP, INC.,

MEMORANDUM OPINION and
ORDER

Defendant.

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

SERGEY ALEYNIKOV,
Counterclaim Defendant.

KEVIN MCNULTY, U.S.D.J.:
This matter comes before the court on the motion (ECF no. 316) of
Goldman, Sachs & Co. (“GSCo”) and The Goldman Sachs Group, Inc. (“OS
Group”) (together, “Goldman”) for partial reconsideration of this Court’s Order
(ECF no. 313) and Opinion (“CIR Op.”, ECF no. 312), filed on October 28, 2016.
Goldman urges that my denial of its motion to strike or dismiss the
Counterclaim in Reply (ECF no. 286) of Sergey Aleynikov, to the extent it found
that lack of probable cause was adequately alleged, is inconsistent with my
ruling in a parallel case against the federal agents, Aleynikov v. McSwairi, Civ.
No. 15-1170 (ECF nos. 38—39, as amended, ECF nos. 52—53). I am said to have
“overlooked” my own opinion, despite having discussed and distinguished it in
the CIR Opinion. Also allegedly overlooked were the “objective” nature of
1

probable cause, and a 2004 Second Circuit case. For the reasons stated herein,
the motion is denied.
The standards governing a motion for reconsideration (or reargument)
are well settled. See generally D.N.J. Loc. Civ. R. 7.1(i). Reconsideration is an
“extraordinary remedy,” to be granted “sparingly.” NL Indus. Inc. v. Commercial
Union Ins. Co., 935 F. Supp. 513, 516 (D.N.J. 1996). Generally, reconsideration
is granted in three scenarios: (1) when there has been an intervening change in
the law; (2) when new evidence has become available; or (3) when necessary to
correct a clear error of law or to prevent manifest injustice. See North River Ins.
Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995); Carmichael v.
Everson, 2004 WL 1587894, at *1 (D.N.J. May 21, 2004). Local Rule 7.1(i)
requires such a motion to specifically identify “the matter or controlling
decisions which the party believes the Judge or Magistrate Judge has
overlooked.” Id.; see also Egloff v. New Jersey Air Nat’l Guard, 684 F. Supp.
1275, 1279 (D.N.J. 1988). Evidence or arguments that were available at the
time of the original decision will not support a motion for reconsideration.
Dainiano v. Sony Music Entm’t, Inc., 975 F. Supp. 623, 636 (D.N.J. 1997); see
also North River Ins. Co., 52 F.3d at 1218; Bapu Corp. v. Choice Hotels Int’l, Inc.,
2010 WL 5418972, at *4 (D.N.J. Dec. 23, 2010) (citing P. Schoenfeld Asset
Mgmt. LLC v. Cendant Corp., 161 F. Supp. 2d 349, 352 (D.N.J. 2001)).
None of those criteria for reconsideration are met here. Nothing raised by
Goldman in its reconsideration motion was unavailable at the time of the
original decision or overlooked by the Court. The motion would be denied on
that basis alone, but I will nevertheless review the grounds briefly.
As set forth in the CIR Opinion, 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 HF’T
business; that the code was worth a billion dollars; and that it empowered the

2

person who held it to unfairly manipulate the financial markets. (CIR

¶

2, 12,

33) Applying a Rule 12(b)(6) standard, I held as follows:
Lack of probable cause, too, is adequately alleged. The CIR
alleges that the facts supplied to the investigators, as outlined
above, were knowingly false. It also alleges that these facts failed to
make out a criminal offense as a matter of law. At a later stage,
these claims may face daunting factual obstacles. In another
context, I have dismissed analogous § 1983 and Bivens malicious
prosecution allegations as against the federal agents. (See
Aleynikov v. McSwain, Civ. No. 15-1170 (ECF nos. 38—39, as
amended, 52—53). Those agents, however, enjoyed qualified
immunity, a doctrine that enables and indeed requires the Court to
dispose of claims at the motion to dismiss stage. And Goldman
here is alleged to have known its allegations were false, whereas
the agents, who were not firsthand witnesses, might plausibly
claim that they had little choice but to rely on Goldman’s
statements. See id.
(CIR

op.

28)

I did not overlook my opinion in McSwain, or rule inconsistently. The
distinctions, as I stated, are (a) that the McSwain agents, unlike Goldman,
enjoy qualified immunity, and (b) that Goldman is alleged to have knowingly
supplied them with false information, which they relied on as the basis for the
prosecution.
The court is well aware that probable cause has been termed an objective
inquiry. That doctrine is used, for example, to justify the actions of the police
on the basis of the objective facts, even if they secretly harbored some other
motivation. See, e.g., Whren u. Brown, 517 U.S. 806 (1996) (objective probable—
cause factual basis to stop car for a traffic infraction was not undermined by
the officers’ subjective intent to look for evidence of another crime).
As overlooked authority, Goldman cites Rothstein v. Carriere, 373 F.3d
275 (2d Cir. 2004). Rothstein was a post-trial challenge to a conviction based
on allegedly faulty jury instructions, not a motion to dismiss. At any rate,
nothing in Rothstein suggests that an allegedly lying witness is insulated from
liability because the investigating officer believed the witness, thereby creating
3

“objective” probable cause. The thrust of Rothstein is that even an allegedly
lying witness may be off the hook if the objective facts independently establish
probable cause:
If the criminal prosecution was otherwise supported by probable
cause, for example, the malicious prosecution claim is unavailable,
even if the accuser lied. Similarly, if the criminal proceeding was
initiated by someone else, the claim is unavailable, again, even if
the accuser lied. These limitations on the cause of action were not
designed to protect false accusers, but rather to ensure that
truthful ones are not discouraged from coming forward.
Id. at 295. That holding is intertwined with the causation element of the

malicious prosecution tort, which requires that the allegedly lying witness was
responsible for “initiating” the prosecution. As I stated in the CIR Opinion, that
is an element that must be proven:
As an allegation, that is sufficient; nothing more is required
at this stage. Such issues as whether Goldman’s information was
in fact the cause of the prosecution, whether the prosecutors’
decisions broke the chain of causation, and so on, are factual
disputes. They must await discovery and summary judgment or
trial.
(CIR Op. 28) Such an allegation may not pan out at trial; where “the criminal
charge is the culmination of a lengthy investigation involving various sources of
evidence,” it may be that the witness is not responsible, in a causal sense, for
“initiating” the prosecution. Rothstein, 373 F.3d at 295. But, as I stated, “[a]s
an allegation, [it] is sufficient.”
Nothing in my CIR Opinion is inconsistent with these statements from
Rot1-istein. The CIR alleges that knowingly false statements by Goldman were

the very substance and foundation of the criminal charges. Once again, these
are allegations only. But as allegations, they suffice under a Rule 12(b)(6)
standard.

4

ORDER
Accordingly, IT IS this 15th day of February, 2017,
ORDERED that Goldman’s motion for reconsideration (ECF no. 316) is
DENIED.

jL(rj7
KE IN MCNULTY
United States District Judge

5

7