ALEYNIKOV v. MCSWAIN et al
OPINION fld. Signed by Judge Kevin McNulty on 6/15/16. (sr, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 15-1170 (KM)
MICHAEL McSWAIN, et al.,
KEVIN MCNULTY, U.S.D.J.:
This is an action brought pursuant to Bivens v. Six Unknown Named
Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999 (1971). The
plaintiff, Sergey Aleynikov, alleges that two FBI Special Agents, Michael
McSwain and Eugene Casey, along with various John Does, violated his
constitutional rights by maliciously prosecuting him in state and federal court.
He also alleges that the treatment of his personal property violated his
Before the Court is defendants’ motion to dismiss the complaint under
R. CIV. P. 12(b)(6). (ECF no. 13) For the reasons discussed below, I will
grant defendants’ motion in part.
TABLE OF CONTENTS
Motion to Dismiss Standard
Federal Charges (Counts 1—4)
Statute of limitations
The NY and NJ statutes of limitations
The Kato rule points to NY
Initiation of proceedings
“Clearly established” violation
Allegations against Special Agent Casey
NY State Charges (Counts 6—9)
Retention of Property (Count 5)
Bivens Conspiracy (Count 10)
For purposes of this motion to dismiss only, I take the allegations of the
complaint to be true. See p.6, infra.
Sergey Aleynikov is a computer programmer who was employed by
Goldman Sachs from May 2007 through June 2009. He worked as part of a
team responsible for developing source code relating to Goldman’s high
frequency trading (“HFT”) system.
In April 2009, Aleynikov accepted an employment offer from Teza
Technologies, a start-up company based in Chicago. While he was still
employed by Goldman, Aleynikov uploaded source code from Goldman’s HFT
system to a server in Germany on two occasions; he did this on June 1 and
June 5, 2009. (ECF no. 8-2 p. 4) Aleynikov then downloaded the material from
the server to his home computer in New Jersey. (Id. p. 19) Aleynikov attempted
to delete his internet history relating to the uploaded data. (Id. p. 20)
Nevertheless, Goldman Sachs discovered Aleynikov’s uploads on June 29, and
it contacted the FBI two days later. (ECF no. 8 (“Am. Cplt.”)
Special Agent McSwain from the FBI’s New York office was assigned to
investigate Aleynikov’s conduct; Special Agent Casey is McSwain’s supervisor.
Cplt. ¶ 2) As part of his investigation into Aleynikov’s conduct, Agent
McSwain learned that Aleynikov had traveled to Chicago on July 2 and would
return on July 3, 2009. (Id.
66) When Aleynikov arrived at Newark airport on
July 3, McSwain, Casey, and a team of other FBI agents arrested him. (ECF no.
8-1 p. 6) The search of Aleynikov incident to that arrest yielded a thumb drive
and laptop containing downloaded source code. (ECF no. 8-1 pp. 9-10, 15)
McSwain interviewed Aleynikov after his arrest, and Aleynikov admitted (among
other things) that he took source code from Goldman Sachs, that he knew his
actions violated Goldman’s policies, and that he had attempted to delete the
history on his computer to cover his tracks. (ECF no. 8-1 pp. 14-16)
On July 4, 2009, a criminal complaint was filed in the Southern District
of New York charging Aleynikov with one count of violating the Economic
Espionage Act of 1996, 18 U.S.C.
1832 (“EEA”), and one count of violating the
National Stolen Property Act, 18 U.S.C.
§ 2314 (“NSPA”). (Am. Cplt. ¶ 70)
Aleynikov was later indicted on these charges.’ Before trial, Aleynikov moved to
dismiss the charges against him, arguing that these statutes did not apply to
his conduct. (Am. Cplt.
¶ 79) Judge Cote, in a lengthy written opinion, ruled
that the NSPA and EEA did apply. See U.S. v. Aleynikov, 737 F. Supp. 2d 173
(S.D.N.Y. 2010), rev’d, 676 F.3d 71 (2d Cir. 2012). Aleynikov was convicted on
both counts at trial. See U.S. v. Aleynikov, 785 F. Supp. 2d 46, 55 (S.D.N.Y.
2011), rev’d, 676 F.3d 71 (2d Cir. 2012). In post-trial motions, Aleynikov again
argued that the NSPA and EEA did not apply to his conduct, and Judge Cote
again rejected his legal arguments. Id. at 60-61. Aleynikov was sentenced to 97
months’ imprisonment. (Am. Cplt
Aleynikov appealed his convictions to the Second Circuit, relying on the
legal arguments he had made before Judge Cote. On February 16, 2012, the
United States Court of Appeals for the Second Circuit filed an order in which it
agreed with Aleynikov. It reversed his convictions and ordered him released
In addition, a third count was added for violating the Computer Fraud and
Abuse Act, 18 U.S.C. § 1030 (“CFAA”). However, this count was dismissed before trial
and is not relevant to this motion to dismiss. (See Am. Cplt. (alleging malicious
prosecution in the federal case based only on the EEA and NSPA charges)).
from custody after serving 51 weeks of his sentence. (Am. Cplt.
Second Circuit subsequently filed an opinion in which it found that although
Aleynikov had breached his confidentiality obligations to Goldman, his conduct
did not fall within the scope of the charged federal offenses. Specifically, the
Court of Appeals held that (a) intangible property such as source code does not
constitute stolen “goods,” “wares” or “merchandise” under the NSPA, and (b)
the government had failed to establish that Goldman’s high frequency trading
system was intended for interstate commerce, as required by the EEA. See U.S.
v. Aleynikov, 676 F.3d 71, 76-82 (2d Cir. 2012).
Shortly after Aleynikov’s federal convictions were overturned, the District
Attorney for New York County began investigating Aleynikov’s conduct. (Am.
81) On June 22, 2012, Aleynikov’s attorney called McSwain to request
the return of Aleynikov’s passport and other personal property that had been
retained in connection with the federal proceeding. (Id.
82) McSwain referred
Aleynikov’s counsel to the U.S. Attorney’s Office. In late June and early July,
2012, Aleynikov’s lawyer communicated with an AUSA in the Southern District
of New York about the property. (Am. Cplt.
82-84) On July 12, 2012, AUSA
Thomas Brown filed an ex parte application to Judge Cote, requesting to unseal
the materials from the federal case. The application indicated that the
materials were to be provided to the District Attorney’s Office. (ECF no. 13-3;
85)2 Judge Cote granted the application. Her order unsealing the
materials was itself unsealed on November 26, 2012. (ECF no. 13-3 p. 2)
On August 2, 2012, Aleynikov was rearrested on state charges stemming
from the same conduct that precipitated the federal prosecution. He was
On a 12(b)(6) motion, a court may consider certain materials even if they are
not attached to the complaint. See Santomenno ex rel. John Hancock Trnst v. John
Hancock Life Ins. Co. (U.S.A.), 768 F.3d 284, 291 (3d Cir. 2012)(”[D]ocuments that the
defendant attaches to the motion to dismiss are considered part of the pleadings if
they are referred to in the plaintiff’s complaint and are central to the claim.”) (internal
quotations and citation omitted); see also Southern Cross Overseas Agencies, Inc. v.
WahKwong Shipping Grp. Ltd., 181 F.3d 410, 426 (3d Cir. 1999)(”To resolve a 12(b)(6)
motion, a court may properly look at public records, including judicial proceedings, in
addition to the allegations in the complaint.”).
charged with two counts of Unlawful Use of Secret Scientific Material in
violation of N.Y. Penal Law
165.07 and one count of Unlawful Duplication of
Computer Related Material under N.Y. Penal Law
156.30(1). (See ECF no. 13—
4) Aleynikov moved to dismiss the charges on legal grounds, but the motion
was denied. (See ECF no. 13-5)3
In the state court proceeding, the jury found Aleynikov guilty of the first
count of Unlawful Use of Secret Scientific Material; failed to reach a verdict on
the other Unlawful Use count; and acquitted him on the Unlawful Duplication
charge. (See ECF no. 8-2 p. 1) After trial, Aleynikov renewed his application to
dismiss the Unlawful Use counts, arguing that his conduct was not covered by
that law. In July 2015, in another lengthy opinion, the state court granted
Aleynikov’s motion and set aside his conviction. (Id. at 24-72).4 The State has
appealed that decision, and the appeal is pending. (Am. Cplt.
The gist of Aleynikov’s allegations here is that Agent McSwain,
supervised by Agent Casey, did not properly investigate whether the federal
statutes under which Aleynikov was charged applied to his conduct. (See, e.g.,
68, 70) He contends that McSwain blindly relied upon the
complaints of Goldman Sachs and that McSwain should have known that
Aleynikov did not violate the law. Therefore, Aleynikov says, McSwain should
have known that he was violating Aleynikov’s constitutional rights by pursuing
his federal prosecution. In addition, Aleynikov alleges that upon the Second
Circuit’s decision reversing his federal convictions, McSwain took steps to
ensure that Aleynikov would be prosecuted in state court, this time under state
laws that McSwain knew did not apply. (See e.g., Am. Cplt. ¶j 20, 22, 23)
The state court did, however, partially grant Aleynikov’s motion to suppress.
Judge Zweibel found that McSwain’s arrest of Aleynikov as well as the transfer of
Aleynikov’s property to the District Attorney’s Office violated the Fourth Amendment,
and he disallowed the use of certain evidence in the state prosecution. (ECF no. 8-1
pp. 39-40, 64) The court admitted Aleynikov’s confession made at the FBI’s
headquarters but suppressed his un-Mirandized statements made earlier at the
airport. (Id. at 67-7 1)
In doing so, the court noted that “the issues in this case have never been easy”
and that it “has no doubt that the People acted in good faith in this case to prosecute
what they believed were serious crimes.” (ECF no. 8-2 p. 72)
Aleynikov also alleges that McSwain knowingly violated his constitutional
rights by orchestrating a plan to deprive Aleynikov of his property, not
returning it to him as required, but instead transferring it to the New York
District Attorney’s Office for use in his state prosecution. (See e.g., Am. Cplt.
17, 39, 82)
II. MOTION TO DISMISS STANDARD
R. CIV. P. 12(b)(6) provides for the dismissal of a complaint, in whole
or in part, if it fails to state a claim upon which relief can be granted. 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. 2005). In deciding a motion
to dismiss, a court must take all allegations in the complaint as true and view
them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.s.
490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140
F.3d 478, 483 (3d Cir. 1998); see also Phillips v. County of Allegheny, 515 F.3d
224, 231 (3d Cir. 2008) (“reasonable inferences” principle not undermined by
later Supreme Court Twombly case, infra).
FED. R. Civ. P. 8(a) does not require that a complaint contain detailed
factual allegations. Nevertheless, “a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and formulaic recitation of the elements of a cause of action will
not do.”’ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual
allegations must be sufficient to raise a plaintiff’s right to relief above a
speculative level, such that it is “plausible on its face.” See id. at 570; see also
Umland v. PLANCO Fin. Seru., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has
“facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a
it asks for more than a sheer possibility.” Iqbal, 556
U.S. at 678 (2009).
Federal Charges (Counts 1-4)
Statute of Limitations
Defendants seek dismissal on statute of limitations grounds of the
Bivens malicious prosecution claim stemming from Aleynikov’s federal
prosecution. If New Jersey’s two year statute is borrowed, the claim is barred; if
New York’s three year statute applies, it is timely. On a Rule 12(b)(6) motion, a
complaint may be dismissed on statute of limitations grounds when it is clear
from the “face of the complaint” that the limitations period has run. Benak ex
rel. Alliance Premier Growth Fund v. Alliance Capital Mgmt. L.P., 435 F.3d 396,
400 n. 14 (3d Cir. 2006). But because I find the longer, New York statute
applicable, I will deny the motion to dismiss.
The NY and NJ statutes of limitations
Federal law determines the date that a Bivens claim accrues. Peguero v.
Meyer, 520 F. App’x 58, 60 (3d Cir. 2013). A malicious prosecution claim
accrues on the date that the underlying criminal proceeding is terminated in
the plaintiff’s favor. Rose v. Bartle, 871 F.2d 331, 349 (3d Cir. 1989). In this
case, that would be February 16, 2012, when the Second Circuit overturned
Aleynikov’s convictions. Aleynikov filed this suit on February 12, 2015. That
was more than two years, but just less than three years, after the date the
claim accrued. The issue of whether the applicable statute of limitations is two
years or three years is therefore a consequential one.
The statute of limitations itself (unlike accrual) is determined by state
law. Because a Bivens claim is the “federal equivalent” of a claim under 42
§ 1983, Bivens claims, like § 1983 claims, borrow the personal injury
statute of limitations of the “applicable state.” Peguero, 520 F. Appx at 60 (“A
Bivens claim, like a claim pursuant to
§ 1983, is characterized as a personal-
injury claim and thus is governed by the applicable state’s statute of
limitations for personal-injury claims.”) (internal quotations and citations
omitted) (citing Wilson v. Garcia, 471 U.S. 261, 275, 105 S. Ct. 1938
§ 1983 claims are governed by the applicable state’s statute
Here, there are two candidates for the “applicable state”: New Jersey and
New York. Defendants argue that because Aleynikov filed this action in New
Jersey, New Jersey’s two-year statute of limitations for personal injury claims
should govern. See N.J. Stat. Ann.
§ 2A: 14-2(a). Plaintiff argues that because
the claim is for malicious prosecution, and the prosecution took place in New
York, that state’s analogous three-year statute of limitations applies. See N.Y.
§ 2 14(5).
The Kato rule points to NY
So how is the Court to identify the “applicable state”? Although the
matter is not free from doubt, I believe that a court considering a Bivens or
1983 claim should borrow the statute of limitations of the state where the
cause of action arose. Here, that state is New York.
I pause for an observation. For this issue to be consequential, three
conditions must apply: (a) the forum state must differ from the state where the
claim arose; (b) the two states’ statutes of limitations must differ; and (c) the
claim must be timely under one, but not the other. Such cases are not
common. Even the cases discussing this legal issue do not usually turn on
which state’s limitations period is chosen; most commonly, for example, the
forum state and the cause-of-action state are the same. As a result, the issue
may not be fully explored.
In Wallace v. Kato, a
§ 1983 case, the U.S. Supreme Court first stated
clearly the rule that the court should apply the statute of limitations of the
state where the cause of action arose:
Section 1983 provides a federal cause of action, but in several
respects relevant here federal law looks to the law of the State in
which the cause of action arose. This is so for the length of the
statute of limitations: It is that which the State provides for
549 U.S. 384, 387, 127 S. Ct. 1091 (2007). That formulation has been
reiterated and relied upon by the Third Circuit in precedential cases. See
Pearson v. Sec. Dep’t of Corr., 775 F.3d 598, 602 (3d Cir. 2015)(”[A1
claim is governed by the statute of limitations that applies to personal injury
tort claims in the state in which such a claim arises.”) (citation omitted); Estate
of Lagano v. Bergen County Prosecutor’s Office, 769 F.3d 850, 859 (3d Cir.
2014)(”ln determining the length of the statute of limitations for a claim arising
§ 1983, courts must apply the limitations period applicable to personal-
injury torts in the State in which the cause of action arose.”)
Bivens claims are, in general, construed in parallel to
§ 1983 claims.
Accordingly, the rule of Wallace v. Kato has been cited and quoted by district
courts within this Circuit considering Bivens claims. See Burke v. MacArthur
Civ. No. 15-6093, 2015 WL 5970725, at *4 (D.N.J. Oct. 13, 2015)(”[T]he statute
of limitations for a Bivens action, like a
§ 1983 action, is governed by the
statute of limitations for personal injury torts under state law where the injury
occurred.”) (citations omitted); Elhassan v. Goss, Civ. No. 06-1000, 2007 WL
319484, at *5 (D.N.J. Jan. 30, 2007)(holding that “[t]he statute of limitations
for a Bivens action, is determined by the statute of limitations for a personal
injury action in the state where the incident forming the basis of the Complaint
occurred”) (citations omitted).
Defendants cite two non-precedential Third Circuit Bivens cases, dating
from after Wallace v. Kato, that refer to the statute of limitations of the “forum
state.” In Brown v. Tollackson, the Third Circuit stated the rule thus:
The statute of limitations for a Bivens claim, as for claims arising
under 42 U.S.C. § 1983, is borrowed from the forum state’s
personal injury statute. See Kost v. Kozakiewicz, 1 F.3d 176, 190
(3d Cir. 1993); King v. One Unknown Fed. Corr. Officer, 201 F.3d
910, 913 (7th Cir. 2000) (same statute of limitations applies to
actions under Bivens and § 1983).
314 F. App’x 407, 408 (3d Cir. 2008) (emphasis added). See also Hughes v.
Knieblher, 341 F. App’x 749, 752 (3d Cir. 2009) (“Like civil rights claims
See also Leonard v. City of Pittsburgh, 570 F. Appx 241, 243 (3d Cir. 2014)(”The
statute of limitations for a claim under § 1983 is imported from the personal injury
tort law of the state in which the injury occurred.”) (citation omitted); Kuhnle Bros.,
Inc. v. Cnty. of Geauga, 103 F.3d 516, 519 (6th Cir. 1997) (“ETJhe proper limitations
period for a § 1983 action is the limitations period for personal injury actions in the
state in which the § 1983 claim arises.”); Faile v. Geary, 958 F.2d 376 (9th Cir. 1992)
(“Federal courts apply the statute of limitations of the state in which the claim arises
for 42 U.S.C. § 1983 claims.”).
brought pursuant to 42 U.S.C.
§ 1983, the statute of limitations for
claims is taken from the forum state’s personal injury statute.”) (emphasis
I do not read Brown and Hughes as signaling a departure from the
principle, stated in Wallace v. Kato, that the court must apply the statute of
limitations “of the state in which the cause of action arose.” As is so often the
case, in Brown and Hughes the forum state was the state where the cause of
action arose. So it was literally, if not doctrinally, true that forum law applied.
Because the distinction made no difference in those cases, it was not
considered or discussed.
There is a certain awkwardness in “distinguishing” Brown and Hughes on
the basis that the forum and cause-of-action state were identical. After all, that
seems also to have been the scenario in Wallace v. Kato, supra, and the
precedential Third Circuit cases following it. Kato was a civil rights action
based on an arrest in Chicago, brought in the U.S. District Court for the
Northern District of Illinois. Pearson, supra, was a civil rights action brought
by a Pennsylvania state prisoner in the U.S. District Court for the Western
District of Pennsylvania. 775 F.3d at 600—01. Estate of Lagano, supra, involved
Both Brown and Hughes cite as authority for the “forum state” rule the Third
Circuit case of Kost v. Kozakiewicz, 1 F.3d 176, 190 (3d Cir. 1993). Kost, however, long
predated the 2007 Supreme Court case of Wallace v. Kato. In Kost, moreover, the
forum state and the state where the harm occurred were the same: Pennsylvania. The
only issue was whether to apply Pennsylvania’s personal injury or contract statute of
Brown’s reliance on King v. One Unknown Fed. Corr. Officer reinforces the
notion that Brown was not truly signaling a departure from the rule that the statute of
limitations is borrowed from the state where the claim arose. 201 F.3d 910, 913 (7th
Cir. 2000) (“The statute of limitations for both § 1983 and Bivens actions is
determined by the statute of limitations for personal injury actions in the state where
the incident forming the basis of the claim occurred.”). Brown cites King as support,
without comment; nothing in Brown suggests that, by choosing the “forum” language,
it intended to distinguish King.
549 U.S. at 387, 127 S. Ct. at 1094. The Supreme Court in Kato did not
actually specify the district in which the case was filed. The district court case,
however, is reported at 472 F. Supp. 2d 942 (N.D. Ill. 2004).
an allegedly unconstitutional search of a New Jersey home, and was brought in
the U.S. District Court for the District of New Jersey. 769 F.3d at 752, 759.
So the point cannot be pressed too far. Nevertheless, if the identity
between the forum state and the cause-of-action state does not distinguish
Brown and Hughes, it helps to explain them. The issue simply did not matter,
and it was not discussed. These non-precedential cases do not furnish me with
a substantial basis to simply set aside considered language in a U.S. Supreme
Court case, quoted and relied on in subsequent, precedential Third Circuit
cases. Perhaps the forum-law rationale would have produced the same result
in Wallace v Kato and the subsequent precedential Third Circuit cases. That
does not mean that is was the rationale of those cases.
Lacking any strong contrary indication, I must conclude that the
Supreme Court meant what it said in Wallace v. Kato. The rationales stated in
subsequent precedential Third Circuit cases establish that they, too, took Kato
at its word. Thus Pearson, supra, observed the doctrinal distinction; it applied
the statute of limitations of Pennsylvania, but riot because Pennsylvania was
the forum state: “As Pearson’s
§ 1983 claims arise in Pennsylvania, we must
apply Pennsylvania’s statute of limitations.” 775 F.3d at 602 (emphasis added).
Likewise, Lagano, supra, upheld application of New Jersey’s two-year
limitations period, not because New Jersey was the forum state, but because
that was the statute of limitations “[un New Jersey, where Lagano’s claim
arose.” 769 F.3d at 859 (emphasis added). I consider myself bound by that
For the reasons stated above, cases in which this issue makes a
difference are comparatively rare. What little district court authority exists,
however, favors the rule I adopt today.
For example, in Burke, supra, Judge Renée Bumb considered a case in
which the plaintiff, a federal prisoner incarcerated in New Jersey, asserted in
New Jersey federal court a Bivens claim against the Assistant U.S. Attorney
who prosecuted him in Chicago. 2015 WL 5970725, at *1. Judge Bumb cited
the rule of Wallace v. Kato that the court must apply the statute of limitations
*4 She observed that
“under state law where the injury occurred.” Id. at
“Burke’s injuries arose out of the criminal proceedings against him in the
Northern District of Illinois. In Illinois, the statute of limitations for personal
injury torts is two years. Kelly v. City of Chicago, 4 F.3d 509, 511(7th
Cir. 1992); 735 ILCS 5/13—202.” Id. She therefore applied the Illinois two-year
statute of limitations and dismissed the claim. Id.
In Cedillo v. TransCorAmerica, LLC, 131 F. Supp. 3d 734, 743-44 (M.D.
Tenn. 2015), a
§ 1983 action, the plaintiffs sued TransCor, a government
contractor that transported prisoners. The prisoner plaintiffs asserted claims
based on lengthy delays and substandard conditions of transportation between
institutions. The claims arose from trips to “six different states, which ha[d]
different statutes of limitations of varying lengths.” Id. The court separately
applied the statute of limitations of each individual state to the particular claim
involving that state.
Although Burke did not say so, New Jersey law probably would have produced
the same result. See also Elhassan v. Goss, supra (applying the Kato rule and applying
foreign state’s statute of limitations, but noting that the result would have been the
same under forum state’s law).
The Cedillo court’s analysis—a sixfold application of Kato—is worth
quoting at length:
Both the Sixth and Ninth Circuits look to the statute of limitation of the
state in which the claim arose when presented with Section 1983 claims.
[citing Kuhnle, supra; Faile, supra]. A Section 1983 claim arises “when
the plaintiff has a complete and present cause of action, that is, when
the plaintiff can ifie suit and obtain relief.” [citing Wallace v. Kato, supra].
As has been made clear by the history of this case, the length of each
Plaintiff’s trip with Defendants is an integral aspect of his claim... .It
follows that a Plaintiffs cause of action is only complete at the end of the
trip and his claim “arises” in the terminus state.
The relevant statute of limitations is therefore that of the state in
which each Plaintiffs trip with Defendants ended. The states and
applicable statutes of limitations are: California/two years for Plaintiffs
Cedillo and Houston; New Jersey/two years for Plaintiffs Greenemeier
and Amo; South Carolina/three years for Plaintiff Cleaves; New
York/three years for Plaintiff Wright; Wisconsin/six years for Plaintiff
Roussell; and Michigan/three years for Plaintiff Hugall.
Cedillo, 131 F. Supp. 3d at 744.
In short, the courts have applied the Kato rule, both in cases where it
makes no difference and in cases (like this one) where it does. I will follow suit,
and apply the statute of limitations of the state in which the cause of action
arose. I find that the applicable state is New York.
This constitutional malicious prosecution tort consists of the initiation of
criminal proceedings without probable cause, resulting in a deprivation of
liberty, followed by termination of the criminal case in the plaintiff’s favor.’
The cause of action is not complete until such termination; for example,
plaintiff cannot sue, and the statute of limitations does not begin to run, until
then. See Rose, 871 F.2d at 349. The malicious prosecution claim therefore
“arises” at the time of such termination.
Aleynikov’s malicious prosecution claim is based on a federal prosecution
initiated by the U.S. Attorney’s Office for the Southern District of New York. All
decisions about whether and how to prosecute him were made by the U.S.
Attorney’s Office in New York. Any decision about whether probable cause
existed, too, was made there. Aleynikov sues two FBI agents based on their
part in causing that New York federal prosecution to be brought. Aleynikov was
tried and convicted in the U.S. District Court for the Southern District of New
York, and he served 51 weeks’ imprisonment following that conviction.” The
favorable termination of proceedings—the event that causes a malicious
prosecution claim to “arise”—occurred in New York, when Aleynikov’s
conviction was overturned by the U.S. Court of Appeals for the Second Circuit.
Malicious prosecution under 42 U.S.C. § 1983 requires that “(1) the defendant
initiated a criminal proceeding; (2) the criminal proceeding ended in [the plaintiffs]
favor; (3) the defendant initiated the proceeding without probable cause; (4) the
defendant acted maliciously or for a purpose other than bringing the plaintiff to
justice; and (5) the plaintiff suffered deprivation of liberty consistent with the concept
of seizure as a consequence of a legal proceeding.” Halsey v. Pfeiffer, 750 F.3d 273,
296—97 (3d Cir. 2014) (citing Johnson v. Knorr, 477 F.3d 75, 82 (3d Cir. 2007)). Accord
Jocks v. Tavernier, 316 F.3d 128, 136 (2d Cir. 2003). The elements of a Bivens
malicious prosecution tort are the same. See Tefair v. Tandy, Civ. No. 08-731, 2008
WL 4661697, at *10 (D.N.J. Oct. 20, 2008) (citing Johnson); Pellegrino v. US. Transp.
Sec. Admin., 855 F. Supp. 2d 343, 362 (E.D. Pa. 2012).
The record does not state whether the sentence was served in an institution
located in New York State.
Defendants highlight certain events that occurred in New Jersey:
Aleynikov’s arrest at Newark Airport, the search of him incident to that arrest,
and the search of his New Jersey home. (See Am. Cplt.
57) If Aleynikov’s
cause of action were confined to the wrongful arrest or search, I might be more
inclined to agree with defendants. The claim here, however, is malicious
prosecution; the gist of it, by definition, lies in the ultimately unsuccessful
federal prosecution of Aleynikov in New York.
I therefore hold that, under the rule of Wallace v. Kato, the Bivens
malicious prosecution cause of action arose in New York, and requires that I
apply New York’s three year statute of limitations.
Defendants offer miscellaneous arguments for setting aside the Kato
analysis and applying some other rule or principle. I am unpersuaded.
Defendants point out that Aleynikov, a New Jersey resident, chose to file
suit in New Jersey. The amended complaint’s venue allegations, too, highlight
New Jersey events: Aleynikov’s arrest and the two searches. (See Am. Cplt.
57) The venue allegations of the complaint do not settle the relevant question:
where the cause of action arose. In Cedillo, for example, the case was filed in
the Northern District of California, but venue was transferred to the Middle
District of Tennessee for reasons of convenience. Cedillo held that, under the
rule of Kato, the transfer of forum did not matter: “As a threshold matter, the
fact that this case originated in the Northern District of California has little
bearing on the statute of limitations analysis.” 131 F. Supp. 3d at 744.
Of course, even a case arising elsewhere must have some connection to
the forum, or venue could not be laid there at all. A case may be brought, for
example, in a district where a defendant resides, where a “substantial part” of
the events giving rise to the claim occurred, or where plaintiff resides. See
generally 28 U.S.C.
1391. Indeed, venue may be permissible in more than
one state. The venue analysis is distinct from, and therefore is no substitute
for, the court’s analysis and identification of the state where the claim arose.
Defendants next suggest that general federal choice of law principles
require that Kato be set aside. The argument runs like this: Because a Bivens
claim is a federal cause of action, a federal common law choice of law rule must
be used to resolve any choice of law issues. See San Lucio, S.r.l. v. Import &
Storage Services, LLC, Civ. No. 07-3031, 2009 WL 1010981, at *3 (D.N.J. April
15, 2009) (“In a federal question case, a district court must apply federal
common law choice of law rules to determine which jurisdiction’s law applies.”).
This case arises from facts that occurred in both New York and New Jersey, a
classic choice of law dilemma. Under certain federal choice of law rules, the
forum state’s statute of limitations should apply unless the plaintiff
demonstrates that the application of the forum’s limitations period would
“seriously frustrate” the policy underlying the federal cause of action or “work
severe hardship to the litigants.” Consol. Express, Inc. v. New York Shipping
Ass’n, Inc., 602 F.2d 494, 507-08 (3d Cir. 1979), vacated on other grounds, 448
U.S. 902 (1980).
On this issue, all of the cases cited by defendants arise, not from Bivens
§ 1983 claims, but from claims created by federal statutes such as the
LMRA or ERISA. See Consol. Express, supra (LMRA); Gluck v. Unisys Coip., 960
F.2d 1168 (3d Cir. 1992) (ERISA); Eichleay Corp. v. International Ass’n of
Bridge, Structural and Ornamental Iron Workers, 944 F.2d 1047, 1060 (3d Cir.
199 1)(NLRA). In such cases, the courts, lacking any other guidance, began
from the default assumption that the statute of limitations to be borrowed is
that of the forum state. Consol. Express, 602 F.2d at 506 (noting that the court
was operating in “a vacuum” without an express limitations period); Gluck, 960
F.2d at 1180 (starting from the “general rule” applying the forum state’s statute
of limitations under federal choice of law principles); Eichlaey, 944 F.2d at
1062. The parties have cited no case in which courts have applied federal
common law conflict of laws principles to a Bivens action.’
See ECF no. 13-1 (“Def. SJ Br.”) p.8 n.3 (“We realize that all of the foregoing
cases involved a federal statutory cause of action lacking a limitations period. We are
True, Section 1983, like ERISA or LMRA, is a federal statute, and Bivens
is a parallel implied cause of action. Like other federal statutes, these civil
rights causes of action lack an explicit limitations provision and must borrow
one from state law. But we are not operating in a “vacuum.” As discussed
above, under Kato these civil rights causes of action have their own, dedicated
rule about which state’s statute should be borrowed. The policy-dependent,
federal common law default principle cited by defendants seems to be a gapfiller, not a strong, independent principle. I do not find it appropriate to apply it
when the case law specifically applicable to
§ 1983 and Bivens actions is to the
contrary. In short, the application of the statute of limitations of the state
where the claim arose is the federal rule of choice that applies here.’
It is very far from evident on the face of the complaint that plaintiff’s
malicious prosecution claims arising from his federal prosecution are time
barred. Benak, 435 F.3d at 400 n. 14. The parties agree that if New York’s three
year statute applies, then the claim is timely. Finding that it does apply, I
therefore deny the motion to dismiss on statute of limitations grounds.
Defendants argue that Counts 1—4 are barred by qualified immunity.
“[Qjualified immunity shields government officials from civil liability as long ‘as
their conduct does not violate clearly established statutory or constitutional
rights of which a reasonable person would have known.” McGreevy v. Stroup,
413 F.3d 359, 364 (3d Cir. 2005) (quoting Harlow v. Fitzgerald, 457 U.S. 800,
818, 102 S. Ct. 2727 (1982)).
Qualified immunity issues (such as whether a violation was “objectively
apparent” under the circumstances at the time) may often require the kind of
aware of no case addressing the choice of law issue in the context of a Bivens claim (or
any other federal implied cause of action).”).
The distinction may be that most federal statutory causes of action are created
from whole cloth by Congress. By contrast, civil rights causes of action, like this one
for malicious prosecution, are essentially federalizations of traditional state-law torts.
Thus it makes sense that the statute of limitations would follow the tort. I offer this as
speculation; it makes no difference to the result.
factual context that is available only on summary judgment or at trial.
Nevertheless, when a qualified immunity issue is raised on a motion to dismiss,
the Court is obligated to address it. “‘[U]nless the plaintiffs allegations state a
claim of violation of clearly established law, a defendant pleading qualified
immunity is entitled to dismissal before the commencement of discovery.”’
Thomas v. Independence Twp., 463 F.3d 285, 291 (3d Cir. 2006) (quoting
Mitchell v. Forsyth, 472 U.S. 511, 526, 105 S. Ct. 2806 (1985)). As Thomas
implies, at the pleading stage such a clear violation need only be alleged, not
proven. “The focus of the qualified immunity inquiry is on the allegations
Lagano, 769 F.3d at 859.
The qualified immunity analysis has two parts:
(1) The court must “determine whether the facts, and inferences drawn
therefrom, taken in the light most favorable to the plaintiff, establish that the
official’s conduct violated a constitutional right.” McGreevy, 413 F.3d at 364
(citing Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151 (2001)). This step is
functionally equivalent to the standard on a Rule 12(b)(6) motion to dismiss.
(2) The court must “determine whether, as a legal matter, the right that
the defendant’s conduct allegedly violates was a clearly established one, about
which a reasonable person would have known.” Id. (citing Gruenke v. Sez, 225
F.3d 290, 298 (3d Cir. 2000)). This step requires “that in light of preexisting
law, the unlawfulness of the official’s conduct was reasonably and objectively
apparent.” McGreevy, 413 F.3d at 366 (citing Wilson v. Layne, 526 U.S. 603,
615, 119 S. Ct. 1692 (1999)). See also Hope v. Pelzer, 536 U.S. 730, 739, 122
S. Ct. 2508 (2002).
The court has discretion to analyze the steps in either order. Pearson v.
Callahan, 555 U.S. 223, 236, 129 5. Ct. 808 (2009) (partially overruling
Saucier, supra, and no longer requiring courts to determine issues (1) and (2) in
that order). I consider 1, then 2, but that choice is fairly arbitrary; the
reasonableness of the officer’s perception of the law, for example, is essential to
A viable malicious prosecution claim, whether under
§ 1983 or Bivens,’
requires that “(1) the defendant initiated a criminal proceeding; (2) the criminal
proceeding ended in [the plaintiffs] favor; (3) the defendant initiated the
proceeding without probable cause; (4) the defendant acted maliciously or for a
purpose other than bringing the plaintiff to justice; and (5) the plaintiff suffered
deprivation of liberty consistent with the concept of seizure as a consequence of
a legal proceeding.” Halsey v. Pfeiffer, 750 F.3d 273, 296—97 (3d Cir. 2014)
(citing Johnson v. Knorr, 477 F.3d 75, 82 (3d Cir. 2007)).
a. Initiation of proceedings
Defendants contest the first element of a malicious prosecution claim,
i.e., the defendant’s initiation of criminal proceedings. Although criminal
proceedings are typically initiated by prosecutors, liability may attach to a law
enforcement officer who “influenced or participated in the decision to institute
criminal proceedings.” Halsey, 750 F.3d at 297. For example, liability exists
where investigators “conceal and misrepresent material facts” to the
prosecutor, and such misconduct is a “significant cause of the prosecution.” Id.
at 297 & n.22;’ see also Hartman v. Moore, 547 U.S. 250, 263, 126 S. Ct.
1695 (noting that a malicious prosecution plaintiff cannot establish the
necessary causal chain if the decision to prosecute was independent of the
As discussed supra, a Bivens claim is the federal equivalent of a § 1983 claim,
and requires federal rather than state government action. In general, “the analysis
established under one type of claim is applicable under the other.” Collins v. F.B.I.,
Civ. No. 10-03470, 2011 WL 1627025, at *6 (D.N.J. April 28, 2011). The parties also
assume, as do I, that a Fifth Amendment malicious prosecution claim would be
similar. (See Def. SJ Brf. p. 15; ECF no. 20 (“Opp. Brf.”) p. 32) One possible distinction
might relate to the fifth element, a deprivation of liberty. (See Def. SJ Brf. p. 15). The
Fourth Amendment protects against a seizure that is warrantless or unreasonable; it
secures “[t]he right of the people to be secure in their persons, houses, papers, and
affects, against unreasonable searches and seizures.” U.S. Const. Amend. IV. The Fifth
Amendment protects against a deprivation of liberty without due process; it provides
that no person shall “be deprived of life, liberty, or property, without due process of
law.” U.S. Const. Amend. V. The distinction is not important for present purposes.
Halsey declined to decide “how strong the connection must be between a police
officer’s misconduct and the defendant’s eventual prosecution” for liability to attach.
750 F.3d at 297 n.22.
misconduct) (citing Dellums v. Powell, 566 F.2d 167, 192-93 (D.C. Cir. 1977));
Peterson v. Bemardi, 719 F. Supp. 2d 419, 431 n.12 (D.N.J. 2010) (in
malicious prosecution case, plaintiff must demonstrate “that the misconduct
significantly contributed to the decision to prosecute”) (citation omitted).
Here, Aleynikov sues two investigating agents, FBI Special Agent
McSwain and his supervisor.’ Plaintiff alleges that McSwain engaged in
misconduct that meets the standard of substantial involvement:
Agent McSwain falsely attested to members of the United States
Attorney’s Office for the Southern District of New York
the decision to indict
successful attempt to improperly influence
Plaintiff and continue his malicious Federal Prosecution, that: (a)
Aleynikov had stolen “the entire platform” of confidential trade
secret computer source code Goldman Sachs used to conduct HF’T;
(b) the allegedly stolen source code was worth “a billion dollars”; (c)
Goldman Sachs could suffer immediate and irreparable harm as a
result of the alleged theft; and (d) there was a danger that the
allegedly stolen source code could be used to “manipulate markets
in unfair ways”
33; see also
12 (alleging that McSwain falsely told prosecutors
that Plaintiff transported “goods, wares, or merchandise” in interstate
commerce in violation of the NSPA and that plaintiff had stolen a trade secret
included in or related to a “product produced for or placed in interstate or
foreign commerce” in violation of the EEA)).’
Plaintiff does not sue the prosecutors involved, presumably because they would
assert the defense of absolute immunity. See Imbler v. Pachtman, 424 U.S. 409, 96 S.
Ct. 984 (1976); Kulwicki v. Dawson, 969 F.2d 1454, 1463 (3d Cir. 1992).
Plaintiff also argues that McSwain is responsible for initiating the federal
prosecution against Aleynikov because he signed the criminal complaint. However, it
appears that the U.S. Attorney’s Office was heavily involved in preparing the
complaint. See ECF no. 8-1 p. 17 (stating that the U.S. Attorney’s office drafted the
complaint); ECF no. 13-6 p. 2 (reflecting that AUSA Joseph Facciponti co-signed it). So
this, although alleged, is also far from a foregone conclusion. See Harper v. City of Los
Angeles, 533 F.3d 1010, 1027 (9th Cir. 2008)(unless the presumption of prosecutorial
independence is rebutted, “[fjiling of a criminal complaint immunizes investigating
because it is presumed that the prosecutor filing the complaint exercised
independent judgment in determining that probable cause for an accused’s arrest
exists at that time”) (internal quotations and citation omitted); see also Hartman, 547
U.S. at 263 (“[t]his presumption that a prosecutor has legitimate grounds for the
actions he takes is one we do not lightly discard....”).
I am mindful of factors that call McSwain’s initiation of the prosecution
into doubt. For example, upon his arrest, Aleynikov confessed that he had
taken the source code from Goldman Sachs (while denying illegality). Indeed,
Aleynikov had the relevant source code in his possession. McSwain’s
characterization of the volume or value of the information (i.e., that it was
worth “a billion dollars” or constituted Goldman’s “entire platform”) would not
undermine probable cause unless it fell below the minimal threshold of $5,000.
See 18 U.S.C.
§ 2314 (NSPA applies to goods worth at least $5000); 18 U.S.C. §
1832 (EEA sets no value threshold).
Nevertheless, I assume (as I must) that McSwain made the false
statements as alleged in the amended complaint.’ These contentions
potentially raise issues of fact that cannot be resolved on a motion to dismiss. I
therefore assume arguendo that McSwain could be regarded as having initiated
b. Probable cause
The larger issue with Aleynikov’s malicious prosecution claim relates to
the third, probable cause element. “Probable cause exists whenever reasonably
trustworthy information or circumstances within a police officer’s knowledge
are sufficient to warrant a person of reasonable caution to conclude that an
offense has been committed by the person being arrested.” United States v.
Myers, 308 F.3d 251, 255 (3d Cir. 2002) (citing Beck v. Ohio, 379 U.S. 89, 91,
85 S. Ct. 223 (1964)). Probable cause thus has a factual and a legal
component, corresponding to the “information” and the “offense.”
For the reasons stated in subsection (a), immediately preceding, the
factual exaggerations alleged in the amended complaint do not detract from a
finding of probable cause. The existence of a statutory violation did not depend,
for example, on whether the code was actually worth $1 billion or constituted
Goldman’s entire HFI’ platform.
Defendants dispute plaintiff’s version of when and by whom these statements
were made. (See ECF no. 26 (“Reply Brf.”) p. 10 n.3.)
The focus here is rather on whether the agent was warranted in believing
that a criminal offense was committed as a matter of law. The Second Circuit
reversed Aleynikov’s conviction, holding that it was premised on an incorrect
view of the law. Even assuming that Aleynikov misappropriated confidential
information, said the Second Circuit, his conduct was not prohibited by NSPA
and EEA, the particular federal statutes at issue. The probable cause issue,
however, is slightly different; an investigator may possess probable cause based
on a reasonable mistake as to the law.
In Heien v. North Carolina, the Supreme Court held that a reasonable
mistake of law could support a finding of reasonable suspicion sufficient to
justify a traffic stop.
officer’s mistake about the
135 S. Ct. 530, 524 (2014) (“Because the
law was reasonable, the stop in this case was
lawful under the Fourth Amendment.”). That holding has been extended to the
context of probable cause. See Cahaly v. Larosa, 796 F.3d 399, 408 (4th Cir.
2015)(”[O]fficers may have probable cause to arrest based on ‘reasonable
mistakes of law”) (quoting Heien); JMäck LLC v. Leonard, Civ. No. 13-808,
2015 WL 519412, at *9 (S.D. Ohio Feb. 9, 2015)(expressing “no reservation in
extending Heien’s rationale to the probable cause analysis, especially given that
the Supreme Court’s decision is based in part on nineteenth century precedent
that it characterized as establishing the proposition that a mistake of law can
support a finding of probable cause”) (citation omitted); see also US. v. Diaz,
122 F. Supp. 3d 165, 174-75 (S.D.N.Y. 2015).
I am constrained to find that at the time of Aleynikov’s prosecution, a
belief that he had violated the NSPA and EEA constituted a reasonable mistake
of law. Trained prosecutors accepted the theory of prosecution. More to the
point, a federal district judge twice analyzed and accepted it. That it was
ultimately rejected by the Second Circuit does not imply that, from the point of
view of the agent at the time, there was not probable cause to support the
federal charges. I further analyze the reasonableness of the agents’ view of the
law in the following subsection.
Because the agent’s presentation of the case for prosecution was
reasonably based on facts admitted by Aleynikov and a reasonable, even if
incorrect, view of the law, I cannot find that probable cause was lacking. Based
on the analysis of this, the first component of the qualified immunity analysis, I
would dismiss Counts 1—4.
“Clearly established” violation
It is not strictly necessary to proceed to the second step of the qualified
immunity analysis: whether the federal agents violated any “clearly
established” rule of law. I will, however, discuss it, because the “reasonable
mistake” doctrine, see supra, and the “clearly established” inquiry are
intertwined, and the latter provides an alternative basis for dismissal.
Even where a violation is established, qualified immunity protects
government officials from liability for damages as long as their conduct does
not violate “clearly established statutory or constitutional rights of which a
reasonable person would have known.” Pearson v. Callahan, 555 U.S. 223,
231, 129 5. Ct. 808 (2009) (quoting Harlow, 457 U.S. at 818). The error may
relate to the law, the facts, or some mixture of the two. Id. (citing Groh v.
Ramirez, 540 U.S. 551, 567, 124 S. Ct. 1284 (2004) (Kennedy, dissenting); Butz
v. Economou, 438 U.S. 478, 507, 98 S. Ct. 2894 (1978)(qualified immunity
covers “mere mistakes in judgment, whether the mistake is one of fact or one of
law”)). “Qualified immunity protects ‘all but the plainly incompetent or those
who knowingly violate the law.”’ Ray v. Twp. of Warren, 626 F.3d 170, 173 (3d
Cir. 2010) (quoting Malley v. Briggs, 475 U.S. 335, 341, 106 S. Ct. 1092
(1986)). As long as an official reasonably believes that his or her conduct
complies with the law, qualified immunity will shield the official from liability.
Sharp v. Johnson, 669 F.3d 144, 159 (3d Cir. 2012) (citation omitted).
Aleynikov urges that McSwain’s belief that his conduct violated the NSPA
and EEA was “objectively and patently unreasonable.” (Opp. Brf. p. 25)
(emphasis in original). At the time of Aleynikov’s prosecution, he says, the
application of the NSPA to intangible property “was foreclosed as a matter of
law by controlling Supreme Court and Second Circuit precedent.” (Id. p. 23)
Similarly, he adds, the notion that Goldman’s HFT’ platform was “produced for
or placed in interstate or foreign commerce” under the EEA “was foreclosed as
a matter of law by the statute’s plain language and longstanding maxims of
statutory construction.” (Id. p. 25)
I cannot agree. Plaintiff is correct by definition that the NSPA and EEA
did not, in fact, apply to Aleynikov’s conduct—the Second Circuit has now so
ruled. But the Second Circuit’s decision does not necessarily establish that
an officer in McSwain’s position would have been unreasonable believing that
Aleynikov violated these statutes. The U.S. Attorney’s Office for the Southern
District of New York—lawyers (unlike McSwain) who prosecuted the case to
trial—thought so. So did the jury who convicted him (based on the District
Judge’s instructions as to the applicable law). District Judge Cote considered
plaintiffs arguments about the inapplicability of the NSPA and EEA both before
trial and in post-trial motions. That learned Senior Judge, experienced in
criminal matters, wrote two opinions upholding the indictment and verdict
against Aleynikov’s legal challenges. Nor were these perfunctory or offhand
rulings; they are cogently based on existing authority, and they make
reasonable arguments for distinguishing certain of the cases later relied on by
the Second Circuit. See Aleynikov, 737 F. Supp. 2d at 177-190; Aleynikov, 785
F. Supp. 2d at 60-6 1. True, Judge Cote’s decision was ultimately overruled by
the Second Circuit. But this is, on its face, an issue of law on which
reasonable minds could and did differ.
In doing so, the Second Circuit stated that “Aleynikov should have known [his
conduct] was in breach of his confidentiality obligations to Goldman, and was
dishonest in ways that would subject him to sanctions; but he could not have known
that it would offend this criminal law or this particular sovereign.” Aleynikov, 676 F.3d
It happens. See Aleynikov v. Goldman Sachs Grp., Inc., 765 F.3d 350 (3d Cir.
2014), reversing 2013 WL 5739137 (D.N.J. Oct. 22, 2013) (McNulty, J.).
Subsequent events, of course, do not bear on the agents’ knowledge at the time.
To complete the story, however, I note that after the Second Circuit’s ruling, Congress
amended the EEA to clarify its intent that it cover conduct like Aleynikov’s. See US. v.
Agrawal, 726 F.3d 235, 244 n.7 (2d Cir. 2013)(”Alenikov’s identification of a
congressional intent to limit the reach of the EEA has since been disavowed by
Despite this context, plaintiff basically says that Agent McSwain should
have known better. Aleynikov asks me to hold McSwain responsible for a
flawed legal theory that was endorsed by numerous lawyers and twice explicitly
upheld by a federal district judge before an appellate panel ultimately ruled the
other way. On this record, I cannot find that at the time of Aleynikov’s
prosecution it was objectively unreasonable for an agent to believe that the
NSPA and EEA applied to his conduct. See Marcavage v. National Park Service,
666 F.3d 856, 859 (3d Cir. 2012)(finding that disagreement among judges
“indicate[dJ” that the constitutional right at issue “was not clearly established”).
No binding authority of which a reasonable agent would have known
clearly established that the statutes did not cover this conduct. Accordingly, I
find that McSwain is entitled to qualified immunity as to Counts 1-4.
Allegations against Special Agent Casey
Special Agent Casey, McSwain’s supervisor, is also named as a defendant
in connection with Aleynikov’s federal prosecution. Plaintiff alleges that Casey
should be liable for malicious prosecution because he had personal knowledge
of, directed, and acquiesced in, the malicious prosecution of Aleynikov. (See
2, (alleging that Casey assigned McSwain to Aleynikov’s case);
Congress itself which quickly amended the EEA to remove the purportedly limiting
language and to clarify its intent to reach broadly in protecting against the theft of
Plaintiff emphasizes the subjective knowledge of Agent McSwain at the time of
Aleynikov’s arrest, including his testimony during a suppression hearing in connection
with the state prosecution, in which he stated that he had not read the EEA before
Aleynikov’s arrest. (See Opp. Brf. pp. 27-28) However, the Court in Heien stated that
the mistake of law must be “objectively reasonable,” meaning that “[wie do not
examine the subjective understanding of the particular officer involved.” (emphasis in
original) (citation omitted).
Plaintiff lists Casey as a defendant (in addition to McSwain and John Does) only
in Count 1. (See Am. Cplt. p. 29) The remaining counts list only McSwain and the
John Does. (See id. pp. 31—41) Plaintiff’s briefing, however, discusses Casey in
connection with other counts. (See, e.g., Opp. Brf. p. 32 (“Agent McSwain, supervised
also violated [Aleynikov’s] Fifth Amendment right to procedural due
by Agent Casey
process.”)). I will assume for purposes of discussion that Aleynikov intended to include
Casey as a defendant in Counts 1—4, the malicious prosecution claims arising from the
federal prosecution. (See Am. Cplt. pp. 3-5)
(alleging that Casey granted McSwain’s request to initiate an investigation of
¶ 68 (“Agents McSwain and Casey substituted blind reliance on
Goldman Sachs, an interested party, for any meaningful investigation of the
facts....”)). I have already found that the allegations relating to McSwain’s
misconduct are deficient; allegations of Casey’s knowledge and acquiescence in
such misconduct fall with them. The claims against Casey are dismissed for
the same reasons Counts 1—4 are dismissed against McSwain.
NY State Charges (Counts
Counts 6—9 assert malicious prosecution in relation to the New York
state charges that followed the dismissal of the federal charges. Aleynikov
alleges that Agent McSwain, especially since he now knew the basis for the
federal dismissal, should have been aware of the flaws in the parallel state
charges, but nevertheless vengefully pursued them. Defendants move to
dismiss Counts 6—9 because the state charges, viewed overall, have not
terminated in plaintiffs favor.
The three counts in the state indictment are closely interrelated:
(a) Count 1 charged Aleynikov with Unlawful Use of Secret Scientific
Material arising from his June 1, 2009 conduct. The state jury hung on Count
Defendants also contend that plaintiff has not sufficiently alleged the personal
involvement of Casey. See Rode v. Dellarciprete, 845 F.2d 1195, 1207 (3d Cir. 1988)(”A
defendant in a civil rights action must have personal involvement in the alleged
wrongs.”); see also Ashcroft v. Iqbal, 556 U.S. 662, 676, 129 S. Ct. 1937
(2009)(”Because vicarious liability is inapplicable to Bivens and § 1983 suits, a
plaintiff must plead that each Government-official defendant, through the official’s
own individual actions, has violated the Constitution.”). It is unnecessary to reach the
Plaintiffs brief at times implies that Counts 6—9 are asserted against Agent
Casey, as well as McSwain. (See, e.g., Opp. Brf. p. 44 (“Agents McSwain And Casey Are
Not Entitled to Qualified Immunity As To The State Prosecution Because The Rights
They Violated Were Clearly Established.”)). The counts themselves do not mention
Casey, or demand relief against him. See, e.g., Am. Cplt. Count 6, prayer for relief
(following ¶ 144) (“WHEREFORE, Plaintiff, Sergey Aleynikov, demands judgment
against Defendants, Agent Michael McSwain and John Does 1-10, on the Sixth Count
of this Complaint....”). Counts 7—9 are similar.
(b) Count 2 charged Aleynikov with violation of the same statute,
based on the events of June 5, 2009. The july convicted Aleynikov on
(c) Count 3 charged Aleynikov with Unlawful Duplication of
Computer Related Material based on the events of June 5, 2009 (the
same date as Count 2). Aleynikov was acquitted on Count 3. Id.
On post-trial motions, Judge Conviser dismissed both Counts 1 and 2 as
a matter of law. (See ECF no. 8-2 p. 1) That order is currently on appeal to the
Appellate Division, First Department. Defendants argue that because Count 2
(at least) is pending on appeal and has not been finally terminated in
Aleynikov’s favor, the malicious prosecution claims arising from the state
proceedings should be dismissed as premature.
“[A] prior criminal case must have been disposed of in a way that
indicates the innocence of the accused in order to satisfy the favorable
termination element” of a malicious prosecution claim. Kossler v. Cristani, 564
F.3d 181, 187 (3d Cir. 2009) (citation omitted). A plaintiff can demonstrate
favorable termination through:
(a) a discharge by a magistrate at a preliminary hearing, or
(b) the refusal of a grand jury to indict, or
(c) the formal abandonment of the proceedings by the public prosecutor,
(d) the quashing of an indictment or information, or
(e) an acquittal, or
(f) a final order in favor of the accused by a trial or appellate court.
The favorable termination requirement is intended to prevent “the
creation of two conflicting resolutions arising out of the same or identical
transaction.” Heck v. Humphrey, 512 U.S. 477, 484, 114 S. Ct. 2364 (1994)
The State says it appealed the entire order as to both counts. Aleynikov insists
that the portion of the order dismissing Count 1 is not appealable. That issue will no
doubt be fought out in the Appellate Division; it is unnecessary to resolve it for present
(internal quotations and citation omitted). That concern is acute here. Counts 1
and 2 were brought under the same statute (Unlawful Use of Secret Scientific
Material), and the court dismissed both on grounds of legal and statutory
interpretation. Count 3, the count of acquittal, was brought based on the same
events of June 5, 2009 that underlie Count 2, but under a different statute
If the dismissal of Aleynikov’s conviction on Count 2 were upheld on
appeal, there would be no inconsistency; both Count 2 and Count 3 (the count
of acquittal) would then have been terminated favorably. Some awkward
maneuvering might be required, however, to resynchronize plaintiff’s causes of
If in the alternative the Count 2 conviction were reinstated on appeal,
this Court would face a split decision (plus the mistrial on Count 1). If there
were already a malicious prosecution judgment on Count 3, the result could be
inconsistent judgments. But even if the malicious prosecution case on Count 3
had not concluded, the court would have to reassess—considering, for
example, whether the proceedings as a whole had terminated in Aleynikov’s
favor. See generally Kossler, 564 F.3d at 187—93. The rule requiring
termination in plaintiff’s favor was designed to avoid such issues.
The charges in Counts 2 and 3 are closely interrelated. All of the
malicious prosecution allegations relating to the state prosecution should be
litigated together in this action. Because the state case is not finally
terminated, at least as to Count 2, there is a substantial risk that proceeding
with the malicious prosecution claims could result in inconsistent judgments.
At the very least it would disrupt the smooth progress of this case.
The question is what to do while the state appeal is pending. Defendants
argue that Counts 6—9 are simply premature; Aleynikov’s causes of action have
not yet ripened, and should therefore be dismissed. Plaintiff, on the other
hand, argues for a stay.
It is true that courts have dismissed malicious prosecution claims when
the favorable termination element is lacking. See, e.g., Blow v. Paterson Police
*3 (D.N.J. Jan. 30, 2012)
Dept., Civ. No. 11—4268, 2012 WL 266433, at
(dismissing claim where defendant pleaded guilty to one count and the other
was dismissed as part of the plea agreement). Here, however, the situation is
different. It’s not that Count 2 was decided in the State’s favor; it’s just that it
is too early to say whether its resolution in Aleynikov’s favor will stick. I
therefore think it is appropriate, not to dismiss the malicious prosecution
claims, but to stay them pending the outcome of the appeal in New York. See
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,
§ 1983 malicious prosecution claim pending the outcome of
defendant’s appeal of her conviction).
In sum, I will deny the motion to dismiss Counts 6—9 at this time.
Instead, I will stay these counts pending the outcome of the appeal in New York
RETENTION OF PROPERTY (Count 5)
The federal government seized and retained Aleynikov’s passports and
other personal property at the time of his arrest. (Am. Cplt.
¶J 8 1—89) They
remained in government custody as a condition of his federal bail. When the
federal conviction was reversed, his attorney requested the property’s return.
The federal government did not return the property, but transferred it to the
office of the New York County District Attorney, which retained it for the
purposes of the state prosecution. Count 5 alleges that this course of conduct
constituted a clear violation of Aleynikov’s Fourth and Fifth Amendment rights.
Defendants respond that there was no constitutional violation, and that if there
had been, qualified immunity would apply because a reasonable officer would
not have been on notice that his behavior violated the Constitution.
Two other grounds require no extended discussion. Defendants ask me to
dismiss Count 5 on statute of limitations grounds. I decline to do so for the reasons
Under the Fourth Amendment, an initially permissible seizure of
property may become unreasonable as time goes on. “[N]ormally
government’s continued possession is not separately actionable as a Fourth
Amendment violation.” Gonzalez v. Village of West Milwaukee, 671 F.3d 649,
660 (7th Cir. 2012) (emphasis in original; citation omitted). However, “a seizure
reasonable at its inception because based on probable cause may become
unreasonable as a result of its duration....” Segura v. United States, 468 U.s.
796, 812, 104 S. Ct. 3380 (1984). See United States v. Ganias, 755 F.3d 125
(2d Cir. 2014) (retention of computer, containing both relevant and nonrelevant data, for two years without sufficient basis).
By hypothesis, the authorities would have been justified in retaining the
property throughout the period of the federal investigation and prosecution.
See U.S. v. Clenney, Civ. Nos. 92-7265, 93-6273, 1994 WL 233296, at *2 (4th
Cir. May 31, 1994) (“An ongoing criminal investigation constitutes sufficient
discussed in connection with Counts 1—4. See Section III.A, supra. Defendants also
assert that McSwain’s personal involvement has not been sufficiently alleged. I do not
find plaintiffs allegations deficient in this respect. (See Am. Cplt. ¶ 82 (alleging that
McSwain received the phone call from Aleynikov’s counsel requesting return of his
passport and items “seized from Plaintiff in connection with the Federal Prosecution”);
¶ 88 (“[A]fter procuring Judge Cote’s Unsealing Order, Agent McSwain, aided by one or
more FBI agents and prosecutors from the United States Attorney’s Office, ignored
Plaintiffs request for the return of his property and instead turned that property over
to the DANY.”))
Aleynikov claims in the alternative that the retention of his passports and other
property violated his Fifth Amendment right to due process of law. Defendants
respond that a motion for return of property, pursuant to Fed. R. Crim. P. 41(g),
provides an adequate remedy, but that Aleynikov failed to take advantage of it.”[W]hen
a state officer randomly and without authorization departs from established state
procedures, the state need only provide post-deprivation procedures,” as opposed to a
pre-deprivation hearing. Revell v. Port Authority of New York, New Jersey, 598 F.3d
128, 137 (3d Cir. 2010) (citing Hudson v. Palmer, 468 U.S. 517, 533, 104 S. Ct. 3194
(1984); Parratt v. Taylor, 451 U.S. 527, 543, 101 S. Ct. 1908 (1981), overruled in part
on other grounds, Daniels v. Williams, 474 U.S. 327, 106 S. Ct. 662 (1986)); see also
Lathon v. City of St. Louis, 242 F.3d 841, 843 (8th Cir. 200 1)(stating that “the rationale
behind the Parratt/ Hudson doctrine is that states could not predict and therefore
could not be expected to safeguard against random and unauthorized deprivations
through predeprivation process”). Whether the alleged deprivation resulted from
established procedures, or was a one-shot departure from them, among other matters,
cannot be settled from the face of the pleadings.
continuing interest to warrant denial of a motion to return property.”) Of
course, the federal proceedings were exhausted at some point. The federal
convictions were overturned by the Second Circuit by order entered February
16, 2012 (and amended February 17, 2012). That order reversed the conviction
and directed that Aleynikov be released on bail pending issuance of the
mandate. 476 F. App’x 473, 2012 WL 591980. The court did not file its opinion,
however, until April 11, 2012.28 676 F.3d 71. On June 22, 2012, Aleynikov’s
lawyer requested the return of the property. (See Am. Cplt.
82) The amended
complaint states that the District Attorney’s investigation was opened “[s]hortly
after” Aleynikov’s acquittal, but apparently the date is unknown to Aleynikov.
81; ECF no. 13-3 p. 2) Because the government’s request to
unseal the relevant materials was filed on July 12, 2012, the state investigation
(See Am. Cplt.
must have been opened by then, at the latest.
District Judge Cote then entered an order unsealing the record to the
limited extent of permitting the federal prosecutors to share their evidence with
the State. That order recited that Aleynikov was “seeking return of his passport
and is planning to travel to Russia in the near future.” (ECF no. 13-3 at 3) The
following items were “unsealed for the limited purpose of allowing the
Government to provide them to DANY for that office’s investigation and
potential prosecution of Aleynikov: (A) any sealed portions of the trial transcript
in this case, (B) any sealed trial exhibits in this case, (C) the unredacted
versions of any redacted trial exhibits in this case; (D) any other material
subject to the protective orders in this case.” (Id. at 3) Judge Cote’s order was
itself sealed “[d]ue to the risk that Aleynikov may flee prosecution if he learns of
the existence of DANY’s investigation... .“ (Id. at 4)
Accepting plaintiff’s allegations as true and giving him the benefit of all
inferences, the federal government’s lawful basis for retention of the property
Before seeing the court’s opinion, the government could not have definitively
determined whether to pursue further review. The record does not reveal whether the
government considered petitioning for review en bane or a writ of certiorari, which
could have added 90 days, see U.S. Sup. Ct. R. 13. That review period may account in
part for defense counsel’s waiting until June 2012 to request return of the property.
may have expired. What happened then, according to the complaint, is that the
government feared that Aleynikov, no longer under bail supervision, would
travel to Russia. It therefore engineered a defacto travel restriction by simply
refusing to return the passports and transferring them to the state authorities
pursuant to an “unsealing” order. At the time, the State was investigating but
had not yet charged Aleynikov. McSwain’s involvement is alleged, though it,
too, remains to be established.
As the defense points out, such a claim has potential vulnerabilities: the
immunity of the chief participants, uncertainty as to the level of McSwain’s
involvement, the scope of authorization afforded by Judge Cote’s order, and so
on. Once the factual parameters are established, the Court may also revisit the
issue of whether all or part of this Bivens cause of action is barred by the
existence of alternative remedies. Minneci v. Pollard,
132 S. Ct. 617,
Those issues, however, are for another day. I find that Count 5
sufficiently alleges a claim, and the motion to dismiss it at the outset is denied.
Because Count 5 is inextricably intertwined with the initiation of state
proceedings as alleged in Counts 6—9, I will likewise stay it in the interest of
efficient case management.
BIVENS CONSPIRACY (Count 10)
“The established rule is that a cause of action for civil conspiracy
requires a separate underlying tort as a predicate for liability.” In re Orthopedic
Bone Screw Liability Litig., 193 F.3d 781, 789 (3d Cir. 1999); see also
Toolasprashad v.Wright, Civ. No. 02-5473, 2006 WL 2264885, at *5 (D.N.J.
Aug. 8, 2006)(one of the elements of a Bivens conspiracy claim is “an actual
deprivation” of constitutional rights). Here, I have found no such violation of
Aleynikov’s constitutional rights. Therefore, the Bivens conspiracy claim is
dismissed and stayed to the same extent that I have dismissed and stayed the
For the foregoing reasons, I will partially grant defendants’ motion to
dismiss. (ECF no. 13) Counts 1—4 are dismissed in their entirety with prejudice.
The motion to dismiss is denied as to Count 5. Counts 5—9 are stayed pending
resolution of the government’s appeal in state court. Count 10 (conspiracy) is
dismissed in part and stayed in part to the same extent as the underlying
substantive claims. An appropriate order is filed with this opinion.
Dated: June 15, 2016
Newark, New Jersey
United States District Ju ge
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