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Kriss v. Bayrock Group LLC

United States District Court, S.D. New York

February 25, 2014

JODY KRISS, et al., Plaintiffs,
BAYROCK GROUP LLC, et al., Defendants.


LORNA G. SCHOFIELD, District Judge.

Before the Court is Plaintiffs' motion to remand the instant action (" Kriss II ") to state court. For the reasons stated below, Plaintiffs' motion to remand is denied.

I. Background

On December 10, 1998, Felix Sater ("Sater"), one of the defendants in Kriss II, pleaded guilty to participating in a racketeering enterprise in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Sater's plea was pursuant to a written cooperation agreement with the United States Attorney's Office for the Eastern District of New York ("Cooperation Agreement"). The Cooperation Agreement required that Sater not reveal his cooperation with federal authorities to anyone without the prior consent of the Government. Judge Glasser, who accepted Sater's guilty plea, ordered that Sater's entire criminal case, including the docket sheet, be sealed. Sater was referred to in court paperwork as "John Doe."

For over ten years after his guilty plea, Sater worked with federal law enforcement agents and prosecutors in both the Eastern and Southern Districts of New York, providing information on organized crime. The Government has characterized the information provided by Sater as "of an extraordinary depth and breadth, almost unseen." The specific information provided by Sater remains under seal.

On October 3, 2009, Sater was sentenced to probation and a $25, 000 fine. Sater claims that his agreement with the Government to keep his cooperation secret also required him to keep his conviction and sentencing secret because "[a]nyone with rudimentary knowledge of the criminal justice system would know that a person who has been convicted but not sentenced until eleven years later was almost certainly a cooperating witness."

Frederick Oberlander ("Oberlander"), counsel for the plaintiffs in Kriss II, obtained some of the information about Sater's criminal case and cooperation with the Government by convincing Joshua Bernstein ("Bernstein"), a former employee of the Bayrock Group, of which Sater was also a former employee, to allow Oberlander access to a back-up hard drive containing information that Bernstein had saved at Sater's direction many years earlier (the "Confidential Information"). Oberlander and his co-counsel then disclosed some of the Confidential Information in a complaint they filed in another matter currently before this Court, 10-cv-03959 (" Kriss I "). For example, the Cooperation Agreement was attached to the complaint in Kriss I as an exhibit.

On May 14, 2010, Judge Buchwald, the judge then presiding over Kriss I, issued orders sealing the complaint and prohibiting its further dissemination. On May 18, 2010, Judge Glasser, who had originally sealed the Confidential Information, issued a temporary restraining order preventing its further dissemination. On June 21, 2010, Judge Glasser permanently enjoined dissemination of the Confidential Information, and on July 20, 2010, Judge Glasser re-affirmed his ruling, finding that dissemination of the Confidential Information would put Sater's safety at risk. Oberlander appealed the permanent injunction to the Second Circuit Court of Appeals, which affirmed Judge Glasser's ruling.

On May 10, 2013, Plaintiffs commenced Kriss II by filing a Summons with Notice in the Supreme Court of the State of New York. On June 21, 2013, Sater filed a Notice of Removal, removing Kriss II to the Southern District of New York pursuant to 28 U.S.C. § 1442(a)(1), commonly referred to as the "Federal Officer Removal Statute." On July 22, 2013, Plaintiffs filed an interim Motion to Remand, and on August 2, 2013, Plaintiffs filed a final Motion to Remand.

II. Discussion

Sater removed Kriss II to this Court pursuant to the Federal Officer Removal Statute, which provides:

A civil action or criminal prosecution that is commenced in a State court and that is against or directed to any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending: (1) The United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office or on account of any right, title or authority claimed under any Act of Congress for the apprehension or punishment of criminals or the collection of the revenue.

28 U.S.C. § 1442(a)(1). The Federal Officer Removal Statute is an exception to the general rule that "an anticipated or actual federal defense generally does not qualify a case for removal"; it allows federal officers and those acting under them to remove actions to federal court "despite the nonfederal cast of the complaint" because "the federal-question element is met if the defense depends on federal law." Jefferson Cnty. v. Acker, 527 U.S. 423, 431 (1999).

The purpose of the Federal Officer Removal Statute has been described by the Supreme Court as giving federal officers, or persons acting under them, the "protection of a federal forum" in which to have any defenses "arising out of their duty to enforce federal law" heard. Willingham v. Morgan, 395 U.S. 402, 406-07 (1969); see also Gurda Farms, Inc. v. Monroe Cnty. Legal Assistance Corp., 358 F.Supp. 841, 843 (S.D.N.Y. 1973) ("The purpose of [the Federal Officer Removal Statute ], whose ancestry is venerable, is to prevent federal ...

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