United States District Court, E.D. New York
MEMORANDUM & ORDER
RAYMOND J. DEARIA, United States District Judge
series of prosecutions, referred to as the "squawk
box" cases, numerous financial advisers, including
Plaintiff Timothy O'Connell, were charged with insider
trading and related offenses. O'Connell's claims stem
from the government's withholding exculpatory material
from him and his co-defendants. He brings claims for
malicious prosecution, negligence and gross negligence
against the United States and claims for violation of due
process and malicious prosecution against five Assistant
United States Attorneys and ten unknown federal agents.
Defendants move to dismiss the Amended Complaint (hereinafter
"Complaint") pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6). The motion is granted.
indictment charged O'Connell and his five co-defendants
with securities fraud for purposefully allowing outside day
traders to listen to confidential information broadcast over
"squawk boxes"-intercom speakers used in investment
banks and stock brokerage houses to facilitate internal
communications between analysts, traders, and brokers. The
government's case depended, in part, on its proving that
the information shared over the squawk boxes was in fact
Assistant United States Attorneys prosecuting the case worked
closely with the Securities and Exchange Commission
("SEC") to develop the charges against
O'Connell and his co-defendants. Beginning in December
2004, the SEC deposed numerous witnesses, some of whom
testified that the information broadcast over the squawk
boxes was not confidential. The SEC provided the
transcripts of these depositions to the prosecutors before
trial and alerted the prosecutors that at least one, and
potentially several, of the transcripts might contain
exculpatory material. The prosecutors, however, elected not
to share the transcripts with O'Connell and his
and his co-defendants were initially tried in 2007.
O'Connell was convicted of witness tampering and making a
false statement and acquitted on thirty-eight counts of
securities fraud and related offenses. The jury could not
reach a decision on the related conspiracy charge.
retried O'Connell and his co-defendants on the conspiracy
count in 2009. The second trial team apparently chose to rely
on the first team's decision not to disclose the SEC
transcripts. O'Connell was convicted after a three-week
trial and sentenced to a period of home confinement.
2009, the SEC initiated administrative proceedings against
one of O'Connell's co-defendants. In connection with
those proceedings, the SEC disclosed the deposition
transcripts in December 2009. O'Connell and his
co-defendants moved for a new trial in February 2010, arguing
that the transcripts included Brady material that
was withheld in the criminal proceedings. The trial court
criticized the government's conduct, but concluded that
the jury would not have reached a different result even if
the transcripts had been disclosed. See United States v.
Mahaffy, No. 05-CR-613(JG), 2010 WL 2925952 (E.D.N.Y.
July 21, 2010), rev'd, 693 F.3d 113 (2d Cir. 2012).
Second Circuit reversed, concluding that the government's
failure to disclose portions of the transcripts violated
Brady and undermined the court's confidence in
the jury's verdict. See United States v.
Mahaffy, 693 F.3d 113, 119 (2d Cir. 2012). Following
remand, O'Connell entered into a deferred prosecution
agreement with the government. In December 2013, at the end
of the agreed-upon six month deferral-which was successfully
completed by O'Connell-the government moved to dismiss
November 12, 2014, O'Connell filed a notice of claim
against the United States, as required under the Federal Tort
Claims Act ("FTCA"). See 28 U.S.C. § 2401(b).
A year later, O'Connell commenced this action. The
Complaint brings claims for malicious prosecution,
negligence, and gross negligence against the United States
pursuant to the FTCA and claims for violation of due process
and malicious prosecution against the prosecuting Assistant
United States Attorneys ("AUSA defendants")
pursuant to Bivens v. Six Unknown Named Agents, 403
move to dismiss pursuant to Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6), citing the absolute immunity of the
AUSA defendants and the sovereign immunity of the United
States. Defendants also assert that the claims are barred by
the statute of limitations and that O'Connell fails to
state a claim.
Claims Against AUSA Defendants
government contends that the claims against the AUS A
defendants are barred by the absolute immunity of federal
prosecutors acting in an advocacy role. The Court agrees.
Because the AUSA defendants were acting in their capacities
as advocates when they decided not ...