Galleon Trader's Wife's Wiretap Suit Against FBI Agents Tossed
Four years after an FBI dragnet brought down her husband, Arlene Drimal's lawsuit against agents who listened in to her privileged conversations with her husband has been dismissed. According to the Second Circuit, Drimal's allegations of improper wiretapping failed to assert sufficient facts under Iqbal and Twombly.
Drimal's husband, Craig Drimal, pleaded guilty to securities fraud in connection with the collapse of the Galleon hedge fund and its founder, Raj Rajaratnam, whose insider trading landed him one of the longest white collar criminal sentences ever. The case against Mr. Drimal and Rajartnam relied heavily on wiretaps.
Failure to Minimize
In her suit against the FBI agents, Arlene Drimal alleged that they violated Title III of the Omnibus Crime Control and Safe Streets Act, which sets the rules governing federal wiretaps. Under Title III, those using wiretaps must minimize the interception of communications not directly related to the wiretap.
Under the court order authorizing the wiretap of her husband's phone, agents were to immediately cease monitoring conversations unrelated to unlawful activity, though they could "spot check" throughout to see if the topic had veered into criminal matters. Agents ended up monitoring slightly under 200 non-pertinent calls between Drimal and her husband. At Mr. Drimal's securities fraud trial, several agents admitted to listening in to privileged conversations between the couple, though the court did not exclude evidence connected to the calls.
Iqbal Strikes Again
Under Iqbal and Twombly, Drimal's complaint had failed to "contain sufficient factual matter," instead asserting legal conclusions without support. The Second Circuit notes, several times, that the complaint never mentions minimization. The law does not prohibit intercepting privileged communications, the court notes, but the failure to minimize their interception. Instead of discussing minimization, the complaint alleges simple unlawful interception, identifying calls only be date, but with no further specificity.
Should Drimal amend her complaint, the Second Circuit also noted that the district court must focus on claims of qualified immunity as they relate to each defendant. It should not wait for further motions for summary judgment, the court noted, but could address the claims at the pleading stage, evaluating whether each agents' minimization efforts were reasonable.
They also note that monitoring privileged calls for under two minutes, considered reasonable in past precedent, would probably not be reasonable in these circumstances, since the personal and privileged nature of the calls was often quickly apparent.
- Ex-Galleon Trader's Wife Suffers Reversal in Suit Against FBI Agents (Reuters)
- 2nd Cir. Massively Limits Insider Trading Prosecutions (FindLaw's U.S. Second Circuit Blog)
- Galleon Insider Trading Case May Go To 2nd Circuit Appeal (FindLaw's U.S. Second Circuit Blog)
- Court Mulling Bail: Does Galleon Group Founder Pose Flight Risk? (FindLaw's U.S. Second Circuit Blog)
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