386 F.Supp.2d 5 (2005) | Cited 1 time | D. Massachusetts | September 13, 2005


Bradford C. Councilman ("plaintiff") has filed a four-countcomplaint against defendants Alibris, Inc. ("Alibris"), MichaelWarchut ("Warchut"), and Peter Krotkov ("Krotkov"), claiming thatthe defendants are liable to him for malicious prosecution (CountI), abuse of process (Count II), and intentional infliction ofemotional distress (Count III). An additional claim that Alibrisviolated the Massachusetts Consumer Protection Statute, Mass.Gen. Laws ch. 93A, has been dismissed by agreement of theplaintiff.


In 1993, the plaintiff co-founded Interloc, an online servicefor rare and out-of-print book dealers. Interloc also operated an Internet Service Provider ("ISP") forsubscribers who were members of the general public. The plaintiffoversaw operations at Interloc's Greenfield, Massachusetts datacenter.

In May of 1998, Interloc merged with, and adopted the name of,Alibris, Inc., an internet company for buyers and sellers of new,used and rare books, music and movies. After the merger, theplaintiff became Alibris' vice president and a member of itsBoard of Directors. Defendant Michael Warchut, formerlyInterloc's systems administrator, became the systemsadministrator for Alibris after the merger. Defendant PeterKrotkov was employed at Interloc for only one week prior to themerger with Alibris. At all other pertinent times, Krotkov wasemployed by the University of Massachusetts as a systemsadministrator.

This case stems from federal and state investigations into twoincidents of computer hacking that led to the return ofindictments against the plaintiff and Alibris. The first chargedincident occurred in March of 1998 when Warchut, then employed byInterloc, obtained unauthorized access to password-protected datain the computer system of an entity known as Studio 32. Studio 32is a software development company that was hired by Interloc todesign its website and servers. The plaintiff claims Warchut liedto him by saying he gained access to Studio 32's confidential datalegally. Relying on this false representation, the plaintiffinstructed Warchut to gain access again to Studio 32'sconfidential data. Studio 32 uncovered the March 1998 invasion ofits system and reported the incident to authorities.

The second charged incident occurred in April of 1998 whenWarchut, with the assistance of Krotkov, obtained unauthorizedaccess into the computers of an entity called Shaysnet. Thisincident resulted in the destruction of files and the theft of aShaysnet password file. David Leonard, the director of Shaysnet,notified the Massachusetts State Police about the intrusion onApril 10, 1998 and authorities began investigating immediatelythereafter.

The plaintiff alleges that during the investigation, Warchutand Krotkov, in return for favorable treatment by authorities fortheir own wrongdoing, gave false statements to investigators thatimplicated the plaintiff. Warchut and Krotkov told police thatthe plaintiff ordered them to write a computer script tointercept and improperly copy certain e-mails. Furthermore,Warchut claimed that his incursion into Studio 32's system was bythe instruction of the plaintiff. As a result, investigatorsbroadened their investigation to include the plaintiff.

Alibris only became aware of the criminal investigation on orabout June 8, 1998, a few weeks after the merger with Interloc.In late July, Alibris management requested and received theplaintiff's resignation from the Board of Directors; the companyterminated his employment on October 21, 1999. Alibris pledguilty to charges relating to the illegal interception of e-mailsand paid a $250,000 fine. On May 31, 2000, Warchut pled guilty toone count of conspiracy to violate laws prohibiting interceptionof electronic messages and was sentenced to two years probationand fined $2,100.

On July 11, 2001, the plaintiff was indicted on two counts. Thefirst count alleged illegal interception of e-mails and chargedplaintiff under 18 U.S.C. § 371 for conspiracy to violate18 U.S.C. §§ 2511 et seq. (the "Federal Wiretap Act"). Thesecond count was related to the Studio 32 incident and chargedthe plaintiff under 18 U.S.C. § 371 for conspiracy to violate18 U.S.C. §§ 1030 et seq. (the "Computer Fraud and Abuse Act").

This court dismissed Count I on February 12, 2003, finding thatthe e-mails at issue were not "intercepted" in transit asrequired to prove a violation of the Federal Wiretap Act. U.S.v. Councilman, 245 F. Supp. 2d 319 (D. Mass. 2003). Prosecutors voluntarily dismissed Count II of theindictment on June 16, 2003, citing recent developments in therelevant case law.

On June 29, 2004, a panel of the Court of Appeals affirmed thedismissal of the Wiretap Act claim in Count I. U.S. v.Councilman, 373 F.3d 197 (1st Cir. 2004)

On October 5, 2004, the United States Court of Appeals allowedthe government's petition for rehearing en banc regarding thedismissal of Count I of the indictment. At the time of argumenton this Motion to Dismiss, counsel was awaiting the en bancdecision. On August 11, 2005, the First Circuit, sitting enbanc, vacated the panel decision and reversed the dismissal ofCount I of the criminal indictment against plaintiff. U.S. v.Councilman, 418 F.3d 67 (1st Cir. 2005). The Court of Appeals'action on the criminal case against the plaintiff will not affectthe logic of this court's ruling on the defendants' Motion toDismiss in this civil case.


In reviewing a motion to dismiss under Rule 12(b)(6), a courtis generally required to "(1) treat all of the non-movant'sfactual allegations as true and (2) draw all reasonable factualinferences that arise from the allegations and are favorable tothe non-movant." Eggert v. Merrimac Paper Co. Leveraged Employee Stock Ownership Plan &Trust, 311 F. Supp. 2d 245, 247 (D. Mass. 2004) (quotingBurchill v. Unumprovident Corp., No. 03-67-P-S, 2003 WL21524730, at *1 (D. Me. June 27, 2003)). Dismissal is not properunless it is clear that the plaintiff has not offered anysupportable claim. Fletcher v. Tufts Univ., 367 F. Supp. 2d 99,103-04 (D. Mass. 2005) (quoting Conley v. Gibson, 355 U.S. 41,45-46 (1957)).


All three claims remaining in this case collapse in the face ofone undisputed fact, established on the face of the complaint:law enforcement officers had initiated an investigation into theunderlying criminal activity before they ever contacted thedefendants. Defendants never "initiated" any criminal prosecutionof the plaintiff, and their conduct in providing information inresponse to law enforcement inquiries was privileged.

Massachusetts law applies in this diversity action. TheCommonwealth's Supreme Judicial Court has held that while aperson need not actually swear out a criminal complaint in orderto be held answerable for malicious prosecution, he "must have,in some sense, initiated the prosecution." Correllas v.Viveiros, 410 Mass. 314, 318 (1991). Correllas involved a bankteller who was a suspect in a larceny and who gave false information implicating a co-worker. The SJC heldthat, even assuming for purposes of the motion that theallegations against Viveiros were true, a claim for maliciousprosecution would not lie.

The mere transmission of information to a police officer, who using his or her independent judgment, then pursues the matter and institutes criminal proceedings, has never been held sufficient to support an action for malicious prosecution.Id.

Despite resourceful and vigorous efforts by plaintiff'scounsel, this holding presents an unavoidable bar to all of theplaintiff's claims here. The fact that in this case, as inCorrellas, a criminal investigation of the criminal conduct was"well under way, and a prosecution was being contemplated,"id., at 324, when the defendants made their statements ends theanalysis. Dismissal is mandated as to all three tort claims. Aprivilege protecting an individual who gives information to lawenforcement agents conducting an investigation from a claim ofmalicious prosecution "would be of little value if the individualwere subject to liability under a different theory of tort."Id.

Plaintiff contends that the defendants may be deemed to have"initiated" the prosecution against the plaintiff because a jurymight find that, at the time the defendants were contacted by lawenforcement, the inquiry was not actively directed at the plaintiff. Thus, the contention goes,the defendants' false incriminatory statements to authoritiesconstituted, in a sense, the commencement or "initiation" of thecharges against Councilman specifically. This argument isunpersuasive. Placing this limitation on the Correllas holdingwould effectively negate the protections so emphaticallyrecognized in that decision. If plaintiff's logic were approved,citizens responding to law enforcement inquiries by suggestingthe possible guilt of another party, or even mentioning anotherparty, would be exposing themselves to later civil claims by theparties whose names they happened to mention. Correllas rejectsprecisely this notion.

The distinction drawn by Correllas is admittedly somewhatcapricious. A person who approaches police, or who seeks issuanceof a criminal complaint, with the result that a prosecutionbegins against an individual based on deliberate lies, may beheld liable civilly. On the other hand, a person who isapproached by police and, in response to questions, utters thesame lies with the result that the investigation takes a newdirection and an innocent person is prosecuted, is immune fromliability in tort for his false statements. The arbitrariness ofthe law in this area may be another example of the apothegm ofOliver Wendell Holmes, Jr. to the effect that "the life of the law has not beenlogic: it has been experience." Oliver Wendell Holmes, Jr., TheCommon Law 1 (Little, Brown & Co. 1990) (1881). At any rate, theSJC has manifestly chosen to balance the availability of legalredress for false statements against law enforcement's need toencourage open communications — free of concerns about lawsuits —in the manner set forth in Correllas. Its holding binds thiscourt.

Because of the fatal impact of Correllas, it is unnecessaryfor the court to address defendants' other powerful argumentbased on the statute of limitations. Along the same lines, thecourt will merely note that the malicious prosecution claim wouldbe, at best, untimely, since, given the First Circuit's enbanc decision in plaintiff's parallel criminal case, it cannotbe said at this time that the prosecution has terminated in favorof the plaintiff.


For the reasons set forth above, the defendants' Motions toDismiss (Docket Nos. 11, 13 & 18) are hereby ALLOWED. The clerkis ordered to enter judgment for the defendants on all counts.This case may now be closed.

It is So Ordered.

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