Second Circuit Dismisses Case of the Wiretapped Wife During Securities Fraud Investigation

The U.S. Court of Appeals for the Second Circuit has dismissed without prejudice a civil lawsuit brought by the wife of a trader being investigated for securities fraud by the FBI who claimed that wiretaps of conversations between the married couple were unauthorized and a violation of Title III.

As part of its investigation of Galleon Group LLC principals and traders for insider trading, the FBI obtained permission to wiretap the cell phone of trader Craig Drimal. Agents were instructed to discontinue monitoring if they intercepted a call that was solely between Mr. and Mrs. Drimal. Despite this instruction, the agents allegedly taped 180 private calls between the couple.

At trial, Mr. Drimal attempted to have all the taped calls suppressed because of the marital calls the agents taped. The district court found that while there were approximately 18 calls that were potential violations, this was not sufficient to suppress all the calls and denied the motion to suppress.

Mrs. Drimal filed a civil suit against 16 FBI agents after her husband’s criminal case was completed, alleging they violated Title III by taping privileged marital conversations. The FBI sought to dismiss the complaint for failure to state a claim and qualified immunity, which the district court denied.

On appeal, the Second Circuit reversed the district court ruling, holding that Mrs. Drimal’s complaint was insufficient because it only stated that the interception of marital calls was a violation of Title III. There was no mention in the complaint of a duty to minimize. The Court noted that Title III does include an outright prohibition on the monitoring of privileged calls.

In addition, as to the question of qualified immunity, the Court held that the district court should have evaluated each individual agent’s efforts to minimize the monitoring of private calls under an “objective reasonableness” standard rather than as a group.

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