Frank Hannibal, 50, said he was arrested in front of his wife and twin 6-year-old daughters at LaGuardia Airport after he joked to his family while Transportation Security Administration screeners were analyzing his jar of peanut butter, the New York Daily News reported Friday.
"They're looking to confiscate my explosives," Hannibal said he told his family sarcastically.
TSA worker Edwin Sanchez overheard the comment and called Port Authority police. Officer Spencer Newman arrested Hannibal on a felony count of falsely reporting an incident.
Hannibal spent 25 hours in lockup before the district attorney decided not to prosecute.
"It sounds laughable now but at the time to be led out of there like a terrorist was unbelievable," Hannibal said. "My whole life was up in the air. It was a nightmare. My children were overwhelmed. It was crazy."
The lawsuit, which names Sanchez and Newman, is seeking $5 million in damages.
"It's a sorry state of affairs in this country when sarcasm is considered a felony," said Alan Levine, Hannibal's lawyer.