Serafino v. Hasbro, Inc.

USCA1 Opinion





United States Court of Appeals
For the First Circuit
____________________

No. 95-1931

GEORGE J. SERAFINO AND ANITA M. SERAFINO,

Plaintiffs, Appellants,

v.

HASBRO, INC., ET AL.,

Defendants, Appellees.


____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Michael A. Ponsor, U.S. District Judge] ___________________

____________________

Before

Torruella, Chief Judge, ___________
Coffin, Senior Circuit Judge, ____________________
and Cyr, Circuit Judge. _____________

____________________

Morris M. Goldings with whom Ellen S. Shapiro was on brief for ___________________ _________________
appellants.
Arthur G. Telegen with whom Amy B.G. Katz, Charles S. Cohen, and _________________ ______________ _________________
David G. Cohen were on brief for appellees. ______________


____________________

April 23, 1996
____________________

























COFFIN, Senior Circuit Judge. Plaintiff-appellant George _____________________

Serafino brought a lawsuit against Hasbro, Inc. ("Hasbro") and

its CEO, George R. Ditomassi, Jr., claiming that they unlawfully

terminated certain business arrangements and then his employment

because his daughter filed a discrimination action against them.

During discovery, Serafino refused to answer questions pertaining

to alleged improprieties surrounding the business arrangements,

invoking his Fifth Amendment privilege against self-

incrimination. Upon determining that Serafino's silence on these

matters unfairly hampered defendants' ability to mount a defense,

the district court dismissed Serafino's claims with prejudice.

In this appeal, we must determine whether dismissal

constitutes an impermissible infringement on Serafino's

constitutional right against self-incrimination. After due

consideration, we conclude that the district court acted within

its power and discretion in dismissing Serafino's claims, and

affirm.

BACKGROUND1

From 1972 until his termination in December 1994, Serafino

worked as a mechanic and then group leader for the Milton Bradley

Company ("Milton Bradley"), a division of Hasbro since 1985,

located in Springfield, Massachusetts. In addition to his

regular employment, Serafino had three unusual business

arrangements with Milton Bradley. In 1976, Serafino created
____________________

1 Since this appeal is from an order granting a motion to
dismiss, we derive the facts from the pleadings. PHC, Inc. v. _________
Pioneer Healthcare, Inc., 75 F.3d 75, 77 (1st Cir. 1996). ________________________

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Hampden Battery Service, Inc. ("Hampden Battery"), which serviced

and reconditioned batteries used in Milton Bradley vehicles.

Then, in 1984, he formed ABC Janitorial Services ("ABC"), which

performed nightly cleaning service at Milton Bradley buildings.

Finally, in 1985, he assumed responsibility for supervising

ground maintenance at the company's facilities, for which he was

guaranteed 20 hours a week of overtime.

Anita Serafino,2 George Serafino's daughter, also worked at

Milton Bradley. In January 1992, she filed a complaint with the

Massachusetts Commission Against Discrimination alleging that a

co-worker had sexually harassed her. In July 1993, both

Serafinos filed a complaint in Hampden Superior Court against

Hasbro and Ditomassi alleging sex discrimination and retaliation.

In particular, George Serafino alleged that Ditomassi, as a

retaliatory measure, instructed two high-ranking company

employees, Joseph Gulluni and Arthur Peckham, to terminate the

three extracurricular business ventures. The overtime

arrangement was discontinued on January 1, 1993, the business

relationship with Hampden Battery in April of 1993, and the

relationship with ABC in mid-1994. Based on these events,

Serafino advanced three theories of liability: violation of






____________________

2 To avoid confusion, Anita Serafino will always be
referred to by her full name; George Serafino, at times, will be
referred to only as "Serafino."

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Mass. Gen. L. Ann. ch. 151B3, quantum meruit, and intentional _______ ______

interference with advantageous relationship.

Serafino was deposed in the fall of 1994. Defendants

pursued a line of questioning concerning improprieties

surrounding Hampden Battery, ABC and the overtime benefits,

focusing, in particular, on how Serafino, Gulluni and Peckham

might have illegally benefitted from these ventures. Serafino,

invoking his rights under the Fifth Amendment and Article 12 of

the Massachusetts Declaration of Rights, refused to answer most

questions relating to these matters. Such questions included:

Did you give money to other people as a condition for doing
business with Milton Bradley?

[Did] Mr. Peckham ever get any financial benefit from
ABC Cleaning Services?

Why did [Mr. Gulluni] have you report to his office
every day?

Do you have any financial relations with Mr. Peckham?

Were you involved in criminal activity together?

Isn't it true that Mr. Peckham got financial benefit
from your companies that was illegal?

George Serafino was discharged from Milton Bradley in

December 1994. Shortly thereafter, the Serafinos amended their

complaint to include this termination as a further act of

____________________

3 Chapter 151B protects people against unlawful
discrimination. Wheelock College v. Massachusetts Comm'n Against ________________ ____________________________
Discrimination, 371 Mass. 130, 137, 355 N.E.2d 309 (1976). ______________
Serafino accused defendants of violating chapter 151B, 4(4A),
which makes it unlawful for any person "to coerce, intimidate,
threaten or interfere with such other person for having aided or
encouraged any other person in the exercise or enjoyment of any
such right granted or protected by this chapter."

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retaliation. In response, defendants removed the case to federal

court, on the ground that consideration of the discharge would

require the court to interpret a collective bargaining agreement,

bringing Serafino's claim within Section 301 of the Labor

Management Relations Act, 29 U.S.C. 185.

On March 31, 1995,4 defendants submitted a motion to

dismiss Serafino's claims. They claimed that by refusing to

respond to their questions, Serafino had prevented them from

discovering important information about the very benefits that he

sued to recover. Defendants asserted that the questions

surrounding the benefits were central to the case:

If . . . Serafino paid criminal bribes to Milton
Bradley employees to maintain his unusually favorable
overtime arrangement, battery business and cleaning
services, then he is in no position to claim that
defendants somehow wrongfully took these benefits away
. . . [or that] his termination was [not] proper.

In rebuttal, Serafino disputed the relevance of the

questions, suggesting that defendants were instead attempting to

garner information for their RICO complaint. On July 28, 1995,

the district court dismissed all of Serafino's claims with

prejudice and remanded Anita Serafino's claims to the state

court.

DISCUSSION

Serafino attacks the district court's decision on two

fronts: first, he argues that, as a matter of law, the court did
____________________

4 A few days earlier, Hasbro filed a civil RICO complaint
against Serafino, Gulluni and Peckham alleging a course of
conduct involving kickbacks, overcharging and other illegal
activity.

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not have the power to dismiss his claims; second, he contends

that the court abused its discretion in concluding that his

constitutional interest was outweighed by possible prejudice to

defendants. We address these issues in turn.

A. The District Court's Power to Dismiss _____________________________________

Serafino argues that the legitimate exercise of one's Fifth

Amendment privilege can never justify dismissal of a civil claim

-- a contention not without force. The Supreme Court has stated

that the Fifth Amendment "guarantees . . . the right of a person

to remain silent unless he chooses to speak in the unfettered

exercise of his own will, and to suffer no penalty . . . for such _______

silence." Spevack v. Klein, 385 U.S. 511, 514 (1967) (quoting _______ _____

Malloy v. Hogan, 378 U.S. 1, 8 (1964)) (emphasis added). The ______ _____

concept of "penalty" includes "the imposition of any sanction

which makes assertion of the Fifth Amendment privilege 'costly.'"

Id. at 515 (quoting Griffin v. California, 380 U.S. 609, 614 ___ _______ __________

(1965)).

Unconstitutional penalties for the invocation of the

privilege have included disbarment of a lawyer, see Spevack, 385 ___ _______

U.S. at 516; forfeiture of jobs by public employees, see Gardner ___ _______

v. Broderick, 392 U.S. 273, 278 (1968) and Uniformed Sanitation _________ ____________________

Men Ass'n v. Commissioner of Sanitation, 392 U.S. 280, 284-85 _________ ___________________________

(1968); and imposition of substantial economic sanctions, see ___

Lefkowitz v. Turley, 414 U.S. 70, 82-83 (1973). While automatic _________ ______

dismissal of a civil action could fall neatly within this

category, see Wehling v. Columbia Broadcasting Sys., 608 F.2d ___ _______ ___________________________


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1084, 1087-88 (5th Cir. 1979), we cannot agree that dismissal is

always impermissible. See id. at 1087 n.6 ("[T]he district court ___ ___

is not precluded from using dismissal as a remedy to prevent ______

unfairness to the defendant.").

The Supreme Court has indicated that the assertion of the

privilege may sometimes disadvantage a party. See Baxter v. ___ ______

Palmigiano, 425 U.S. 308, 318 (1976) (allowing adverse inferences __________

to be drawn from a civil party's assertion of the privilege); _____

Flint v. Mullen, 499 F.2d 100, 104 (1st Cir. 1974) ("[N]ot every _____ ______

undesirable consequence which may follow from the exercise of the

privilege against self-incrimination can be characterized as a

penalty."). We think that in the civil context, where,

systemically, the parties are on a somewhat equal footing, one

party's assertion of his constitutional right should not

obliterate another party's right to a fair proceeding. In other

words, while a trial court should strive to accommodate a party's

Fifth Amendment interests, see United States v. Parcels of Land, ___ _____________ _______________

903 F.2d 36, 44 (1st Cir. 1990), it also must ensure that the

opposing party is not unduly disadvantaged. See Gutierrez- ___ __________

Rodriguez v. Cartagena, 882 F.2d 553, 577 (1st Cir. 1989) _________ _________

(affirming district court's refusal to allow defendant to testify

at trial when he asserted Fifth Amendment privilege during

discovery). After balancing the conflicting interests, dismissal

may be the only viable alternative.5
____________________

5 Though dismissal has rarely been imposed or affirmed, a
number of courts have acknowledged the court's power to dismiss
even in the face of a party's proper assertion of the privilege.

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We reiterate that the balance must be weighted to safeguard

the Fifth Amendment privilege: the burden on the party asserting

it should be no more than is necessary to prevent unfair and

unnecessary prejudice to the other side. See S.E.C. v. Graystone ___ ______ _________

Nash, Inc., 25 F.3d at 187, 192 (3d Cir. 1994); Wehling, 608 F.2d __________ _______

at 1088. As correctly delineated by the district court in this

case, "the Fifth Amendment privilege should be upheld unless

defendants have substantial need for particular information and

there is no other less burdensome effective means of obtaining

it." See Black Panther Party v. Smith, 661 F.2d 1243, 1272 (D.C. ___ ___________________ _____

Cir. 1981), vacated mem., 458 U.S. 1118 (1982) (enunciating ____________

similar balancing approach). Having determined that the district

court could, within its discretion, dismiss this case, and that

it utilized the proper balancing test, we now evaluate the

balancing itself for abuse of discretion. See Parcels of Land, ___ ________________

903 F.2d at 44.

B. The Court's Balancing Test __________________________

The district court dismissed Serafino's claims upon

concluding that 1) the alleged illegal conduct underlying the

outside benefits was central to defendants' defense; 2) there was

no effective substitute for Serafino's answers; and 3) there was
____________________

See, e.g., Wehling v. Columbia Broadcasting Sys., 608 F.2d 1084, ___ ____ _______ ___________________________
1087 n.6 (5th Cir. 1979); Lyons v. Johnson, 415 F.2d 540, 542 _____ _______
(9th Cir. 1969); Mt. Vernon Sav. & Loan v. Partridge Assocs., 679 ______________________ _________________
F. Supp. 522, 529 (D. Md. 1987); Stop & Shop Cos. v. Interstate _________________ __________
Cigar Co., 110 F.R.D. 105, 108 (D. Mass. 1986); Jones v. B. C. _________ _____ _____
Christopher & Co., 466 F. Supp. 213, 227 (D. Kan. 1979); Penn __________________ ____
Communications Specialties, Inc. v. Hess, 65 F.R.D. 510, 512 _________________________________ ____
(E.D. Pa. 1975); Wansong v. Wansong, 395 Mass. 154, 157-58, 478 _______ _______
N.E.2d 1270 (1985).

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no adequate alternative remedy to dismissal. Though Serafino

hotly disputes each premise, our more detailed analysis compels

us to agree with the court's conclusions.
















































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1. Importance of the Information _____________________________

Serafino's alleged illegal conduct is relevant in two ways.

First, defendants justify their discharge of Serafino on their

belief that he conspired to defraud Hasbro. Under the framework

of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-05 (1973), _______________________ _____

which generally guides claims under Mass. Gen. L. Ann. ch. 151B,

Woods v. Friction Materials, Inc., 30 F.3d 255, 263 (1st Cir. _____ _________________________

1994), if defendants propose a nonretaliatory reason for the

termination and present facts in support, Serafino cannot prevail

unless he proves that the reason is pretext, see Tate v. Dep't of ___ ____ ________

Mental Health, 419 Mass. 356, 362-63, 645 N.E.2d 1159 (1995). In _____________

this context, the significance of information that goes directly

to the nonretaliatory justification is self-evident.

Second, if in fact the benefits were illegally obtained,

then defendants could effectively argue that Serafino is not

entitled to compensation based on them. Though we do not, and

need not, determine whether his alleged misconduct would

foreclose all possible relief,6 we easily conclude that, at the

very least, it would greatly diminish his recovery. Cf. McKennon ___ ________

v. Nashville Banner Pub. Co., 115 S. Ct. 879, 886 (1995) (holding _________________________

that after-acquired evidence of an employee's misconduct does not

bar all relief under the ADEA but must be taken into account in

determining an appropriate remedy). Without the ability to

____________________

6 In addition to seeking compensation for the
discontinuation of the three business arrangements, Serafino
seeks emotional and exemplary damages, attorneys' fees and
injunctive relief against further retaliation.

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investigate a matter that goes to the heart of the damages

sought, defendants would be substantially prejudiced.

2. Alternative Means _________________

The district court found that "there are no company records

or other Hasbro employees whose information could effectively

substitute for responses from George Serafino himself." We

agree. Even if a paper trail might show some irregularities, it

is a poor proxy for Serafino's testimony. As for other

employees, such as Peckham and Gulluni, if they were involved in

illegal conduct, they would almost certainly assert their Fifth

Amendment privilege. If, instead, they denied involvement,

defendants would be back at square one, handicapped in their

defense by Serafino's silence.

3. Alternative Remedies ____________________

We are left to consider whether a less drastic remedy would

have sufficed. At oral argument on the motion to dismiss,

counsel for Serafino listed several possibilities -- staying the

matter, allowing an adverse inference to be drawn, and striking

testimony -- but did not recommend one, suggesting instead that

the court's first alternative should be a motion to compel. We

doubt that the court could have ordered Serafino to answer

questions to which the privilege attached. See Wehling, 608 F.2d ___ _______

at 1087. In any event, since counsel did not even suggest that

Serafino would waive his privilege, a motion to compel was not a

reasonable alternative.




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Though he never requested one, Serafino contends that the

court could have issued a stay and cites Wehling in support. In _______

Wehling, the Fifth Circuit reversed the denial of plaintiff's _______

motion for a protective order and stayed the civil proceedings

for three years, until the expiration of the criminal limitations

period. 608 F.2d at 1089. Here, upon considering Serafino's

failure to file a motion, and the hardship that delay would

impose on defendants, the district court refused to sua sponte ___ ______

impose a stay. We cannot say this constitutes an abuse of

discretion.

CONCLUSION

Information regarding potential illegal conduct in

connection with the three business ventures was crucial to

defendants' ability to mount an effective defense, and was

uniquely within plaintiff's control. While Serafino had an

absolute constitutional right not to reveal any potentially

incriminating material, his invocation of that privilege, in

these circumstances, placed defendants at a significant

disadvantage. Because the district court did not abuse its

discretion in balancing the interests at stake, we affirm its

decision to dismiss Serafino's claims.

Affirmed. ________










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