Serafino v. Hasbro, Inc.

Opinion

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.


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                     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.
        ______________


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                                    April 23, 1996

                                 ____________________



COFFIN,  Senior Circuit  Judge.   Plaintiff-appellant George
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          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

                              
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               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).
          ________________________



                                         -2-



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."



                                         -3-



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



                              
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               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."



                                         -4-



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

                              
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               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.



                                         -5-



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
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          Malloy v. Hogan,  378 U.S.  1, 8 (1964))  (emphasis added).   The
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          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
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          dismissal  of  a  civil  action  could fall  neatly  within  this



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


-6-



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

                              
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               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.



                                         -7-



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
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               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). 



                                         -8-



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.



                                         -10-



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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