Sheridan v. DeHart, et al. CV-02-412-M 09/03/03 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
William C. Sheridan, Plaintiff
v. Civil No. 02-412-M Opinion No. 2003 DNH 153 James DeHart, Thomas Trevethick, New Hampshire Supreme Court Committee on Professional Conduct, Mark Hanlon, James McDowell, III, and Geraldine Karonis, Defendants
O R D E R
Pro se plaintiff. Attorney William Sheridan, brings this
action seeking damages, costs, and attorney's fees for what he
says were "violation[s ] of the federal Constitution, as well as
federal laws, such as 28 U.S.C. § 1983 and Section 1 of the
Sherman Act." Amended complaint at I.1
1 Almost certainly, plaintiff's reference to "28 U.S.C. § 1983" is a typographical error, meant to be an invocation of .42. U.S.C. § 1983. But, of course, defendants could not have "violated" section 1983, since that statute does not vest citizens with any substantive rights. Instead, it merely provides a vehicle by which individuals may pursue civil actions against state actors for alleged violations of their federally protected statutory or constitutional rights. See, e.g., Graham v. Connor, 490 U.S. 386, 393-94 (1989) ("As we have said many times, § 1983 is not itself a source of substantive rights, but merely provides a method for vindicating federal rights elsewhere conferred.") (citation and internal guotation marks omitted). Background
The relevant facts appear to be largely undisputed. To the
extent that they are contested, however, the court will, for the
purpose of ruling on the pending motions, recite them in the
light most favorable to Sheridan.
In and before 1998, Attorney Sheridan practiced in the area
of bankruptcy law. As part of that practice, he mailed an
"informational pamphlet" entitled "THERE MAY BE AN ALTERNATIVE TO
FORECLOSURE," to individuals whose homes were subject to bank
foreclosure. In it, Sheridan explained the benefits of obtaining
relief under Chapter 13 of the bankruptcy code and advised
recipients to contact an attorney about the possibility of
availing themselves of Chapter 13. The pamphlet included
Sheridan's name and telephone number.
In September of 1998, Sheridan received a notice from the
New Hampshire Professional Conduct Committee ("PCC"), informing
him that, in response to a letter mailed to it by defendant
Hanlon (which included a copy of Sheridan's pamphlet), the
Committee had opened an investigation into his use of direct
2 mailings as part of his marketing efforts. Concerned by that
development, Sheridan says he removed his telephone number from
the pamphlet, "so that it was clear that it was only
informational." Amended complaint at para. 10. As a conseguence
of modifying the pamphlet, Sheridan says his practice and income
declined sharply.
Subseguently, in 2000, Chief Judge Vaughn of the United
States Bankruptcy Court for the District of New Hampshire became
aware of potential problems associated with Sheridan's practice
before that court. Accordingly, Judge Vaughn directed Geraldine
Karonis, the Assistant United States Bankruptcy Trustee, to
investigate the matter and file a report of her findings with the
court. Prior to a scheduled hearing on that matter, Karonis
learned of Sheridan's practice of sending unsolicited pamphlets
to potential bankruptcy clients. One day, she encountered
Sheridan at the bankruptcy court and told him that she believed
his practice of mailing the pamphlet to individuals subject to
foreclosure proceedings might violate provisions of the New
Hampshire Code of Professional Conduct. As a follow-up to that
conversation, Karonis faxed Sheridan a copy of the New Hampshire
3 Rules of Professional Conduct, and highlighted the provisions
dealing with attorney advertising. That was the extent of
Karonis's direct dealings with Sheridan on the subject.
Nevertheless, from that, Sheridan says he inferred that Karonis
had (implicitly) threatened to seek his suspension from
practicing before the United States Bankruptcy Court if he
continued to distribute the pamphlet.2
Subseguently, Karonis completed her investigation into
Sheridan's conduct and reported her findings to Judge Vaughn,
stressing that, in her view, the most serious matters involved
issues concerning Sheridan's use and/or management of client
2 At the time, the pertinent rule of professional conduct provided:
A lawyer may not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship, by mail, in person or otherwise, when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain. The terms "solicit" and "solicitation" include contact . . . by letter or other writing . . . directed to a specific recipient, but do not include letters addressed or advertising circulars distributed generally to persons not known to need legal services of the kind provided by the lawyer in a particular matter, but who are so situated that they might in general find such services useful.
Rule 7.3(c), N.H. Rules of Professional Conduct (2000).
4 funds. Although she did not advance it as a ground for
disciplining Sheridan, Karonis did mention Sheridan's practice of
sending the pamphlets to potential clients and told the court
that she believed it "may or may not be permissible under the New
Hampshire [Rules of Professional Conduct]." Exhibit E to Karonis
declaration, transcript of June 19, 2000 hearing at 17. She
added her own opinion, however, that, "From my reading of the
rules, it is not permissible." Id.
In the wake of that hearing. Judge Vaughn appointed Nancy
Michels (not a party to this litigation) as special counsel to
investigate Sheridan's possible violations of the Rules of
Professional Conduct. In September of 2000, Michels filed her
report with the court and recommended that a disciplinary
proceeding be instituted against Sheridan. In June of 2001, the
court held a trial on the complaint. Sheridan's practice of
circulating the pamphlet was not, however, an issue in that
proceeding. See Michels v. Sheridan, 2001 BNH 43, 2001 WL
1737058 (Bankr. D.N.H. Oct. 12, 2001). Following trial, the
court concluded that:
5 [D]uring a twenty month period between January 13, 1999, and September 29, 2000, Attorney Sheridan committed at least 88 violations of the NHR P C . These violations involved thirty clients in thirty-three separate cases, exclusive of the five violations in this proceeding. Other than the violation of NHRPC 1.15 in In re Hogan, all of the remaining violations involved NHRPC 1.1 [reguiring a lawyer to provide "competent representation to a client"]. Based upon the record in this proceeding. Attorney Sheridan has demonstrated a continuing unwillingness or inability to competently provide services to clients and to meet his professional obligations to this Court. In the Stipulation[,] Attorney Sheridan admitted to allegations which at best show a repeated pattern of conduct involving inattention to and neglect in handling client matters. Accordingly, it is necessary for this Court to impose disciplinary sanctions on Attorney Sheridan.
Id. The court then suspended Sheridan from practicing in the
bankruptcy court for one year and granted Michel's reguest for
attorney's fees in the amount of approximately $30,000. That
decision was affirmed by the United States Bankruptcy Appellate
Panel of the First Circuit. In re Disciplinary Proceedings,
Sheridan v. Michels, 282 B.R. 79 (B.A.P. 1st Cir. 2002) .
According to Sheridan, he has appealed the matter to the United
States Court of Appeals for the First Circuit and is presently
awaiting a decision.
6 Meanwhile, notwithstanding his knowledge that the PCC had
opened an investigation into his use of direct mailings to
potential clients, and despite his conversation with Karonis on
that topic, Sheridan apparently never bothered to research the
attorney advertising issue (as one might expect a licensed
attorney facing an investigation would d o ) . Had he done so, he
would have guickly discovered an opinion of the United States
Supreme Court which expressly approves informational mailings of
the very sort that he had been distributing.3 Instead, Sheridan
unilaterally amended his pamphlet and, eventually, unilaterally
decided to stop mailing it to potential clients. Importantly,
neither Karonis nor the PCC ever ordered or directed Sheridan to
amend the pamphlet or to stop distributing it.
Unfortunately for Sheridan, his decision to stop mailing the
pamphlet to potential clients apparently resulted in a dramatic
decline in his bankruptcy practice. It was not until the Fall of
2000 that Sheridan says he "came across" the relevant Supreme
3 In 1988, the United States Supreme Court held that states cannot categorically ban attorneys from soliciting legal business through truthful and non-deceptive letters directed to individuals known to face particular legal problems. Shaoero v Kentucky Bar Ass'n, 486 U.S. 466 (1988).
7 Court decision and notified the PCC of its existence. Amended
complaint at para. 17. At that point, the PCC terminated the
pending investigation into Sheridan's conduct. I d . at para. 18.
Sheridan then filed this suit, in which he seeks
compensatory, conseguential, and enhanced damages, as well as his
costs and attorney's fees against the named defendants.
According to Sheridan, he bases his claims on two distinct events
related to his practice of mailing the informational pamphlet to
potential clients: "(1) the complaint commenced against Sheridan
by the PCC in which the PCC claimed that Sheridan should be
disciplined because he had mailed bankruptcy informational
brochures to prospective clients in September 1998; and (2)
[Assistant United States Bankruptcy Trustee] Karonis threatening
to commence a disciplinary action against Sheridan in June of
2000 because Sheridan had mailed bankruptcy informational
brochures to prospective clients in the 2000 calendar year."
Plaintiff's memorandum (document no. 32) at para. 1.
Parenthetically, it probably bears noting that it is not
entirely accurate for Sheridan to characterize the PCC's conduct in this matter as amounting to a "claim" that "Sheridan should be
disciplined" for mailing the pamphlet. Rather, the record
suggests that the PCC received a letter/complaint from a member
of the New Hampshire Bar concerning Sheridan's use of direct mail
advertising and simply opened an investigation to determine
whether that conduct violated provisions of the Rules of
Professional Conduct. Importantly, the July 30, 2001, petition
submitted by the PCC to the New Hampshire Supreme Court seeking
Sheridan's interim suspension appears to have been based on
conduct entirely unrelated to his having distributed the
bankruptcy pamphlet. See Exhibit H-A to Declaration of Geraldine
Karonis.
With respect to Karonis's alleged conduct, even reading
Sheridan's amended complaint guite liberally, at the very most it
alleges that, based upon Karonis's general comments on the
matter, Sheridan inferred that she might seek to commence a
disciplinary action against him (presumably before the Bankruptcy
Court) if she concluded that he had violated the Rules of
Professional Conduct. Nowhere in the amended complaint does Sheridan allege that Karonis ever explicitly made any threatening
statements in that regard.
In any event, although it is hardly a model of clarity,
Sheridan's amended complaint sets forth four counts in which he
appears to allege the following causes of action: violations of
the Sherman Act by the PCC, Mark Hanlon, James McDowell, III, and
Geraldine Karonis (count one); violations of the Sherman Act and
his First Amendment Rights by Thomas Trevethick and James DeHart
(count two); a "failure to adeguately train its personnel"
respondeat superior claim against the Professional Conduct
Committee (count three); and a Bivens claim against Karonis for
having violated his First Amendment rights (count four).4
4 Defendants DeHart and Trevethick are administrators of the Professional Conduct Committee and Joseph McDowell, III, was appointed as counsel to the Bar Association in connection with the investigation into Sheridan's conduct. According to counsel for defendants, Joseph (not James, as named in plaintiff's complaint) McDowell, is the proper party to this action. Although Joseph McDowell had not yet been served with a copy of the complaint when defense counsel filed the pending motion to dismiss, he was aware of plaintiff's suit and reguested the Office of the New Hampshire Attorney General (counsel to several defendants) to represent him in this matter.
10 Defendants DeHart, Trevethick, McDowell, and the
Professional Conduct Committee (collectively, the "PCC
Defendants") move to dismiss all claims against them, saying
Sheridan's amended complaint fails to state any claims upon which
relief may be granted. They also assert that, to the extent
Sheridan has set forth a viable claim, they are entitled to
absolute immunity and are shielded from any award of monetary
damages by the State Action doctrine. Defendant Karonis also
moves to dismiss all claims against her, saying the court lacks
subject matter jurisdiction over those claims and she enjoys
sovereign immunity with respect to plaintiff's antitrust claims.
In the alternative, Karonis moves for summary judgment.
Plaintiff objects.
Discussion
I. Claims Against Assistant U.S. Bankruptcy Trustee Karonis.
Plaintiff's amended complaint appears to set forth two
claims against Karonis: first, that she (and other defendants)
undertook a "knowing concerted refusal to deal and a horizontal
boycott," amended complaint at para. 22, in violation of the
Sherman Antitrust Act (count one); and, second, that Karonis,
11 while acting under color of law, violated plaintiff's First
Amendment rights (count four).
A. The Antitrust Claim.
In count one of his amended complaint, Sheridan alleges
that:
The conduct of the Professional Conduct Committee, Mark Hanlon, James McDowell, Geraldine Karonis of the US Trustee's Office for the Justice Department constitutes a knowing concerted refusal to deal and a horizontal boycott against Sheridan in violation of Section 1 of the Sherman Act . . . insofar as it involved state action that had been instigated at the direction of and in concert with one or more of Attorney Sheridan's competitors to cut off Attorney Sheridan's access to his customer base, as well as to his license to practice law.
Amended complaint at para. 22 (citations omitted).
Notwithstanding Sheridan's conclusory claims to the contrary, the
factual allegations in his amended complaint make clear that
Karonis was, at all times material to this proceeding, acting in
her official capacity, as Assistant United States Bankruptcy
Trustee. See, e.g.. Amended complaint at para. 15 n.5. And,
because Sheridan's anti-trust claim against Karonis is one
brought against a federal official for conduct undertaken during
12 the course of her official duties, she is entitled to absolute
immunity. See Sea-Land Service, Inc. v. Alaska Railroad, 65 9
F.2d 243 (D.C. Cir. 1981). See also Name.Space, Inc. v. Network
Solutions, Inc., 202 F.3d 573 (2d Cir. 2000); Lawline v. The
American Bar Ass'n, 738 F. Supp. 288 (N.D. 111. 1990).
B. The First Amendment Claim.
In count four of his amended complaint, Sheridan alleges
that, "Geraldine Karonis, as a federal agent, under color of law,
took the steps alleged herein against Sheridan in response to his
exercise of his well established free speech rights guaranteed by
the federal constitution, entitling Sheridan to damages against
her, as well as court costs and attorney[']s fees." Amended
complaint at para. 32. Based upon those allegations, the court
will assume that Sheridan seeks to assert a Bivens claim against
Karonis for having unconstitutionally chilled his protected
speech. See Bivens v. Six Unknown Named Agents ofFederal Bureau
of Narcotics, 403 U.S. 388 (1971).
Typically, in order to show that a deprivation of a First
Amendment right has occurred, a plaintiff must, at a minimum.
13 demonstrate that the defendant intended to inhibit speech
protected by the First Amendment, Tatro v. Kervin, 41 F.3d 9, 18
(1st Cir. 1994), and that the defendant's conduct had a chilling
effect on the protected speech that was more than merely
"speculative, indirect or too remote." Sullivan v. Carrick, 888
F.2d 1, 4, (1st Cir. 1989). And, of course, a plaintiff's
response to a defendant's allegedly wrongful or "threatening"
conduct must be reasonable. See, e.g., Mendocino Environmental
Ctr. v. Mendocino County, 192 F.3d 1283, 1300 (9th Cir. 1999)
(holding that, with regard to a plaintiff's claim that his or her
First Amendment rights were chilled, "the proper inguiry asks
whether an official's acts would chill or silence a person of
ordinary firmness from future First Amendment activities.")
(citation and internal guotation marks omitted); Bart v. Telford,
677 F.2d 622, 625 (7th Cir. 1982) ("It would trivialize the First
Amendment to hold that harassment for exercising the right of
free speech was always actionable no matter how unlikely to deter
a person of ordinary firmness from that exercise.").
Here, a reasonable and properly instructed trier of fact
could not conclude that Sheridan's response to his conversation
14 with Karonis and/or her subsequent decision to fax him a copy of
the New Hampshire Rules of Professional Conduct was reasonable.
Stated somewhat differently, Karonis's conduct would not, as a
matter of law, have deterred a person of ordinary firmness
(particularly one trained in, and licensed to practice, law) from
engaging in the sort of conduct in which Sheridan was engaged.
This is particularly true if, as Sheridan claims, the pamphlet
was the source of an extraordinary percentage of his work.
Presented with Karonis's comments about his conduct (especially
in light of the then-pending Professional Conduct Committee
investigation into that very conduct), a reasonable person would
not have simply stopped disseminating the pamphlet. Instead, he
or she would have sought legal advice about the matter. If, as
in this case, the person is an attorney, he or she would have at
least casually (but promptly) researched the legal issue raised.
Sheridan apparently did not. Instead, he unilaterally decided to
stop sending out his pamphlet, only to discover some months later
(apparently inadvertently) that the United States Supreme Court
had specifically held that such conduct was protected by the
First Amendment.
15 In short, it was not reasonable for Sheridan to stop
disseminating the pamphlet simply based upon Karonis's statement
that she believed he might be violating the Rules of Professional
Conduct. After all, Karonis was not charged with enforcing those
rules and claimed no expertise beyond that of an ordinary
attorney regarding the extent to which they might, as written,
conflict with relatively recent Supreme Court precedent.
Little more need be said of Sheridan's First Amendment
claim. It is sufficient to point out that, as to that count in
his amended complaint, Karonis is entitled to judgment as a
matter of law.
I I . Claims Against Defendants DeHart, Trevethick, McDowell, _____ and the Professional Conduct Committee.
The PCC Defendants say that, with respect to plaintiff's
First Amendment and Sherman Act claims, they are shielded from
liability by absolute immunity and the State Action doctrine.
The court agrees.
The PCC Defendants are not subject to suit under the Sherman
Act. See Bates v. State Bar of Arizona, 433 U.S. 350 (1977);
16 Parker v. Brown, 317 U.S. 341 (1943) . And, with regard to
Sheridan's First Amendment claims (pursuant towhich he seeks
only monetary damages, not prospective relief of any sort), the
PCC Defendants are entitled to immunity. See Supreme Court of
Virginia v. Consumers Union, 446 U.S. 719 (1980); Green v. State
Bar of Texas, 27 F.3d 1083 (5th Cir. 1994).
III. Sherman Act Claim Against Mark Hanlon.
In count one of his amended complaint, Sheridan asserts that
Attorney Mark Hanlon, one of his alleged "competitors," acted in
concert with the PCC Defendants in bringing the complaint against
him before the PCC. Hanlon's alleged goal was to "cut off
Attorney Sheridan's access to his customer base, as well as to
his licence to practice law."
The amended complaint is, however, plainly deficient on its
face. See generally Green, 27 F.3d at 1087. As the United
States District Court for the Southern District of New York has
observed:
To withstand a motion to dismiss, the plaintiff in a Sherman Antitrust Conspiracy claim must allege (1) concerted action; (2) by two or more persons; (3) that
17 unreasonably restrains interstate or foreign trade or commerce.
In re NASDAQ Market-Makers Antitrust Litigation, 8 94 F. Supp.
703, 710 (S.D.N.Y. 1995). See also Ford Motor Co. v.Webster's
Auto Sales, Inc., 361 F.2d 874, 878 (1stCir. 1966)(noting that
an alleged agreement between two or more parties is
"[f ]undamental ... to any section 1 violation").
Here, the amended complaint fails to allege sufficient facts which, if taken as true, would constitute a violation of that statute. At best, it alleges that Hanlon brought to the PCC's attention the fact that Sheridan was distributing the informational pamphlet (albeit with the alleged intention to harm Sheridan's business).5 Standing alone, that fact (even if true) cannot give rise to liability under the Sherman Act.
5 Regardless of his subjective motivation, Hanlon, no doubt, felt he was ethically obligated to report Sheridan's conduct to the PCC. In September of 1998, the New Hampshire Rules of Professional Conduct provided:
A lawyer having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial guestion as to the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects shall inform the appropriate professional authority.
Rule 8.3(a), N.H. Rules of Professional Conduct (1998) (emphasis supplied).
18 Instead, to plead a viable claim under Section 1 of the
Sherman Act, Sheridan must, at a minimum, allege sufficient facts
which, if believed, could lead a reasonable trier of fact to
conclude that Hanlon and at least one other person engaged in
some sort of concerted effort to restrain trade. Hanlon's
unilateral decision to report what he believed to be
unprofessional conduct to the PCC is not, without more,
sufficient. See, e.g., Copperweld Corp. v. Independence Tube
Corp., 467 U.S. 752, 768 (1984) ("Section 1 of the Sherman Act
. . . reaches unreasonable restraints of trade effected by a
contract, combination or conspiracy between separate entities.
It does not reach conduct that is wholly unilateral.") (citations
and internal guotation marks omitted).
Hanlon has not, however, moved to dismiss the claim against
him. Hanlon's silence is, no doubt, explained by the fact that
he was never served with a copy of the original or amended
complaint (at least, the court's docket contains no evidence of
service). Accordingly, that claim is dismissed for plaintiff's
failure to timely serve Hanlon in accordance with the Federal
Rules of Civil Procedure. See Fed. R. Civ. P. 4 (m). See also
19 Figueroa v. Rivera, 147 F.3d 11 , 83 (1st Cir. 1998) ("Under Fed.
R. Civ. P. 4 (m), a district court may dismiss a complaint without
prejudice as to a particular defendant if the plaintiff fails to
serve that defendant within 120 days after filing the
complaint.").
Conclusion
For the foregoing reasons, and for the reasons set forth in
defendants' memoranda (documents no. 7, 11, and 30), the PCC
Defendants' motion to dismiss (document no. 7) is granted.
Likewise, Karonis's motion to dismiss or, in the alternative, for
summary judgment (document no. 11) is also granted.
As to the sole remaining claim in plaintiff's complaint -
his assertion that Attorney Mark Hanlon violated the Sherman Act
(count one) - it fails to state a viable cause of action. But,
because plaintiff has failed to serve Hanlon with a copy of the
original or amended complaint within the time allowed, that claim
is dismissed, without prejudice, pursuant to Rule 4 (m) of the
Federal Rules of Civil Procedure.
20 Sheridan's motion for additional time within which to file
responsive pleadings (document no. 21), as well as his motion for
leave to file a memorandum of law (document no. 25) are granted.
Karonis's motion to strike (document no. 27) and her motion for
leave to file a reply (document no. 34) are denied as moot.
The Clerk of Court shall enter judgment in accordance with
this order and close the case.
SO ORDERED.
Steven J. McAuliffe United States District Judge
September 3, 2003
cc: William C. Sheridan, Esg. Daniel J. Mullen, Esg. Gretchen L. Witt, Esg. Mark Hanlon, Esg.