
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).          ________________________                                         -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                                        ____________________               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                                        ____________________               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                      _______    _____          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                     ___ _______     ___________________________                                         -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                                        ____________________               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               __________________________               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.                                         -9-               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.                                           -11-               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.               ________                                         -12-
