1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-5-1997

Kelly v. Sayreville

Precedential or Non-Precedential:

Docket 96-5342

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Recommended Citation

"Kelly v. Sayreville" (1997). 1997 Decisions. Paper 57.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/57
1

 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 No. 96-5342 

 

 CHARLES F. KELLY, 

 

 Appellant

v. 

 BOROUGH OF SAYREVILLE, NEW JERSEY; 

 DOUGLAS A. SPRAGUE, CHIEF OF POLICE OF 

 THE BOROUGH OF SAYREVILLE 

 

 On Appeal from the United States District Court 

 for the District of New Jersey 

 (D.C. Civ. No. 94-05460) 

 

 Argued February 11, 1997 

 BEFORE: GREENBERG, COWEN, and MCKEE, Circuit Judges

 (Filed: March 5,1997) 

 

 Richard J. Kaplow (argued) 

 53 Elm Street 

 Westfield, NJ 07090 

 Attorney for Appellant

 Robert T. Clarke (argued) 

 Daniel P. Murphy 

 Apruzzese, McDermott, Mastro 

 & Murphy 

 25 Independence Boulevard 

 P.O. Box 112 

 Liberty Corner, NJ 07938 

 Attorneys for Appellee

 Robert E. Anderson 

 Public Employment Relations 

 Commission 

 CN 429 

 Trenton, NJ 08625 

 Attorney for Amicus
2

 Curiae Public Employment

 Relations Commission 

 

 

 OPINION OF THE COURT 

 

GREENBERG, Circuit Judge. 

 

 Charles Kelly, a police officer, appeals in this action 

involving his ongoing disputes with the appellees, the 

municipality which employs him and its chief of police, from the 

district court's order dismissing his complaint brought under 42 

U.S.C. § 1983. The district court entered the order on the 

grounds that by reason of prior New Jersey administrative 

proceedings involving the subject matter of Kelly's current 

action, the New Jersey entire controversy doctrine barred this 

case and that, in any event, the complaint failed to state a 

claim upon which relief may be granted. Kelly v. Borough of 

Sayreville, 927 F. Supp. 797 (D.N.J. 1996). Inasmuch as we hold 

that the district court properly dismissed the complaint on the 

latter ground, we need not consider the entire controversy 

ruling, though we note that we have significant reservations 

concerning the district court's disposition of that issue. 

 1. Jurisdiction and Standard of Review

 The district court had jurisdiction under 28 U.S.C. §§ 

1331 and 1343(a)(3), and we have jurisdiction over Kelly's timely 

appeal pursuant to 28 U.S.C. § 1291. We exercise plenary review 

over the district court's dismissal of Kelly's complaint. See
3

Schrob v. Catterson, 948 F.2d 1402, 1408 (3d Cir. 1991). In 

considering this appeal from an order dismissing a complaint for 

failure to state a claim upon which relief can be granted, we 

accept Kelly's allegations as pleaded as true, and we draw all 

reasonable inferences in his favor. See id. at 1405. We can 

affirm the dismissal only if it is certain that Kelly cannot 

attain relief under any set of facts that he could prove. See

id. at 1408. 

 2. Background

 On November 20, 1992, appellees, the Borough of 

Sayreville and its Chief of Police, Douglas Sprague, filed a 

formal written preliminary notice of disciplinary action against 

Kelly, a Sayreville police officer who serves as the president 

and employee representative of the Sayreville Policemen's 

Benevolent Association Local No. 98. The disciplinary notice 

delineated 12 charges against Kelly and stated that Sayreville 

and Sprague were seeking his permanent removal from the police 

department. In response, Kelly and the PBA filed an application 

for an order to show cause with temporary restraints and an 

unfair practice charge with the New Jersey Public Employment 

Relations Commission ("PERC") alleging that in bringing the 

charges the appellees violated the New Jersey Employer-Employee 

Relations Act, N.J. Stat. Ann. § 34:13A-1 et seq. (West 1988), 

and infringed Kelly's First Amendment free speech rights. 

 PERC issued an order to show cause on the application 

on January 4, 1993, and a PERC hearing examiner held a hearing on 
4

the order to show cause on February 17, 1993. The examiner, 

however, did not restrain the prosecution of the disciplinary 

proceedings against Kelly because Sayreville agreed to postpone 

those proceedings pending the disposition of the PBA unfair 

practice charge. A PERC hearing examiner then held hearings on 

the unfair practice charge on May 27 and 28, and June 3, 8, and 

17, 1993. At these hearings, the PBA requested that PERC order 

the withdrawal of the disciplinary proceedings directed toward 

Kelly's removal from the police department. 

 On December 6, 1993, the examiner issued a report and 

recommendation finding that Sayreville had violated the New 

Jersey Employer-Employee Relations Act. He recommended that PERC 

order Sayreville to cease and desist from violating the Act, that 

the disciplinary charges against Kelly be withdrawn, and that 

Sayreville expunge any references to the charges from his 

personnel file. H.E. No. 94-11, at 33-34 (Dec. 6, 1993). On 

April 29, 1994, PERC issued its decision and order remanding the 

matter to the hearing examiner for clarification of his report 

and recommendation. P.E.R.C. No. 94-104 (Apr. 28, 1994). The 

examiner then issued a supplemental recommended order on July 22, 

1994. H.E. No. 95-5 (July 22, 1994). On May 24, 1995, PERC 

issued its final decision, incorporating the hearing examiner's 

findings and ordering that the disciplinary proceedings against 

Kelly be withdrawn and that Sayreville cease and desist from 

discriminating against Kelly on the basis of his actions in the 

performance of his duties as PBA president. P.E.R.C. No. 95-97, 

at 12 (May 23, 1995). Neither the hearing examiner nor PERC 
5

considered Kelly's First Amendment claim on the merits, P.E.R.C. 

No. 94-104, at 3, and neither Kelly nor appellees appealed PERC's 

decision to the New Jersey courts. 

 On November 17, 1994, Kelly filed the complaint in this 

case in the district court seeking damages, alleging that the 

appellees violated 42 U.S.C. § 1983 in their treatment of him. 

In particular, Kelly asserted that during his tenure as the PBA 

president the appellees subjected him to an unjustified 

continuous series of reprimands, disciplinary actions, reprisals, 

and job-related actions motivated by Sprague's personal dislike 

for and malice toward him. Kelly asserted that the appellees' 

actions violated his liberty and property interests without due 

process of law. Kelly claimed he therefore suffered substantial 

monetary loss, humiliation, damage to his reputation, and 

emotional and physical injury. He did not specify, however, the 

basis for his claim of monetary loss, and thus he did not claim 

that he lost compensation or other employment benefits by reason 

of appellees' actions. The district court complaint mirrors the 

PERC charges for Kelly acknowledges that "the specific factual 

allegations of [his] District Court complaint refer directly and 

specifically to the underlying facts and circumstances which were 

raised and litigated in the PERC administrative proceeding. . . 

.” Br. at 10. The administrative and district court proceedings 

differ, however, in that in the court action, unlike in the 

administrative proceeding, Kelly alleged a claim for damages for 

reputation and psychological injuries. 
6

 The appellees filed a motion to dismiss which the 

district court granted by order of May 10, 1996, holding that 

because Kelly could have raised his federal constitutional claims 

before PERC, the New Jersey entire controversy doctrine barred 

his district court action. Kelly, 927 F. Supp. at 805. The 

district court also dismissed the complaint for failure to state 

a claim upon which relief could be granted. Id. at 805-06. 

Kelly then filed this appeal. As we have indicated, we address 

only the second ruling. 

 

 3. Discussion 

 Initially we point out that the district court found 

that Kelly had not responded to the motion to dismiss for failure 

to state a claim upon which relief could be granted. Kelly, 927 

F. Supp. at 806. The court nevertheless decided the motion on 

the merits rather than grant it as unopposed. In these 

circumstances, we, too, will address the merits of the motion to 

dismiss. 

 In his complaint, Kelly asserted a section 1983 action 

based on the alleged violation of his rights under the Fifth, 

Sixth, Eighth, and Fourteenth Amendments to the Constitution. He 

claimed that the appellees injured him by repeatedly filing 

groundless disciplinary charges against him. The district court 

held that Kelly could not state a claim for violation of his 

Fifth, Sixth, and Eighth Amendment rights. Id. at 805-06. In 

arriving at this result, it indicated that Kelly's Fifth 

Amendment claim fails because he has not alleged wrongdoing on 
7

the part of the federal government, his Sixth Amendment claim 

fails because he is not a criminal defendant, and his Eighth 

Amendment claim fails because he is not a convicted criminal 

defendant subjected to punishment in the context of criminal 

proceedings. We will affirm these dispositions summarily because 

we agree with the district court that the Sixth and Eighth 

Amendments are clearly not applicable here, and Kelly's remaining 

claims raise due process of law contentions which in this action 

against a municipality and one of its officials we consider under 

the Fourteenth Amendment. The district court dismissed the 

Fourteenth Amendment claim on the ground that the appellees' 

action had not deprived Kelly of any liberty or property 

interest, and we will address that disposition at length. 

 On appeal, Kelly argues that his complaint sufficiently 

alleged the constitutional violations of which he complains. He 

contends that "[a]ll of the required elements of [his] theory of 

injury and resulting harm are adequately set forth in the 

complaint." Br. at 31. In his complaint Kelly alleged damage to 

his liberty interest in his reputation and his property interest 

in his employment. Appellees argue, however, that any reputation 

damage Kelly may have suffered due to their filing of 

disciplinary charges is not sufficient to support a cause of 

action for violation of the due process clause of the Fourteenth 

Amendment. They argue further that even if Kelly identified a 

right that their actions altered or extinguished, he cannot 

establish that his liberty interest in his reputation was 

violated by their publication of false information about him. 
8

They also contend that they did not injure his property 

interests. For these reasons, they argue that the district court 

properly dismissed his claim of a Fourteenth Amendment violation. 

 "To establish a claim under 42 U.S.C. § 1983, [a 

plaintiff] must demonstrate a violation of a right secured by the 

Constitution and the laws of the United States [and] that the 

alleged deprivation was committed by a person acting under color 

of state law." Mark v. Borough of Hatboro, 51 F.3d 1137, 1141 

(3d Cir.) (citation and internal quotation marks omitted), cert. 

denied, 116 S.Ct. 165 (1995). Inasmuch as the appellees 

undoubtedly acted under color of state law, our inquiry focuses 

on whether they violated Kelly's property or liberty interests. 

 State law creates the property rights protected by the 

Fourteenth Amendment. Clark v. Township of Falls, 890 F.2d 611, 

617 (3d Cir. 1989) (looking to Pennsylvania law to determine 

whether police officer enjoys a property right in the retention 

of his assigned duties). Thus, we must look to New Jersey law to 

determine what property interests Kelly enjoys in his employment 

as a police officer. Under New Jersey law: 

[N]o permanent member or officer of the police 

department or force shall be removed from his 

office, employment or position for political 

reasons or for any cause other than incapacity, 

misconduct, or disobedience of rules and 

regulations established for the government of the 

police department and force, nor shall such member 

or officer be suspended, removed, fined or reduced 

in rank from or in office, employment, or position 

therein, except for just cause as hereinbefore 

provided and then only upon a written complaint 

setting forth the charge or charges against such 

member or officer. 
9

N.J. Stat. Ann. § 40A:14-147 (West 1993). Kelly undoubtedly had 

a property interest in his position. Furthermore, the appellees 

repeatedly filed disciplinary actions against Kelly so that they 

intended to interfere with that property interest. Nevertheless, 

as Kelly conceded at oral argument before us, they never 

suspended, removed, fined, or reduced him in rank, and he 

suffered no loss of compensation by reason of these disciplinary 

actions. Accordingly, while Kelly's complaint broadly asserts 

that he suffered substantial monetary loss, he has clarified his 

complaint to indicate that he seeks damages only for the 

continued pattern of harassment through the filing of groundless 

disciplinary charges, not for any particular adverse employment 

action. We hold that in those circumstances he has not alleged a 

property loss so that his claim cannot survive the motion to 

dismiss. 

 Kelly cites Richardson v. Felix, 856 F.2d 505 (3d Cir. 

1988), and Perez v. Cucci, 725 F. Supp. 209 (D.N.J. 1989), aff'd, 

898 F.2d 142 (3d Cir. 1990) (table), in support of his argument 

that he has asserted the deprivation of a protected property 

right. Although Richardson and Perez support the unquestionably 

correct proposition that public employees may enjoy 

constitutionally protected property rights in their employment, 

Richardson, 856 F.2d at 509; Perez, 725 F. Supp. at 243, these 

cases are distinguishable as they involved interference with 

employment rights. In Richardson the plaintiff was given the 

option of resigning or being terminated, so that the government 

impaired his property interest in his continued employment when 
10

it deprived him of that interest without prior notice or hearing. 

 Richardson, 856 F.2d at 505. Similarly, in Perez the plaintiff 

was demoted for precluded political reasons and without required 

procedural protections. We reiterate that in contrast the 

appellees never discharged or demoted Kelly, and he lost no 

compensation or other employment benefits by reason of their 

actions. Accordingly, the appellees never deprived Kelly of a 

property interest in his employment, so he has failed to state a 

claim for deprivation of a property interest in violation of the 

Fourteenth Amendment. 

 Kelly also argues that he was deprived of his liberty 

interest in his reputation. Yet, as we explained in Clark v. 

Township of Falls, "reputation alone is not an interest protected 

by the Due Process Clause." Clark, 890 F.2d at 619. Clark

relied on Paul v. Davis, 424 U.S. 693, 96 S.Ct. 1155 (1976), 

which held that a plaintiff complaining that his liberty interest 

in his reputation has been injured states an actionable claim 

only if he has suffered an additional deprivation. Accordingly, 

in Clark we held that because the plaintiff, a police lieutenant, 

had not demonstrated the deprivation of any protectable right 

beyond the injury to his reputation, he could not succeed on his 

constitutional claim. Id. at 620. In particular the plaintiff 

in Clark, like Kelly, maintained his rank within the police 

department. Furthermore, we rejected the plaintiff's claim in 

Clark to the extent that he predicated it on an argument that the 

defendants' actions diminished his future employment prospects. 

In reaching this result we explained that the "possible loss of 
11

future employment opportunities is patently insufficient to 

satisfy the requirement imposed by Paul that a liberty interest 

requires more than mere injury to reputation." Clark, 890 F.2d 

at 620. Here, inasmuch as Kelly has not suffered a deprivation 

beyond the injury to his reputation, he has not pleaded a valid 

claim based on a violation of his liberty interests. 

 In reaching our result, we point out that in Siegert v. 

Gilley, 500 U.S. 226, 233-34, 111 S.Ct. 1789, 1794 (1991), the 

Supreme Court relied on Paul v. Davis to hold that there is no 

constitutional liberty interest in one's reputation and that a 

claim that is essentially a state law defamation claim cannot 

constitute a claim for violation of one's federal constitutional 

rights. Thus, we must be careful not to equate a state 

defamation claim with a cause of action under section 1983 

predicated on the Fourteenth Amendment. See also Sturm v. Clark, 

835 F.2d 1009, 1012 (1987) ("Absent the alteration or 

extinguishment of a more tangible interest, injury to reputation 

is actionable only under state defamation law."); Robb v. City of 

Philadelphia, 733 F.2d 286, 294 (3d Cir. 1984) ("Stigma to 

reputation alone, absent some accompanying deprivation of present 

or future employment, is not a liberty interest protected by the 

fourteenth amendment."). Indeed, even financial injury due 

solely to government defamation does not constitute a claim for 

deprivation of a constitutional liberty interest. Sturm, 835 

F.2d at 1013. We emphasize that the crucial question is whether 

the plaintiff “has alleged the alteration or extinguishment of 

some additional interest." Id. (citation omitted). Kelly 
12

simply has not done so. Therefore, his liberty interest claim, 

resting solely on the alleged injury to his reputation, is not 

sufficient to state a claim upon which relief may be granted for 

violation of his Fourteenth Amendment rights. 

 4. Conclusion

 Kelly has failed to allege that appellees deprived him 

of a right cognizable under the Constitution, and he thus has 

failed to state a claim upon which relief can be granted. 

Accordingly, the district court properly dismissed the complaint. 

 Therefore, we will affirm the district court’s order of May 10, 

1996. 
1

KELLY v. BOROUGH OF SAYREVILLE, 96-5342 

McKEE, Concurring 

 I agree that this case should be affirmed for the 

reasons set forth by my colleagues and join their opinion. 

However, I believe the district court’s reliance on the entire 

controversy doctrine, as codified in New Jersey Court Rule 4:30A, 

is too important to ignore, and I would therefore also 

specifically hold that the district court erred in holding that 

Kelly’s suit is barred by that doctrine. 

 The district court dismissed the instant suit because 

Kelly and the Police Benevolent Association (“PBA”) had 

previously initiated a proceeding before the Public Employment 

Relations Commission (“PERC”). In that proceeding they alleged 

that the Borough’s conduct constituted an unfair labor practice, 

and that the defendant's proposed disciplinary proceedings 

violated the New Jersey Employer-Employee Relations Act, N.J. 

Stat. Ann. § 34:13A-1 et seq. (the “Act”), and Kelly's First 

Amendment right to free speech1. PERC subsequently concluded that 

the Borough had violated the Act. It recommended that the then - 

pending disciplinary proceeding against Kelly be withdrawn, that 

the defendants cease and desist from interfering with or 

discriminating against the PBA or Kelly, and that any related 

 

 

1 During the hearings before PERC, the unfair labor 

practice charge was amended to delete Kelly as one of the named 

charging parties. 
2

disciplinary matters be expunged from Kelly’s record. The 

instant suit under 42 U.S.C. § 1983 was filed before PERC issued 

its ruling, and the administrative claim was therefore still 

pending when this suit was filed. The district court held that 

the entire controversy doctrine barred Kelly from bringing the 

action under 42 U.S.C. § 1983 because of the prior administrative 

action. 

The New Jersey entire controversy doctrine is 

a particularly strict 

application of the rule 

against splitting a cause 

of action. Like all 

versions of that rule its 

purpose is to increase 

judicial efficiency. 

Thus it precludes not 

only claims which were 

actually brought in 

previous litigation, but 

also claims that could 

have been litigated in 

the previous litigation. 

 

Bennun v. Rutgers State Univ., 941 F.2d 154, 163 (3d Cir. 1991). 

The district court reasoned that Kelly had elected the 

administrative forum, that the proceedings before PERC were 

judicial in nature, and that Kelly had a fair opportunity to 

litigate his claims before PERC. Kelly, 927 F. Supp. at 803. The 

district court concluded that “to allow Kelly to deliberately 

bypass New Jersey’s entire controversy rule would undermine the 

policy considerations at the center of the doctrine.” Id. at 

804. 
3

 However, PERC has a well-established practice of 

refusing to hear constitutional claims except insofar as they 

relate to statutory claims properly before it under the Act. See

Hunterdon Cent. High Sch. Bd. of Educ.v. Hunterdon Cent. High 

Sch. Teachers Ass’n, 416 A.2d 980 (N.J. Super. Ct. App. Div.) 

(holding that PERC did not exceed its authority in resolving, on 

a constitutional ground, a matter involving mandatorily 

negotiable terms in a teachers contract), aff’d. 429 A.2d 354 

(1981); see also In re Bd. of Educ., 494 A.2d 279 (N.J. 1985), 

and Brief of Amicus Curiae at 6 (PERC's jurisdiction is limited 

to resolving statutory claims under the Act, and that 

“jurisdiction does not extend to resolving federal constitutional 

claims unless necessary to resolve such statutory claims.”).2

 The district court erred in applying the entire 

controversy doctrine. Our analysis of that doctrine under the 

facts before us is squarely controlled by Jones v. Holvey, 29 

F.3d 828 (3d Cir. 1994), cert. denied, 116 S. Ct. 1329 (1996). 

In Holvey, administrative charges were brought against a state 

inmate for possession of a weapon in prison. A hearing officer 

found Jones guilty of that offense. Jones unsuccessfully 

challenged that decision administratively and then appealed to 

the Appellate Division of the Superior Court of New Jersey. That 

 

 

2 The Public Employment Relations Commission filed an amicus 

curiae brief before this court to clarify the issue of its 

jurisdiction. It took no position as to the merits of the 

dispute. See Brief of Amicus Curiae at 1. 
4

court reversed the decision of the hearing officer and vacated 

all sanctions that had been imposed on Jones. 

 Jones then filed an action in federal court under 42 

U.S.C. § 1983 in which he alleged that his right to due process 

had been violated in the administrative proceeding. There, as 

here, the district court granted the defendants’ motion for 

summary judgment. The court held that Jones’s federal action 

under section 1983 was barred by the New Jersey entire 

controversy doctrine and the doctrine of res judicata. “The 

court determined that Jones could have raised the section 1983 

claim . . . in the New Jersey State Court proceeding . . . .” 

Id. at 829. Jones appealed to this court, and we reversed. We 

held: 

[U]nder the entire controversy doctrine, a party will 

not be barred from raising claims 

that he could not have brought in 

the initial action. As the New 

Jersey Supreme Court has stated, if 

the court in the first action would 

clearly not have had jurisdiction 

to entertain the omitted theory or 

ground (or, having jurisdiction, 

would clearly have declined to 

exercise it as a matter of 

discretion), then a second action 

in a competent court presenting the 

omitted theory or ground should not 

be held precluded. 
5

Id. at 831 (internal quotations and citations omitted).3 Here, 

the hearing examiner refused to hear Kelly’s First Amendment 

constitutional claim because that claim was not integral to the 

resolution of the labor dispute which was properly before the 

administrative body. The district court held “because Kelly had 

a fair opportunity to have litigated his claims before PERC, the 

Court finds that the entire controversy doctrine applies to the 

case at hand.” Kelly, 927 F. Supp. at 803. That was error. See

Watkins v. Resorts Int'l Hotel & Casino, Inc., 591 A.2d 592, 599 

(N.J. 1991). There, the New Jersey Supreme Court stated: 

 If, on the other hand, a claim could not have been 

presented in the first action, then 

it will not be precluded in a later 

action. . . . If the plaintiffs 

could not have asserted both state 

and federal claims in a single 

forum, it would be unfair to force 

them to sacrifice the claims that 

could not be so asserted in order 

to bring a single action in one 

forum. 

Id. at 599. 

 It is even more clear here that the entire controversy 

doctrine should not preclude the federal action. In Holvey, we 

surmised that the Appellate Division would not have exercised 

jurisdiction of the federal claim based upon the “sparsity of the 

complaint.” Id. at 832. Here, the hearing examiner actually 

 

 

3 None of the parties cited Holvey in their briefs or 

argument before this court, and I can only assume that the 

district court was therefore also without the benefit of citation 

to this authority. 
6

refused to hear Kelly’s First Amendment constitutional claim 

because that claim was not integral to the resolution of the 

labor dispute which was properly before the administrative body. 

 We need not guess. The federal claims Kelly asserts here were 

not adjudicated in the PERC proceeding. Therefore, Kelly’s 

action in federal district court should not have become ensnared 

in the tentacles of the entire controversy doctrine. Holvey, 29 

F.3d at 831. I believe that we should avail ourselves of this 

opportunity to define the parameters of this troublesome doctrine 

and clarify its operation. Thus, although I join in the opinion 

of my colleagues, I write separately to express regret that we 

have missed an opportunity to start putting this jurisprudential 

genie back into its analytical bottle.