Court Opinion

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Opinions of the United
1997 Decisions                                                                                                             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Precedential or Non-Precedential: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
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           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

                          1
                                       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

                                2
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

                                 3
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

                                 4
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.

                                 5
           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

                                6
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.

                                  7
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.

                                8
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

                                 9
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

                                  10
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

                                11
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.

                                12
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.

                                 1
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.

                               2
           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.

                                 3
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.

                                 4
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.

                                 5
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.

                                6