Court Opinion

ID: 2965756
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:44:32.581575+00
Date Added: 2024-06-11T15:01:33.466375
License: Public Domain

USCA1 Opinion

	

                 United States Court of Appeals
                     For the First Circuit

No. 98-1653

                            MAX HUGEL,

                      Plaintiff, Appellant,

                                v.

          MILBERG, WEISS, BERSHAD, HYNES & LERACH, LLP,
                  GOLD, BENNETT & CERA, LLP, 
       SHAPIRO, HABER & URMY, LLP, AND WOLF, POPPER, LLP,
                                
                     Defendants, Appellees.
                                

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                                
               FOR THE DISTRICT OF NEW HAMPSHIRE
                                
        [Hon. Steven J. McAuliffe, U.S. District Judge]
                                

                             Before
                                
                     Lynch, Circuit Judge,
          Coffin and Campbell, Senior Circuit Judges.
                                
                                

     Andrew D. Dunn with whom Daniel E. Will was on brief for
appellant.
     William L. Chapman with whom Pamela E. Phelan was on brief for
appellees.

April 12, 1999

                                
                                
  COFFIN, Senior Circuit Judge. Appellant Max Hugel
contends that he was defamed by allegations in a complaint filed in
a federal securities fraud lawsuit (the "Presstek litigation") to
which he was not a party.  He brought suit in state court seeking
damages for defamation and legal malpractice.  The defendants, four
law firms, removed the case to federal court and then moved to
dismiss.  Concluding that neither of Hugel's claims was viable, the
district court granted the motion.  The court wrote a thoughtful
opinion recognizing that certain aspects of the defamation claim
were close, but explaining that the privilege given by New
Hampshire law to statements made in judicial proceedings protected
the challenged allegations.  We agree with the court's reasoning on
that issue, and see no need to reiterate its analysis.  We add only
a few brief comments.  We also hold that, because the privilege
bars any civil damages based on protected statements, the district
court properly dismissed the malpractice claim as well.
A. Defamation Claim
  As the district court recognized, New Hampshire law
provides "very broad protection" to statements made in the course
of judicial proceedings.  See Order at 9.  A statement falls
outside the privilege only if it is "'so palpably irrelevant to the
subject matter of the controversy that no reasonable man can doubt
its irrelevancy or impropriety,'" McGranahan v. Dahar, 408 A.2d
121, 126 (N.H. 1979) (citation omitted), and all doubts are to be
resolved in favor of pertinency and application of the privilege,
id. at 127.  It is the breadth of this protection that persuaded
the district court that the privilege applied to all of the
challenged statements, though some of them "approach the protective
limit of the privilege." Order at 8.
     We agree with the district court that certain of the 
objectionable statements   in particular, those alleging organized
crime links   were connected only obliquely to the underlying fraud
charges.  These allegations, however, were contained in a
background description of the intimate association between Hugel
and a key Presstek litigation defendant, Robert Howard.  The two
men served together as president and vice president of Howard's
company, Centronics, and they allegedly engaged in reciprocal stock
manipulations for each other's benefit on five occasions.  The
additional allegation that Hugel was involved in organized crime
reasonably may be viewed as more than an attempt to establish
"guilt by association."  In light of Hugel's close relationship
with Howard, the allegation that Hugel had serious criminal ties,
combined with the assertions that Centronics had dealings with Las
Vegas casinos that were linked to organized crime or "frequently
subject to federal organized crime investigations," reinforces an
inference that Howard was involved in ongoing, illegal activities. 
Such an inference is relevant to whether Howard knowingly
participated in the securities fraud charged in the Presstek 
lawsuit.  Though characterizing Hugel as an organized crime figure
may have been at the margin of relevance, we cannot say that the
statements were so "palpably irrelevant" that, giving them the
benefit of any doubt, they fell outside the privilege.
     We wish to emphasize that, in rejecting appellant's
defamation claim, we do not condone quick resort to reputation-
harming allegations at the far reaches of relevancy.  Here, the
defendants' decision to file an amended complaint deleting all
references to Hugel raises some question as to their level of
certainty regarding the original statements.  Fed. R. Civ. P. 11
(b)(3) imposes a duty on attorneys to certify that, "to the best of
[their] knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances," the allegations and other
factual contentions in a pleading have evidentiary support.  
Ensuring the integrity of their representations is a serious
responsibility that attorneys may not take lightly, and we caution
against the deliberate or careless use of unsubstantiated
allegations, notwithstanding their relevance.
     B. Legal Malpractice Claim 
     Although the absolute privilege for statements made in
judicial proceedings was recognized in McGranahan in the context of
a defamation claim, the language of that opinion, subsequent case
law, and policy considerations make it clear that the privilege
bars any civil claim for damages based on statements protected by
the privilege.  In McGranahan, the court noted "the general rule .
. . that statements made in the course of judicial proceedings are
absolutely privileged from civil actions, provided they are
pertinent to the subject of the proceeding," 408 A.2d at 124
(emphasis added).  The court reiterated this general statement of
the rule in another defamation case, Pickering v. Frink, 461 A.2d
117, 119 (N.H. 1983), and recently confirmed it in a case raising
claims of, inter alia, negligence, fraud, and intentional
infliction of emotional distress, see Provencher v. Buzzell-Plourde
Ass., 711 A.2d 251, 255 (N.H. 1998) (citing McGranahan and
Pickering).  We thus think it clear that the Supreme Court of New
Hampshire views the privilege to extend to any civil claim arising
from statements made in the course of a judicial proceeding.
     In addition to the explicit language to that effect, the
policy underlying the privilege requires that civil claims other
than for defamation also be extinguished.  The rule's absolute bar
"reflects a determination that the potential harm to an individual
is far outweighed by the need to encourage participants in
litigation, parties, attorneys, and witnesses, to speak freely in
the course of judicial proceedings."  McGranahan, 408 A.2d at 124. 
This policy would be nullified if individuals barred from bringing
defamation claims could seek damages under other theories of
liability.  Moreover, as the district court observed, Hugel's
malpractice claim is, in essence, a claim that he was defamed by
allegations in the Presstek complaint.  In these circumstances,
Hugel's malpractice claim unquestionably is barred by the
privilege.  Compare Blanchette v. Cataldo, 734 F.2d 869, 877 (lst
Cir. 1984) (holding that similar privilege under Massachusetts law
bars any civil action based on the statements); Correllas v.
Viveiros, 572 N.E.2d 7, 17-19 (Mass. 1991) ("A privilege which
protected an individual from liability for defamation would be of
little value if the individual were subject to liability under a
different theory of tort.").
     C. Certification
     Hugel moved to certify both the defamation and legal
malpractice issues to the New Hampshire Supreme Court, claiming
that each implicates an unresolved question of state law.  We
disagree that there is any uncertainty warranting certification. 
     As discussed in Section A on the defamation issue, the
standard for evaluating statements made during the course of
judicial proceedings is clear: an absolute privilege attaches if
the statements are "pertinent to the subject of the proceeding,"
see McGranahan, 408 A.2d at 124.  Hugel's assertion that
certification is necessary because the New Hampshire Supreme Court
has not had occasion to provide further guidance on the standard
misses the mark.  As the district court recognized, "[w]hen state
law is sufficiently clear to allow [a federal court] to predict its
course, certification is both inappropriate and an unwarranted
burden on the state court."  Order at 11 n.2 (citing Armacost v.
Amica Mut. Ins. Co., 11 F.3d 267, 269 (lst Cir. 1993)).  See alsoMarbucco Corp. v. Suffolk Construction Co., 165 F.3d 103, 105 (lst
Cir. 1999) ("It is inappropriate . . . to use certification 'when
the course state courts would take is reasonably clear.'") (quoting
Porter v. Nutter, 913 F.2d 37, 41 n.4 (lst Cir. 1990)). The New
Hampshire court cannot be charged with failure to make its standard
reasonably clear.  Although we may err in applying that standard,
we act within the range of discretion entrusted to us.
     The malpractice issue as we have resolved it involves a
similarly straightforward application of unambiguous state case
law.  There is no need for certification.
     Accordingly, the judgment of the district court is
affirmed.