Court Opinion

ID: 219674
Source: CourtListenerOpinion
Date Created: 2011-06-24 19:53:39+00
Date Added: 2024-06-11T17:28:41.674929
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                              Nos. 10-2586 and 10-3076
                                   _____________

                               GEORGE E. KERSEY,
                                          Appellant

                                          v.

                          BECTON DICKINSON AND CO.;
                         ESTATE OF JOSEPH R. PARADIS;
                         CAROL PARADIS; DEAN B. BELL
                                _____________

            APPEAL FROM THE UNITED STATES DISTRICT COURT
                        FOR THE DISTRICT OF NEW JERSEY
                            (D.C. Civil No. 2-08-cv-02155)
             District Judge: Honorable Garrett E. Brown, Jr., Chief Judge
                                    ____________

                      Submitted Under Third Circuit LAR 34.1(a)
                                   June 20, 2011
                                   ____________

                Before: BARRY, AMBRO and COWEN, Circuit Judges

                            (Opinion Filed: June 24, 2011)
                                   ____________

                                      OPINION
                                    ____________

BARRY, Circuit Judge

      George Kersey, an attorney appearing pro se, appeals from two orders of the

District Court granting summary judgment to defendants-appellees, denying Kersey’s
cross-motion for summary judgment, and sanctioning Kersey more than $49,000. We

will affirm.

                                          I.

       On May 2, 2008, Kersey, a Rhode Island resident, filed a complaint in the District

of New Jersey against Becton Dickinson and Co. (“Becton Dickinson”), a New Jersey

corporation, the Estate of Joseph R. Paradis (“Paradis Estate” or “the Estate”), Carol

Paradis, the executrix of the Estate, and Dean B. Bell, a South Carolina attorney who

represented Paradis. Kersey alleged that he was a third-party beneficiary to a contract

between Becton Dickinson and the Estate, and that the Estate had not paid Kersey certain

agreed-upon payments for Kersey’s services as a patent attorney. Specifically, Kersey

alleged that Becton Dickinson was obligated to pay $100,000 in annual royalty payments

to the Paradis Estate, and that Kersey’s agreement with the Estate entitled him to 10

percent of any royalties. He alleged that the Estate had not made payments since July

2007, and demanded that his “third party share” of the $100,000 payments “be deducted

from the amount remitted to Paradis and be paid directly to Kersey.” App. at 27.

       Kersey also alleged that Bell defamed him by making and publishing “attacks on

my personal professional character and standing.” Id. at 28. Kersey’s defamation claim

resulted from communications between him and Bell, in relation to Bell’s representation

of Paradis. Bell contacted Kersey by letter on August 16, 2007, noting that “serious

problems” had arisen with certain patents that Paradis inherited from the Estate as a result

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of Kersey’s errors, and that Kersey should immediately provide the documentation

relating to those patent applications and assignments. Id. at 52-53. Bell also stated that

he was “aware of your problems with regard to your license to practice law,” id. at 52,

and that “inasmuch as it appears that you are no longer licensed to practice law, and as

such, will no longer be able to fulfill your responsibilities under your agreement with Mr.

Paradis, the responsibilities for maintaining and monitoring these patents and Patent

Applications will be transferred to a new attorney.” Id. at 53. Bell sent a copy of the

letter to Paradis.

       On September 1, 2007, Kersey responded to Bell and disclaimed responsibility for

any errors with the patents. He also took issue with Bell’s statement about his

“problems” with regard to his law license. Kersey stated that “[t]he fact of the matter is

that I am in good standing for the practice of law with, for example, the State of New

York.” Id. at 54. As reflected in exhibits submitted to the District Court as part of the

summary judgment motions, Kersey had been disbarred from the practice of law in New

Hampshire in 2004 and Massachusetts in 2005, reprimanded by the Supreme Court of

New Jersey in 2005, and publicly censured by the New York Appellate Division in 2006.

Additionally, in June 2007, the Under Secretary of Commerce for Intellectual Property

and Director of the United States Patent and Trademark Office (“USPTO”) upheld

Kersey’s exclusion from practicing before the USPTO.

       On September 19, 2007, Bell requested that Kersey ship all files related to the

                                             3
Paradis patent matters to Ms. Paradis’ son. Receiving no response, Bell again wrote to

Kersey on October 18, 2007, requesting transfer of the files and noting that “[y]our

services as patent attorney have been terminated . . . Unless appropriate response is

received to this request, Ms. Paradis will have no option other than to contact the

appropriate administrative authorities to request whatever relief may be available through

the applicable ethical rules.” Id. at 71. Kersey responded on October 25, 2007 and stated

that he was owed $2,500 in royalty payments from the Estate’s agreement with Becton

Dickinson. On November 1, 2007, Bell wrote to Mark Ochs, the Chief Attorney of the

Third Judicial Department of the New York Appellate Division, Committee on

Professional Standards, complaining that Kersey was refusing to release Paradis’ patent

files and inquiring whether the committee had authority to require Kersey to release the

files. Id. at 73-74. Bell’s letter included copies of the previous communications with

Kersey, and Bell also sent a copy of the letter to Paradis.

       On September 19, 2008, Kersey, the Estate, and Carol Paradis entered into a

settlement agreement whereby the Paradis defendants agreed to pay Kersey $10,000 to

settle all alleged debts of the Estate through the second quarter of 2008. The Paradis

defendants also agreed to pay Kersey 10 percent of any future royalties received for

patents that Kersey had prosecuted, and Kersey agreed to return the patent files. The

parties stipulated to the dismissal of the Paradis Estate and Carol Paradis as defendants.

       Following discovery, Bell and Becton Dickinson moved for summary judgment

                                              4
and for sanctions against Kersey. Kersey cross-filed for summary judgment. On May 6,

2010, the District Court granted Becton Dickinson’s and Bell’s motions for summary

judgment. The Court found Kersey’s claims to be frivolous and awarded reasonable

attorney fees and costs to Becton Dickinson and Bell. Following briefing, on June 21,

2010, the Court awarded Becton Dickinson $16,059.47 and Bell $33,061.08.

                                          II.

       We have jurisdiction pursuant to 28 U.S.C. § 1291. We review a district court’s

grant of summary judgment de novo, applying “the same standard as the District Court in

determining whether summary judgment was appropriate.” United States ex rel.

Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 94 (3d Cir. 2009). Summary judgment is

appropriate “if the movant shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). We

review a district court’s sanctions determination for abuse of discretion. See In re

Grossman’s Inc., 607 F.3d 114, 119 n.4 (3d Cir. 2010).

                                          A.

       Kersey’s claim against Becton Dickinson is grounded in his desire to have his 10

percent “cut” of the Becton Dickinson royalty payments paid directly to him by Becton

Dickinson, rather than by the Paradis defendants, as Kersey agreed to in the September

19, 2008 settlement agreement. Kersey argues that he is a third-party beneficiary to a

1995 license agreement between Becton Dickinson and Joseph R. Paradis providing for a

                                                5
minimum royalty payment of $100,000 annually. Inexplicably, Kersey contends that this

third-party status entitles him to force Becton Dickinson to subtract 10 percent of its

royalty dues to the Paradis defendants and pay that amount directly to him.

       Kersey has no claim against Becton Dickinson because Kersey is not a third-party

beneficiary to the license agreement. Because Kersey was not a party to the agreement, it

is not clear whether we should apply Utah law, as the contract instructs, or New Jersey

law, the law of the forum state. We need not determine this issue, however, because

under either law Kersey is not a third-party beneficiary. Under both states’ laws, the

intent of the contracting parties is the key consideration. See Wagner v. Clifton, 62 P.3d

440, 442 (Utah 2002) (third-party beneficiary status is determined by examining the

written contract, which must show that the contracting parties “clearly intended to confer

a separate and distinct benefit upon the third party” (citation and internal quotation marks

omitted)); Broadway Maint. Corp. v. Rutgers, State Univ., 447 A.2d 906, 909 (N.J. 1982)

(“The principle that determines the existence of a third party beneficiary status focuses on

whether the parties to the contract intended others to benefit from the existence of the

contract, or whether the benefit so derived arises merely as an unintended incident of the

agreement.”). Nothing in the licensing agreement suggests that Kersey was an intended

third-party beneficiary, rather than an incidental beneficiary with no contractual standing.

Becton Dickinson was entitled to summary judgment.

       We note that the District Court granted Becton Dickinson’s motion for summary

                                              6
judgment based on its determination that Kersey’s claim to a percentage of royalty

payments had been settled in the September 19, 2008 agreement between Kersey and the

Paradis defendants. In addition to finding that Kersey is not a third-party beneficiary of

the 1995 license agreement, we agree that the September 19, 2008 agreement

extinguished any legal claims that Kersey may have had against Becton Dickinson. The

2008 settlement provided that the Paradis defendants would pay Kersey the 10 percent

future royalty payments, and the settlement papers created a specific schedule for making

those payments. Any judgment against Becton Dickinson would necessarily undermine

the settlement agreement and result in an unwarranted double payment to Kersey.

                                           B.

       Kersey’s complaint states that his defamation claim against Bell is based on

“attacks on my personal professional character and standing; including his letter of 10-18-

07.” App. at 28. In later filings, Kersey also specifies the “wrongful complaint filed

against me with New York State” as a basis for his claim, Supp. App. at 19, and in his

reply brief Kersey contends that statements in Bell’s August 16, 2007 letter defamed him.

Read liberally, the only possible defamatory statements include (1) the statements in the

August 16, 2007 letter regarding Kersey’s alleged mistakes in the maintenance of the

Paradis patents and Kersey’s inability to practice law and fulfill his responsibilities as a

patent attorney; and (2) the allegations within the November 1, 2007 letter to the New

York Committee on Professional Standards that Kersey (a) was withholding the Paradis

                                                7
patent files in order to “extract a payment out of my client;” and (b) had failed to maintain

the Paradis patents and had caused Ms. Paradis “significant financial losses.” App. at 74.

No statement within the October 18, 2007 letter is possibly defamatory; a person is not

exposed to defamation liability for threatening to raise ethics violations with the

appropriate authorities when the person alleges no specific ethics violations.

       As an initial matter, the District Court was correct to apply the law of New Jersey

to Kersey’s defamation claim, even though the alleged defamatory statements were

published to third parties in South Carolina and New York. We apply the forum state’s

laws and choice of law rules to diversity actions. Sys. Operations, Inc. v. Scientific

Games Dev. Corp., 555 F.2d 1131, 1136 (3d Cir. 1977). Under New Jersey’s choice of

law rules, we must first determine whether a conflict exists between the laws of the

interested states, and if there is no conflict, then the forum state’s laws apply. Rowe v.

Hoffman-La Roche, Inc., 917 A.2d 767, 771 (N.J. 2007). The District Court found that

the elements of defamation in New Jersey, South Carolina, and New York did not

conflict, and we agree. See, e.g., DeAngelis v. Hill, 847 A.2d 1261, 1267-68 (N.J. 2004);

Erickson v. Jones St. Publishers, LLC, 629 S.E.2d 653, 664 (S.C. 2006); Dillon v. City of

New York, 704 N.Y.S.2d 1, 5 (App. Div. 1st Dep’t 1999). Accordingly, under New

Jersey’s defamation law, Kersey was required to establish “(1) the assertion of a false and

defamatory statement concerning another; (2) the unprivileged publication of that

statement to a third party; and (3) fault amounting at least to negligence by the publisher.”

                                              8
DeAngelis, 847 A.2d at 1267-68.

       Several of Bell’s alleged defamatory statements were true, so by definition they

cannot be defamatory. These include the statements in the August 16, 2007 letter that

Bell was “aware of your problems with regard to your license to practice law,” and that

Kersey “will no longer be able to fulfill [his] responsibilities under [his] agreement with

Mr. Paradis” for maintaining and monitoring the Paradis patents. App. at 53. As to the

first statement, even though Kersey was licensed to practice law in New York, he had

been disbarred in two states and reprimanded in two others; he clearly had “problems”

with regard to his license to practice law. Regarding the second statement, the USPTO

had excluded Kersey from practicing before it, so he necessarily could not fulfill his

obligations vis-à-vis the Paradis patents.

       Bell’s remaining allegedly defamatory statements are privileged. New Jersey

recognizes a litigation privilege immunizing from liability statements “made in the course

of judicial, administrative, or legislative proceedings.” Hill v. N.J. Dep’t of Corr.

Comm’r, 776 A.2d 828, 840 (N.J. Super. Ct. App. Div. 2001). The privilege “applies to

any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or

other participants authorized by law; (3) to achieve the objects of the litigation; and (4)

that have some connection or logical relation to the action.” Hawkins v. Harris, 661 A.2d

284, 289 (N.J. 1995) (citation and internal quotation marks omitted). The

communications in the August 16, 2007 letter related to the maintenance and

                                              9
reinstatement of certain Paradis patents as well as Bell’s notification to Kersey that his

patent duties would be transferred to another attorney. Bell’s letter was intended to

resolve problems, prior to litigation, regarding the Paradis patents and Kersey’s alleged

failure to maintain the patents. This type of communication falls under the litigation

privilege and is exempt from liability for defamation. See Hill, 776 A.2d at 840 (noting

that the litigation privilege “covers statements made during settlement negotiations or

while engaged in a private conference with an attorney regarding litigation”).

       Bell’s November 1, 2007 letter to the New York Committee on Professional

Standards was absolutely privileged. The Supreme Court of New Jersey has adopted a

rule granting an ethics complainant immunity from suit by the lawyer against whom the

complaint was made. See In re Hearing on Immunity for Ethics Complainants, 477 A.2d

339, 341-44 (N.J. 1984) (invalidating statute allowing attorney to bring malicious

prosecution action against ethics complainant); see also Toker v. Pollak, 376 N.E.2d 163,

168 (N.Y. 1978) (recognizing absolute immunity from suit in New York for filing a

complaint before a grievance committee of a bar association). Bell’s November 1, 2007

letter to the New York Committee on Professional Standards is the exact type of ethics

complaint covered by the privilege. The District Court properly granted summary

judgment to Bell on Kersey’s defamation claim.

                                           C.

       The District Court did not abuse its discretion in awarding Becton Dickinson and

                                             10
Bell litigation sanctions under Federal Rule of Civil Procedure 11. Kersey, an

experienced attorney, pursued obviously frivolous claims against Becton Dickinson and

refused to dismiss the company as a defendant even after reaching an agreement with the

Paradis defendants. Kersey’s third-party beneficiary claim was clearly baseless, and the

District Court correctly sanctioned Kersey for his pursuit of the claim. See Doering v.

Union Cnty. Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir. 1988) (sanctions

under Rule 11 only prescribed “in the exceptional circumstance where a claim or motion

is patently unmeritorious or frivolous” (internal citation and quotation marks omitted)).

Likewise, Kersey’s defamation claim against Bell was poorly pled, contrary to clear law,

and seems, even from the removed perspective of a reviewing court, intended to harass.

                                          III.

       We will affirm the orders of the District Court.

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