Plaintiff, Charles J. Bulkin, has sued his former employer, defendant Western Kraft East, Inc.; he claims he has been damaged by defendant's negligence in maintaining personnel records, and seeks recovery accordingly. Pursuant to F.R. Civ. P. 12(b)(6), defendant moved to dismiss the complaint; its motion is based solely upon its contention that plaintiff's cause of action is time-barred by the one-year limitations periods which govern defamation actions under the applicable Pennsylvania and New Jersey statutes and decisional law. Defendant argues that the cause of action is one for defamation, not for negligence; accordingly, it contends that the one-year statutes of limitations require dismissal of the complaint under the law of both jurisdictions.
Our decision, as to whether plaintiff's complaint was filed within the time period established by the applicable statutes, depends upon disposition of the following subsidiary issues: First: does the law of Pennsylvania, or the law of New Jersey, control with respect to the choice of the limitations principles which we must follow in deciding this matter? Second: when selecting the appropriate limitations statute of either state, should the action be regarded as one for negligence or as one for defamation? Third: will characterization of the cause as one for negligence or as one for defamation, depend in turn upon our choice of the substantive law of Pennsylvania or of that of New Jersey? and Fourth: if we elect to follow the limitations law of Pennsylvania, does that state's "borrowing" statute require us to apply a New Jersey limitations period? We have considered these issues in light of the pleadings and briefs before us, as well as our own independent research, and conclude that the limitations principles established under Pennsylvania law should control; moreover, we have also concluded that plaintiff's cause of action should be treated as one for negligence, and not for defamation. Accordingly, we hold that under the Pennsylvania statutes of limitations for negligence actions, which are controlling in this matter, the complaint was timely filed; and we will, therefore, deny defendant's Motion to Dismiss. Our reasons follow:
II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY OF THE CASE
It is, of course, axiomatic that we must accept the truth of all of the material allegations of the complaint in connection with our disposition of defendant's Motion to Dismiss. We cannot grant that motion unless we are convinced that plaintiff could not possibly establish facts, in support of his claim, which would entitle him to relief; we must construe the complaint liberally, and resolve all doubts which appear on the face of the pleading in plaintiff's favor. Quinones v. United States, 492 F.2d 1269, 1273 (3d Cir. 1974); Miller v. American Telephone and Telegraph Company, 507 F.2d 759, 761 (3d Cir. 1974); Melo-Sonics Corporation v. Cropp, 342 F.2d 856, 858 (3d Cir. 1965); Frederick Hart & Co. v. Recordgraph Corporation, 169 F.2d 580, 581 (3d Cir. 1948).
We will review the underlying facts against this backdrop. Defendant, Western Kraft East, Inc., is a New Jersey corporation, with offices in Bellmawr, New Jersey. During the period from July 15, 1970, until November 1, 1973, plaintiff Bulkin, a Pennsylvania resident, was employed by the defendant as a salesman of corrugated paper boxes. Due to a shortage of paper in this particular industry, defendant apparently decided, in November, 1973, to reduce its sales force; plaintiff was discharged as a result of this cutback. Defendant then wrote a letter of introduction and recommendation for plaintiff.
On or about March 25, 1974, plaintiff discovered that his former employer had furnished Retail Credit Company with allegedly incorrect personnel information. This information related to the circumstances of plaintiff's severance; the thrust of the data provided by defendant was that plaintiff's sales record was the spur which led him to leave Western Kraft East, Inc., by "mutual agreement", and that he "would not be eligible for rehire".
Plaintiff explicitly avers that defendant, through its agents and employees acting in the scope of their employment, was negligent, in that it failed to maintain correct personnel records about plaintiff; he contends that this dereliction is the direct cause of the mental pain, distress, humiliation, and financial loss, which he allegedly has suffered. Plaintiff also claims that his reputation for competence has been severely undermined; the deleterious effect charged is the prejudice these statements will kindle when potential employers consider his qualifications.
Significantly, the complaint does not aver that the "statements" made by defendant were of a "defamatory" nature, or that defendant acted maliciously or wilfully in making these allegedly incorrect statements. Although the complaint states that "incorrect statements" had been "given" by defendant to Retail Credit Company, the nub of the complaint is the negligent maintenance of the personnel records, with the concomitant foreseeable effect upon prospective employers. Thus, in construing the entire complaint in a light most favorable to the plaintiff, any segregation of the claim of "incorrect statements" as a wholly independent allegation of wrongdoing, apart from the averments of faulty record-keeping, would do violence to the principles which must govern our disposition of the motion to dismiss. See, Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957); Quinones v. United States, supra, at 1273; Miller v. American Telephone and Telegraph Company, supra, at 761.
Plaintiff filed this suit on October 15, 1975, more than one year after he first learned of the incorrect personnel information, but less than two years thereafter. For purposes of deciding the Motion to Dismiss, we will fix March 25, 1974, as the date on which plaintiff's cause of action matured.
Thus, if we were to accept defendant's characterization of the action as one for defamation and, consequently, to apply the one-year limitations periods urged by defendant, then the complaint would be untimely. If, on the other hand, we accept the plaintiff's characterization of the action as one for negligence, and then apply a Pennsylvania statute of limitations for negligence, then the complaint would be timely; the application of either of the Pennsylvania statutes which govern negligence actions, 12 P.S. § 31 (six years), or 12 P.S. § 34 (two years), would dictate a finding of timeliness.
We also note that the institution of this action followed our dismissal of a prior federal suit by plaintiff against the same defendant. The prior action, Bulkin v. Western Kraft East, Inc., C.A. 75-2003, filed in this district on July 11, 1975, was based upon the same factual situation which underlies the instant complaint. In the initial action, however, plaintiff set forth a cause of action which sounded exclusively in defamation.
Upon plaintiff's own initiative, and with defendant's concurrence, that action was dismissed by this Court's Order of September 4, 1975; because our Order specified that the dismissal was "without prejudice", plaintiff retained the right to refile his suit under an alternate legal theory.
With these facts as background, we now proceed to our disposition of the issues raised by the Motion to Dismiss.
III. THE CONFLICTS ISSUE: DOES THE LAW OF NEW JERSEY OR PENNSYLVANIA GOVERN WITH RESPECT TO SELECTION OF THE APPROPRIATE STATUTE OF LIMITATIONS?
It is clear that this matter is before us solely because of diversity of citizenship; plaintiff is a Pennsylvania resident, and defendant is a New Jersey corporation. Accordingly, we must apply the substantive law of our forum state (Pennsylvania), and must refer to the conflicts of law rules of that jurisdiction, in connection with our choice of the appropriate limitations doctrine. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). As a general rule, Pennsylvania courts, when confronted by conflicts problems, apply the limitations statutes of the forum state. Freeman v. Lawton, 353 Pa. 613, 46 A.2d 205 (1946); Rosenzweig v. Heller, 302 Pa. 279, 153 A. 346 (1931). The prominent exception to this general rule is the so-called "borrowing" statute, 12 P.S. § 39, which requires a Pennsylvania court, under certain circumstances, to accord de facto recognition to the limitations statutes of another state. We will defer our discussion of the "borrowing" statute, and look initially to the impact of the general Pennsylvania rule, calling for the application of the limitations statutes of the forum state. In the present case, of course, application of that rule requires that we follow the limitations statutes of Pennsylvania.
Our decision to apply the limitations law of Pennsylvania is, however, only the beginning of our inquiry. Which of the various Pennsylvania limitations periods should properly govern adjudication of this cause of action? Defendant asserts that the cause of action is one for defamation, and urges that we apply Pennsylvania's one-year statute of limitations for defamation actions, 12 P.S. § 32.
Plaintiff responds, however, that the action must be treated as one for negligence, and jumps to the conclusion that the only applicable statute of limitations is the Pennsylvania two-year statute for personal injury actions, 12 P.S. § 34. However, we believe such a conclusion to be unwarranted on the basis of the pleadings before us. We perceive yet another arguably relevant Pennsylvania statute of limitations: 12 P.S. § 31, the general six-year limitations statute, which would govern a negligence action not involving personal injury.
What, then, are the factors to be weighed in choosing among these different limitations periods? In the first instance, a preliminary determination is required with respect to the nature of the complaint. Does it sound in negligence or in defamation? That decision, however, depends upon our choice of the controlling substantive law. Substantive determination of this litigation could be controlled by the law of New Jersey, or by that of Pennsylvania, notwithstanding our choice of the limitations principles set by Pennsylvania law. Thus, we must also resolve yet another problem, the choice of a body of substantive law which will govern the legal rights of the parties.
A. Choice of substantive law
Applying, again, the precept that a federal court must be guided by the conflicts rules of the forum in which it sits ( Klaxon, supra), we turn to the conflicts principles established by Pennsylvania law. Unlike the choice of limitations law, a procedural matter, the choice of substantive law, under Pennsylvania conflicts rulings, is governed by an interest analysis. Pennsylvania has abandoned the lex loci delecti doctrine, in favor of the more recently accepted " grouping of contacts " test; the relevant inquiry focuses upon a decision as to which forum has the most significant relationship to this particular controversy. Griffith v. United Air Lines, 416 Pa. 1, 203 A.2d 796 (1964).
Based upon the allegations of the complaint, we have only the following facts before us: (1) plaintiff resides in Pennsylvania, and (2) defendant company has its offices in New Jersey. The pleadings do not disclose the state of plaintiff's employment, the situs of plaintiff's employment records, nor the fact of maintenance of an office in Pennsylvania by defendant. Assuming that plaintiff was attached to the New Jersey office, and assuming further that his personnel records were kept at that location, then New Jersey might arguably have the more substantial contacts with any alleged negligence in record-keeping. However, depending upon the location of the Retail Credit Company, or upon the location of any businesses which might have been influenced by the incorrect personnel information, we can conceive of a set of facts which could establish Pennsylvania as the state in which the actual injury occurred; consequently, it would follow that the substantive law of Pennsylvania might be applied under the Griffith test.
In light of the scant record before us, any decision as to which state has the more significant contacts with this litigation would be completely speculative. We will avoid such a flight of fancy, by holding that both under the substantive law of Pennsylvania and under that of New Jersey, plaintiff has properly pleaded an action for negligence. Hence, we need not, and will not, decide the issue of the choice of substantive law, since under the law of both states the complaint properly would be regarded as one setting forth a cause of action for negligence, and not one for defamation.
B. CHARACTERIZATION OF THE CAUSE OF ACTION AS NEGLIGENCE -- NOT DEFAMATION
We reject defendant's argument that the complaint must be interpreted as stating a cause of action for defamation, rather than one for negligence. Defendant has failed to direct our attention to any Pennsylvania or New Jersey cases which support its attempt to discredit the legal sufficiency of plaintiff's allegations of negligence under the law of both of those jurisdictions. Neither the Pennsylvania nor the New Jersey courts have considered the precise issue with which we are faced; i.e., whether allegations of improper record-keeping by an employer can give rise to an action for negligence. Our own review of the case law of each of those states convinces us, however, that plaintiff has properly pleaded a valid action in negligence, and that his cause of action is not preempted by the possible existence of an alternate remedy in the nature of an action for defamation. Our reasons on this score follow:
1. Negligence under Pennsylvania law
Our analysis of Pennsylvania law is heavily influenced by the decision in Quinones v. United States, 492 F.2d 1269 (3d Cir. 1974), in which the Third Circuit reversed the lower court's dismissal of a complaint, filed under the Federal Tort Claims Act
that was based upon allegations of negligence in the maintenance of employment records. Because the Federal Tort Claims Act specifically excludes claims for slander and libel,
the Quinones court was faced squarely with the issue of recognition by Pennsylvania courts of a tort of "negligent maintenance of employment records", in contradistinction to the tort of "defamation". The Third Circuit candidly stated that the Pennsylvania courts had not yet faced that particular issue; hence, the Court resolved the matter upon its own prognostication of Pennsylvania state court action, based upon existing case law; it held that the tort of "negligent maintenance of employment records" would and does exist under the law of Pennsylvania; the Court further ruled that such a cause of action was not pre-empted by the law of libel and slander.
We find the rationale of the Quinones decision persuasive. Accordingly, we hold in this diversity action that, if this action were brought in the courts of Pennsylvania, the appellate courts of Pennsylvania would hold that a cause of action exists for "negligent maintenance of employment records ". The Quinones court discussed, at length, the fundamental nature of actions for negligence and actions for defamation, under Pennsylvania law, and stressed that the two torts were "conceptually distinct" in their root premises, and substantially different with respect to their essential ingredients; the court also noted that different standards of proof of injury, and different statutes of limitations, governed each of the two actions. Quinones, supra, at 1274-1275. Although recognizing that the interest protected by each form of action could be the same; e.g., the interest in reputation, the court declined to hold that such similarity with respect to the zones of protected interest required allegations of negligence to be treated as claims for defamation; the court viewed the availability of multiple or alternative causes of action as a "phenomenon . . . not unusual to the substantive law of torts", and one which would not restrict a plaintiff to the choice of any single remedy among several available ones. Quinones, supra, at 1275. Noting that the essence of a defamation action is the publication of defamatory matter, while the essence of the complaint before the court in Quinones was the failure to maintain adequate employment records, the court concluded:
It is not the publication of the incorrect employment history and record that serves as the foundation of plaintiff's complaint; it is the method in which the defendant maintained the record of his employment that is being criticized. Accordingly, we are persuaded that the Pennsylvania courts would not view the defamatory torts as pre-empting a cause of action sounding in negligence and based on an employer's failure to use due care in the maintenance of an employee's employment records.
Quinones, supra, at 1276. Since the allegations of Bulkin's complaint are weighted toward negligent record-keeping, rather than toward wrongful publication of defamatory matter (see discussion, infra, slip op. at p. 4), we are in accord with the rationale of Quinones and will apply its holding to our case. Quinones described the basic elements of the tort in the following language:
Having due regard for those principles of tort law followed by the Pennsylvania Supreme Court, we are persuaded that the state courts would recognize a duty of the defendant personal to the plaintiff to use due care in keeping and maintaining employment records, and that for breach of that duty, plaintiff may have a cause of action, if he is injured thereby and if the defendant's breach was the proximate cause of his injury.