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BULKIN v. WESTERN KRAFT EAST

October 29, 1976

CHARLES J. BULKIN
v.
WESTERN KRAFT EAST, INC.



The opinion of the court was delivered by: FOGEL

 FOGEL, J.

 I. STATEMENT OF THE QUESTIONS INVOLVED

 Before us is an issue which appears to be one of first impression in the federal courts. Should a diversity suit which alleges negligent maintenance of personnel records be treated as a defamation action, rather than one sounding in tort, with respect to the choice and application of the appropriate state statute of limitations?

 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. *fn1"

 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". *fn2"

 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. *fn3"

 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. *fn4" 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. *fn5" 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. *fn6" 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. ...


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