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Palestri v. Monogram Models Inc.

May 19, 1989

ROBERT PALESTRI, APPELLANT
v.
MONOGRAM MODELS, INC., KIDDE RECREATION PRODUCTS, INC., THE ERTL COMPANY AND JOHN DOES 1 THROUGH 20



On Appeal from the United States District Court for the District of New Jersey, D.C. Civil No. 87-4030.

Author: Sloviter

Opinion OF THE COURT

SLOVITER, Circuit Judge

I.

The sole issue presented on this appeal is whether the New Jersey statute of limitations for libel begins to run when an allegedly libelous press release is mailed or when it is received and read. The facts relevant to this appeal are not in dispute.

Appellant Robert Palestri and Sol Kramer were formerly principals in a toy and hobby products distributorship, Kramer Brothers, Inc., which filed for bankruptcy in 1982. Appellees Monogram Models, Inc. and The Ertl Company, a subsidiary of Kidde Recreation Products, Inc., and other creditors, believing that Palestri and Kramer had deliberately misrepresented the financial health of the company when ordering goods on credit in 1981, filed suits in 1984, alleging fraud, negligence, and racketeering. After two years of litigation the suits were settled in April 1986 and thereafter dismissed. By agreement of the parties the terms of the settlement were to remain confidential.

On August 20, 1986, Monogram and Ertl mailed a joint press release from Illinois to the New York office of Toy and Hobby World Weekly Market Report which announced the settlement of the fraud and racketeering suit against Palestri and Kramer. The press release contained an admonition that because of its sensitive and complex nature it should be published in its entirety, but it was ultimately excerpted in the September 15, 1986 issue of Toy and Hobby World Weekly Market Report and later in Toy and Hobby World's October monthly magazine. The press release stated that the suit alleged that Palestri and Kramer had defrauded Monogram and Ertl through "overt misrepresentations and by ordering goods on credit without the intention of paying for them," and further stated that Monogram and Ertl filed their action "because they are no longer willing to be victimized by manipulation of their customers' businesses." App. at 59. These statements were repeated in the magazines substantially verbatim.

Palestri filed suit against Monogram and Ertl on August 21, 1987 in the New Jersey Superior Court and defendants removed it to the District Court for the District of New Jersey on the basis of the diverse citizenship of the parties.*fn1 The suit originally alleged counts for libel, slander, breach of contract, and intentional infliction of emotional distress. Defendants answered asserting various affirmative defenses including, inter alia, the defense that the libel and slander counts were barred by the statute of limitations. Defendants then moved for summary judgment.

The parties and the district court assumed that New Jersey law applies to this issue, and we see no reason to challenge that assumption. The district court construed the libel and slander counts as asserting the tort of defamation, rather than trade libel which apparently is subject to a different statute of limitations. After a careful canvass of the available New Jersey precedents the court predicted that New Jersey would hold that the libel and slander claims were barred by New Jersey's one-year statute of limitations because the complaint was filed one year and one day after the allegedly libelous communication was mailed by the defendants. The court held that the claim for intentional infliction of emotional distress could not be maintained because the conduct at issue did not rise to the requisite outrageousness. Finally, the court held that the settlement contract could not be construed to bar the issuance of the press release and thus, that claim also must fail. Therefore, the court granted summary judgment for defendants over the entire action. Our review of the district court's grant of summary judgment is plenary.

II.

Palestri appeals only from that part of the order that dismissed the libel claim on statute of limitations grounds. The text of the relevant New Jersey statute provides that "[every] action for libel or slander shall be commenced within 1 year next after the publication of the alleged libel or slander." N.J. Stat.Ann. ยง 2A:14-3 (West 1987). Palestri argues that the district court erred in concluding that the act of publication, which starts the limitations period running, occurred when the press release was mailed. Rather, Palestri argues, publication did not occur until the press release was received and read by someone at Toy and Hobby World. Thus, Palestri argues, since a letter posted in Illinois on August 20 would not in all likelihood have reached New York until at least August 22, his suit was timely filed.

The issue before us is a narrow one. Although Palestri argues that the statute of limitations did not begin to run until there was communication of the libel to a third party, it is not clear whether New Jersey would hold off the running of the statute until a third party actually read the material. At least with respect to a mass media publisher defendant, New Jersey has adopted a version of the single publication rule which establishes publication for purposes of commencing the statute of limitations at the time the libelous material is released to the trade, even though there may be no proof that at that time a third person has read and understood the libel. Barres v. Holt, Rinehart and Winston, Inc., 131 N.J. Super. 371, 390, 330 A.2d 38, 50 (N.J.Super.Ct. Law Div. 1974), aff'd per curiam, 141 N.J. Super. 563, 359 A.2d 501 (N.J.Super.Ct.App.Div. 1976), aff'd per curiam, 74 N.J. 461, 378 A.2d 1148 (1977). Barres suggests that New Jersey would, at least for media publishers, apply a time of sending rule.

However, the rule of Barres and its progeny does not necessarily govern the case of a single mailing by a private party of the allegedly libelous material. Barres represents New Jersey's application of the single publication rule for media publishers, a rule which is designed to avoid a multiplicity of lawsuits. It stems from the implicit common sense presumption that material widely distributed by the media is ordinarily equivalent to communication for statute of limitations purposes. See Barres, 131 N.J. Super. at 390, 330 A.2d at 49-50; cf. Hartmann v. Time Inc., 166 F.2d 127, 135 (3d Cir. 1947) cert. denied, 334 U.S. 838, 68 S. Ct. 1495, 92 L. Ed. 1763 (1948) (making same presumption for Pennsylvania law and noting the likelihood that "Life" magazine was read by persons not privileged within two or three days of its "very widespread distribution").

It does not follow ineluctably that New Jersey would apply the same rule it has established for media publications, which rejects the need to show the material has been read and understood before publication is deemed to have occurred, to cases involving a private written communication. That is because there is simply no basis either in New Jersey precedent or experience to assume that the contents of a letter have been communicated until the letter has been received by the addressee. ...


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