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KRAMER v. MONOGRAM MODELS

May 31, 1988

SOL KRAMER, Plaintiff,
v.
MONOGRAM MODELS, INC., KIDDE RECREATION PRODUCTS, INC., The ERTL COMPANY and JOHN DOES 1 through 20, Defendants. ROBERT PALESTRI, Plaintiff, v. MONOGRAM MODELS, INC., KIDDE RECREATION PRODUCTS, INC., The ERTL COMPANY and JOHN DOES 1 through 20, Defendants


Maryanne Trump Barry, United States District Judge.


The opinion of the court was delivered by: BARRY

Plaintiffs in this consolidated action bring suits against defendants alleging defamation, breach of contract, and intentional infliction of emotional distress. Defendants now move for summary judgment. For the reasons that follow, that motion will be granted.

 Plaintiffs Palestri and Kramer were formally principals in a toy and hobby products distributor known as Kramer Brothers, Inc. A once highly successful business, it filed for bankruptcy in April, 1982. Plaintiffs contend that the company had overstocked goods for the 1981 Christmas season and was unable to pay its bills when sales fell off that year. However, defendants and other creditors who had supplied goods to plaintiffs' company, believed that Palestri and Kramer had deliberately misstated the financial health of the company and in 1984 they filed suits in this district against plaintiffs alleging fraud, negligence and racketeering. After two years of litigation, in April, 1986 the cases were settled and finally dismissed in August, 1986. The parties agreed that the terms of the settlement were to remain confidential.

 Approximately one month later, on August 20, 1986, defendants, The ERTL Company and Monogram Models, issued a joint press release to several trade publications. Although the cover letter requested that the statement, because of its "sensitive nature and complexity," be published in its entirety, it was instead excerpted in the September 15, 1986 issue of Toy & Hobby World Weekly Market Report and later in Toy & Hobby World's October monthly magazine. Both excerpts noted the filing of the fraud and racketeering suit which had alleged that Kramer and Palestri had defrauded Monogram and ERTL by "overt misrepresentations and by overordering goods on credit without the intention of paying for them," and the fact of the confidential settlement. The excerpts then quoted the press release's explanation and admonishment that "[ERTL] and Monogram . . . had filed their action because they are 'no longer willing to be victimized by manipulation of their customer's businesses . . . [nor would they] . . . tolerate defaults by [their] customers that are contrived in order to enrich their principals at their expense.'" Plaintiffs then filed these separate actions alleging breach of the settlement agreement, libel, slander, and intentional infliction of emotional distress. Palestri's suit was filed August 21, 1987; Kramer's was filed September 13, 1987.

 Defendants now move for summary judgment *fn1" arguing: 1) that both actions are barred by the statute of limitations, 2) that the statements alleged to be libelous are true, 3) that no action lies for the tort of intentional infliction of emotional distress or for breach of contract, and 4) that service of process on defendant ERTL, in the Palestri action only, is defective.

 The Statute of Limitations

 In the instant case, defendants argue that the last possible date that any of the defendants communicated anything concerning the Kramer litigation was August 20, 1986 when Monogram issued the press release. Thus, defendants argue, "publication" occurred at the latest on August 20, 1986 and, therefore, both Kramer's complaint, filed one year and one day later, and Palestri's complaint, filed thereafter, are time-barred. Plaintiffs argue that where the alleged libel was published by the mass media, courts have fixed the date of publication as of the date a periodical "goes on sale or is otherwise released to the public." Pl. Brief in Opp. at 20. Plaintiffs, however, misperceive the application of the so- called "single publication rule."

 Prior to the adoption at common law of the "single publication rule," a publisher of mass-produced materials did not enjoy the repose of the statute of limitations because sales subsequent to the initial sale created new causes of action. Accordingly, the rule developed that a plaintiff would have only one cause of action against a mass media publisher with the accrual date deemed to be the date on which the first edition of the publication was circulated to the public. See generally Zuck v. Interstate Publishing Corp., 317 F.2d 727 (2d Cir. 1963).

 Plaintiffs argue, relying on Zuck and Barres v. Holt, Reinhart & Winston Inc., 131 N.J. Super. 371, 330 A.2d 38 (Law Div. 1974), aff'd, 141 N.J. Super. 563, 359 A.2d 501 (App. Div. 1976), aff'd, 74 N.J. 461, 378 A.2d 1148 (1977), that application of the single publication rule compels the conclusion that plaintiffs' cause of action accrued, at the earliest, when Toy & World disseminated the first article which bears a publication date of September 15, 1986. However, there is an important factual difference between Zuck and Barres and the case at bar. In both Zuck and Barres, the defendant was the media publisher and the sole issue before the court was whether publications subsequent to the initial sale extended the statute of limitations:

 
. . . application of the [single publication] rule [is said] to cut off or "to engross" causes of action for distributions made by the publisher itself after the date of original "publication."

 Zuck, 317 F.2d at 733 (emphasis in original). In the instant case, plaintiffs have not joined the mass media publisher but rather have only sued parties that supplied the allegedly libelous press release. Thus, the issue in this case is when it can be fairly said that these defendants "published" a defamatory statement.

 "Publication" is defined as the communication of the allegedly libelous statement to a third person with a reasonable ground to suppose that it will become known to others. See Gnapinsky v. Goldyn, 23 N.J. 243, 128 A.2d 697 (1957); Kelly v. Hoffman, 137 N.J.L. 695, 61 A.2d 143 (E. & App. 1948). In the case at bar, that event occurred when Monogram and ERTL issued the August 20, 1986 press release. While the Barres court does state that an action may be brought within one year of the publication against either the author or the publisher, see Barres, 131 N.J. Super. at 386-87, that statement merely reflects the long-established rule that where an agency relationship exists, a communication from the agent to the principal does not affect a publication because no communication has been made to a third person.

 There was no special relationship between Toy & Hobby World and ERTL/Monogram. The issue of the press release itself is clearly a communication to a third person within the legal definition of "publication." In fact, the complaint alleges as much. See Complaint para. 14. (". . . statements by . . . defendants were ...


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