DeMoss v. Kelly Services, Inc., 73-1182

• Citation: 493 F.2d 1012
• Decision Date: 18 March 1974
• Docket Number: 73-1253.,No. 73-1182,73-1182
• Parties: Jerry V. DeMOSS and J & B Corporation, Plaintiffs, Appellees, v. KELLY SERVICES, INC., Defendant, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

493 F.2d 1012 (1974)

Jerry V. DeMOSS and J & B Corporation, Plaintiffs, Appellees, v. KELLY SERVICES, INC., Defendant, Appellant.

Nos. 73-1182, 73-1253.

United States Court of Appeals, First Circuit.

Argued February 8, 1974.

Decided March 18, 1974.

Noel Gonzalez-Miranda, Hato Rey, P. R., with whom Sweeting, Gonzalez & Rodriguez, Hato Rey, P. R., was on brief, for Jerry V. DeMoss and J & B Corp.

Herman W. Colberg, San Juan, P. R., with whom Reichard & Colberg, San Juan, P. R., and Cedric A. Richner, Jr., Detroit, Mich., were on brief, for Kelly Services, Inc.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

COFFIN, Chief Judge.

These are cross appeals challenging the action of the district court in giving each party only part of the interlocutory relief prayed for pending final resolution of a dispute between a mainland United States dealer (in services) and his Puerto Rican distributor. The question of more widespread importance in Puerto Rico is a legal one, whether, in light of the "hands off" posture which federal courts are compelled to maintain toward interpretation of Law 75 under Fornaris v. Ridge Tool Co., 400 U.S. 41, 91 S.Ct. 156, 27 L.Ed.2d 174 (1970), such courts must desist from all adjudication, although of a non-constitutional nature, until the Supreme Court of Puerto Rico has spoken to the precise issue. The second question, of principal interest to the parties, is whether the court abused its discretion in giving less than complete relief requested.

Since 1964 DeMoss¹ has operated a temporary help business in San Juan, Puerto Rico, under a dealership contract with Kelly Services, Inc., a nationwide company. The letter of agreement between the parties provided in part that the manager "shall not operate any other business without Kelly's prior written permission". Sometime after the agreement was executed, DeMoss, without seeking Kelly's approval, acquired ownership and began to operate an employment agency called Careers, Inc., which shared part of the Kelly facilities. As soon as Kelly learned of this activity it informed DeMoss that conducting Careers, Inc. was violative of their dealership contract. When DeMoss, after some backing and filling, refused to discontinue the employment agency, Kelly terminated the dealership agreement.

The first move made by Kelly was to seek return of property and injunctive relief in federal district court. DeMoss immediately followed suit in the Superior Court of Puerto Rico seeking damages and injunctive relief against Kelly for termination of a dealership contract in alleged violation of Law 75,² which provides that no such contract may be unilaterally terminated by the principal except for "just cause". The Superior Court granted ex parte temporary relief by enjoining the termination of the dealership contract under Article 3A of Law 75.³ Kelly then removed the case to the federal district court pursuant to 28 U. S.C. § 1441 and § 1332, moved to set aside the restraining order issued by the Puerto Rico Superior Court and, consistent with its earlier request for injunctive relief against DeMoss, moved separately under Article 3A for an order prohibiting DeMoss from continuing to operate his employment agency. The court, resting solely on the authority of Article 3A, refused to set aside the Superior Court order enjoining termination of the dealership contract, granted Kelly's request that Careers, Inc. be terminated,⁴ concluding that "pending a final definition of `just cause' by the Commonwealth Supreme Court . . . leaving things as they stand presently would best serve the interests of the parties and the public policy that law 75 was designed to effectuate." Both parties appeal.

While the court, as its quoted words indicate, deemed itself restrained by Fornaris from deciding the merits, it did not feel similarly barred from granting provisional relief under Article 3A. DeMoss argues that, under Fornaris, even a provisional remedy cannot be afforded the principal against his agent. Kelly urges that Fornaris bars neither provisional nor ultimate relief. Strictly, only the availability and the appropriateness of the provisional relief granted is presented by these appeals. Nonetheless, in light of the clear intention of the court to abstain from deciding the merits until a decision by the Supreme Court of Puerto Rico applying "just cause" to the facts at hand, it is necessary that we resolve the question of what Fornaris requires of the federal court, rather than leave the parties and the court in limbo.

The salient portion of Fornaris is:

"Whether the Supreme Court of Puerto Rico, would give the same broad sweep to `just cause\' as did the Court of Appeals is something we do not know. It is conceivable that `just cause\' might be judicially confined to a more narrow ambit which would avoid all constitutional questions. We therefore reverse and direct the Court of Appeals to remand the cases to the District Court with instructions to hold its hand until the Puerto Rican Supreme Court has authoritatively ruled on the local law question in light of the federal claims. See England v. Medical Examiners, 375 U.S. 411, 420, 84 S.Ct. 461, 11 L.Ed.2d 440" 400 U.S. at 44, 91 S.Ct. at 158. Footnote omitted.

In the case now before us, no constitutional issue is presented by the merits or by the requests for temporary relief. The merits present only a question of statutory construction, the sole issue being whether DeMoss' violation of the letter of agreement constituted "just cause" within the meaning of Law 75. There are no "federal claims" at issue...