AMERICAN EUTECTIC WELD. AL. SALES CO. v. García-Rodríguez

• Decision Date: 03 January 1973
• Docket Number: Civ. No. 104-72.
• Parties: AMERICAN EUTECTIC WELDING ALLOYS SALES CO., INC. and Eutectic Corporation, Inc., Plaintiffs, v. Pablo GARCÍA-RODRIGUEZ, Defendant.
• Court: U.S. District Court — District of Puerto Rico

353 F. Supp. 850

AMERICAN EUTECTIC WELDING ALLOYS SALES CO., INC. and Eutectic Corporation, Inc., Plaintiffs, v. Pablo GARCÍA-RODRIGUEZ, Defendant.

Civ. No. 104-72.

United States District Court, D. Puerto Rico.

January 3, 1973.

COPYRIGHT MATERIAL OMITTED

G. A. Nigaglioni, San Juan, P. R., for plaintiffs.

Benjamin Rodriguez-Ramon, San Juan, P. R., for defendant.

MEMORANDUM OPINION AND ORDER

CANCIO, Chief Judge.

Plaintiffs filed an amended complaint in this case on February 4, 1972. Said complaint alleges, in essence, that the plaintiffs are corporations engaged in the production, distribution and marketing of welding and soldering alloys and related products. It further alleges that the defendant Garcia was hired by the plaintiff, American Eutectic, on September 14, 1966, after entering into an employment contract in which the defendant agreed that for a period of two years following the date of termination of said contract, he would not work for any competitors in the same territory he covered for American Eutectic during the last two years of his employment, and further agreed to maintain plaintiff American Eutectic's customer lists and identifications and other business secrets as confidential.

The plaintiffs requested injunctive relief against defendant Garcia to prohibit him from "disclosing or using confidential information with respect to plaintiff's customers or from calling upon any of plaintiff's customers which have been designated in customer lists, card files or other customer identifying records." The complaint also requested that the defendant be restrained "from employment in competition with plaintiffs for a period of two years from the date of his termination of employment with them in the Commonwealth of Puerto Rico."

On April 27, 1972, the plaintiffs moved for summary judgment, limited to the issue of enjoining the defendant from soliciting plaintiffs' customers. The defendant opposed said motion on its merits and moved for the dismissal of the amended complaint.

The defendant also alleges that this case should be dismissed for lack of jurisdiction because the plaintiffs have not established the requisite $10,000 jurisdictional amount, and further contends that a stay of proceedings should be granted under the rule of Fornaris v. Ridge Tool Co., 400 U.S. 41, 91 S.Ct. 156, 27 L.Ed.2d 174 (1970).

JURISDICTION

The defendant bases his contention of non-compliance with the jurisdictional amount of $10,000¹ on the stipulated fact that there have been no substantial changes in Eutectic's sales in the territory covered by Garcia. The defendant relies mainly on Zep Manufacturing Corporation v. Haber, 202 F.Supp. 847 (1962), which involved a restrictive covenant for a two year period imposed upon a distributor. In that case the sole evidence of value to the plaintiff before the Court was the loss of $3,000 in profits from the distributor. The Court suggested that the result could have varied if the plaintiff had established other possible losses:

Nevertheless, the plaintiff has suggested no other basis for calculating the benefit to be derived from an injunction, such as protection of good will.

The plaintiffs allege that the future effects of the defendant's alleged breach of Eutectic's other employees is relevant when determining the jurisdictional amount, Premier Industrial Corporation v. Texas Industrial Fastener Company, 450 F.2d 444 (5 Cir., 1971). Paragraph 27 of the affidavit of George Vanta, Divisional Manager of Eutectic Corporation, states that the possible pirating away of Eutectic's sales personnel could be valued at more than $10,000.

The right to be free from disclosure of confidential information is also highly valued by the plaintiffs.² Hulenbusch v. Davidson Rubber Co., 344 F.2d 730 (8 Cir., 1965). Possible damages to good will are also greatly esteemed by the plaintiffs. Mr. Vanta's affidavit in paragraphs 17, 18 and 26 seems to uphold an alleged loss of good will. Good will though an intangible, constitutes property and is recognized and protected by law, Mann v. Fisher, 51 F.Supp. 550 (U.S.D.C.1943).

The amount in controversy should be determined from the standpoint of the plaintiff, Moore's Federal Practice, Vol. 1, 0.91, p. 827; Central Mexico Light & Power Co. v. Munch, 116 F.2d 85 (2 Cir., 1940); Alfonso v. Hillsborough County Aviation Authority, 308 F.2d 724 (5 Cir., 1962); Breault v. Feigenholtz, 380 F.2d 90 (7 Cir., 1967). We are not convinced that the value of the remedy sought by the plaintiff does not reach the jurisdictional amount. This Court not being able to affirm, beyond a legal certainty, that the value of the injunction sought by the plaintiffs does not exceed the requisite jurisdictional amount, is bound to uphold jurisdiction, at least at this stage of the case, and in this type of motion. Muller v. Groban, 346 F.2d 263 (7 Cir., 1965); Matthiesen v. Northwestern Mutual Ins. Co., 286 F.2d 775 (5 Cir., 1961); Arnold v. Troccoli, 344 F.2d 842 (2 Cir., 1965).

ABSTENTION

The defendant moved that an order to stay proceedings be granted until the Supreme Court of Puerto Rico interprets the provisions of the Constitution of the Commonwealth of Puerto Rico alleged to have been violated by the restrictive covenant entered into between the parties. The defendant cites Fornaris v. Ridge Tool Co., 400 U.S. 41, 91 S.Ct. 156, 27 L.Ed.2d 174 (1970), in support of its contention. In that case the Court of Appeals for the First Circuit held that the Dealer's Act of the Commonwealth of Puerto Rico (Act No. 75 of 1964, 10 L.P.R.A. Section 278 et seq.) was repugnant to the federal Constitution. On appeal, the Supreme Court held that since that case dealt with a rather vague Puerto Rican law, which the Supreme Court of Puerto Rico had not authoritatively construed, federal courts should hold their hand until the Supreme Court of Puerto Rico has had the opportunity to interpret the law.

The rule of Fornaris is also inapposite to the case at bar. The underlying premise of Fornaris is that the highest court of Puerto Rico be given the opportunity to construe a Puerto Rican statute in a manner not repugnant to the federal Constitution. We are not, even remotely, involved in a case where we may declare a Puerto Rican statute unconstitutional, vis a vis the federal Constitution. The principle of comity, clearly present in Fornaris, cannot be said to be found in the present case. The abstention doctrine was instituted in order to prevent federal equitable intervention in those cases where state court construction of its laws could obviate the need for a decision on the federal claim. Railroad Commission v. Pullman Company, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). See also Harmon v. Forssenius, 380 U.S. 528, 85 S.Ct. 1177, 14 L.Ed.2d 50 (1964); Reetz v. Bozanich, 397 U.S. 528, 90 S.Ct. 788, 25 L.Ed.2d 68 (1970); Askew v. Hargrave, 401 U.S. 476, 91 S.Ct. 856, 28 L.Ed.2d 196 (1971) and Marin v. University of Puerto Rico, 346 F.Supp. 470 (DCPR, 1972, Order convening three-judge court).

In view of the above, defendant's motion to stay proceedings is denied.

Having disposed of these two preliminary matters, let us face plaintiffs' and defendant's motions for summary judgments on the merits.

FINDINGS OF FACT

The Court finds that the following facts are not in controversy:

1. The defendant García was hired by the plaintiff American Eutectic on September 14, 1966. A contract for employment was signed by the defendant in Puerto Rico, and lastly signed and consented to by the plaintiff. American Eutectic in the state of New York. Said contract, also dated September 14, 1966, designates Mr. García as a "Sales Representative" and forms part of plaintiffs' amended complaint as Exhibit "A".

2. Plaintiff Eutectic is a nationally known corporation specializing in the manufacture of welding and soldering alloys and related products and equipment. Plaintiff American Eutectic is a subsidiary of Eutectic and engages in the distribution, sale, marketing and promotion of products manufactured by Eutectic.

3. From the year 1961 until the date of his employment with Eutectic, Mr. García was employed by several companies as salesman. Mr. García's main task in his employ with Eutectic as a "sales representative" was really that of salesman. He is presently employed by Anibal L. Arsuaga, Inc. (A.L.A.) as a salesman. During his employ with Eutectic he was named District Supervisor in 1968 and Regional Manager in 1971.

4. Defendant García was trained by the plaintiffs in Flushing, New York. His training included the familiarization with the products he was to sell and the general techniques used in merchandising. He resigned his position with Eutectic in 1971.

5. At present, Mr. García, as a salesman for ALA, sells substantially the same types of welding products he sold when employed by Eutectic. García solicits for ALA a substantial number of his former clients when he worked for Eutectic. Of these, a substantial number were also prior clients of ALA. (See Exhibit 4, Deposition of defendant García, and affidavit of Mr. Anibal L. Arsuaga, dated May 31, 1972.)

6. Garcia's present employer, ALA, has been selling welding products in Puerto Rico since 1958.

7. Plaintiffs' "Customer Control Cards" system consists of preparing a separate card for each of their customers, which cards the specific sales made to each customer were recorded. The defendant delivered such cards to plaintiffs before his resignation from their employ.

8. The contract of employment executed between the parties on September 14, 1966 states, in part, the following:

(a) Paragraph 7 states that for a period of two years following the date of termination of the agreement, García would not work for any competitor in the same territory he covered for American Eutectic, during the last two years of his employment and within a 50-mile radius thereof.³

(b) Paragraphs 4 and 7 hold García responsible to maintain pla...