Oreman Sales, Inc. v. Matsushita Elec. Corp., Civ. A. No. 90-4947.

Decision Date06 June 1991
Docket NumberCiv. A. No. 90-4947.
PartiesOREMAN SALES, INC. v. MATSUSHITA ELECTRIC CORPORATION OF AMERICA d/b/a Panasonic Industrial Company.
CourtU.S. District Court — Eastern District of Louisiana

John Emmett, Emmett, Cobb, Waits & Kessnich, New Orleans, La., for plaintiff.

Perry Staub, Elise Brown, Monroe & Lemann, New Orleans, La., for defendant.

ORDER AND REASONS

PATRICK E. CARR, District Judge.

This civil action is before the Court on the defendant's motion to dismiss Record Document No. 5. By Minute Entry of May 14, 1991, the Court took the motion under submission without oral argument. The Court now GRANTS the motion.

A local computer printer distributor, Oreman Sales, Inc. (Oreman), is suing one of its former suppliers, Matsushita Electric Corporation of America d/b/a Panasonic Industrial Company (Panasonic), for wrongfully terminating their distribution agreement, for interfering with Oreman's business with others, and for price discrimination among distributors. Oreman's complaint lacks certain necessary factual allegations on the one hand and relies on certain erroneous legal conclusions on the other. Together, these defects prove fatal to the viability of Oreman's complaint.

I. Background and allegations

Oreman is a local wholesale distributor of electronic equipment, including computer printers. Panasonic is the manufacturer (or U.S. affiliate distributor of a foreign manufacturer) of electronic equipment, including computer printers. Complete diversity exists between the two parties.

Oreman alleges that beginning in 1985, it and Panasonic made a series of agreements whereby Oreman would act as a distributor for certain Panasonic products. The last of the series was entered effective May 31, 1989; a copy of this written agreement is attached to Panasonic's motion to dismiss. Generally, the agreement makes Oreman a non-exclusive wholesale distributor for certain enumerated Panasonic computer printers in a territory covering Louisiana and six surrounding states (Texas, Oklahoma, Arkansas, Mississippi, Alabama, and Tennessee).

In section 2 of the agreement, Panasonic specifically reserved the right to have itself and others compete directly with Oreman:

... Notwithstanding anything to the contrary herein, PIC Panasonic reserves the unrestricted right to solicit and make direct sales of the Products to anyone, anywhere, and to appoint additional distributors of the Products and/or dealers, sales agents or sales representatives for the Products in the Territory and elsewhere, as in PIC's best judgment may from time to time be desirable, without obligation to DISTRIBUTOR Oreman of any kind, including, without limitation, for any commissions or other charges upon or in respect of any such sale or sales.

In section 3, Oreman agreed "not to resell the Products to customer locations outside of the seven-state Territory or to endusers, except upon the prior written consent of" Panasonic. Section 12 imposes certain record-keeping obligations on Oreman for its activities under the agreement:

12.1 DISTRIBUTOR shall at all time keep and maintain at its place of business herein set forth accurate books, records, correspondence and data of all transactions pertaining to this Agreement, and shall at all time make available and permit PIC or its authorized representative to examine or take extracts or copies of the same during normal business hours. All such books, records, correspondence and data shall be retained by DISTRIBUTOR during the term of this Agreement and for a period of one (1) year after the date of termination or expiration of this Agreement, except as otherwise provided in Paragraph 12.2, and thereafter PIC's rights with respect to the same shall cease.
12.2 DISTRIBUTOR shall at all times make available to PIC such of its records as are necessary for PIC to fulfill any recall or other obligations PIC deems necessary under Federal, state or local statutes, laws, rules or regulations, and such obligations shall survive and continue indefinitely after termination or expiration of this Agreement.
12.3 DISTRIBUTOR will promptly prepare and forward, as required by PIC, any and all reports PIC deems necessary for the carrying on of the mutual business of DISTRIBUTOR and PIC.

Section 14 emphasizes the independent buyer/seller relationship between Oreman and Panasonic:

14.1 Except as otherwise provided in Paragraph 13.3 above providing Panasonic a standard UCC Article 9 security interest in the goods it sells to Oreman, the relationship between PIC and DISTRIBUTOR is intended to, and shall, be that of buyer and seller and DISTRIBUTOR and its employees, agents and representatives shall under no circumstances be considered employees, agents, partners, joint venturers or representatives of PIC....
14.2 The relationship created by this Agreement is not intended by the parties to constitute the granting of a franchise to DISTRIBUTOR by PIC, and no Federal or state franchise statute, law, regulation or rule is intended by the parties to apply such relationship; nor shall any such franchise statute, law, regulation or rule be deemed or construed to apply to the formation, operation, administration or termination of this Agreement.

Section 16 effectively provides that the agreement is an "at will" agreement between the parties:

16.1 This Agreement shall be deemed effective upon the date of execution by a duly authorized representative of PIC and shall continue until December 31 of the current year. Thereafter, this Agreement shall renew automatically for successive one-year additional terms unless either party elects, by written notice to the other no less than thirty (30) days prior to the expiration date of the then current term, to permit this Agreement to expire. Anything to the contrary notwithstanding, either PIC or DISTRIBUTOR may terminate this Agreement, and the appointment of DISTRIBUTOR as a Regional Authorized Distributor of the Products, with or without cause, at any time upon written notice to the other to that effect, and said termination shall become effective thirty (30) days following the mailing of such notice, except where a shorter period for termination is provided in this Agreement.
. . . .
16.4 The expiration or termination of this Agreement at any time shall, unless otherwise expressly agreed to in writing by PIC, automatically operate, as of the effective date thereof, as a cancellation of any further deliveries of Products to DISTRIBUTOR, and shall be construed as an automatic cancellation of all purchase orders and releases of DISTRIBUTOR for Products, whether or not any such orders have theretofore been accepted by PIC.
. . . .
16.8 Neither PIC nor DISTRIBUTOR shall be liable to the other, or to any other party, by virtue of the expiration or termination of this Agreement due to any reason whatsoever, or due to no reason, or by virtue of the cancellation, pursuant to Paragraph 16.4 above, of any orders of Products that are undelivered on the effective date of any expiration or termination of this Agreement, including, without limitation, any liability for direct, indirect, special, consequential or incidental damages sustained by reason of such expiration or termination, including, without limitation, any claim for loss of profits or prospective profits in respect of sales or anticipated sales of Products, or on account of any expenditures, investments, leases, capital improvements or any other commitments made by either of the parties in connection with their respective businesses made in reliance upon or by virtue of DISTRIBUTOR's appointment as a Regional Authorized Distributor of the Products or otherwise; nor shall PIC or DISTRIBUTOR have the right to any equitable remedies by reason of the expiration or termination of this Agreement.

Section 25 provides for New York law to govern the agreement and the performance under the agreement.

Oreman alleges that its "volume of business" with Panasonic "was projected to exceed" $6 million per year by 1990. Oreman alleges that Panasonic "unilaterally terminated the agreement between the parties without cause" in April 1990. Oreman does not allege, however, that Panasonic failed to observe the 30-day delay period set forth in paragraph 16.1 of the agreement.

In an apparent effort to assert that Panasonic owed it an "implied fiduciary duty in tort under the provisions of New York law," Oreman alleges:

During the course of their dealings, a confidential relationship arose by virtue of Panasonic's dominance as a manufacturer over its distributor, in which Oreman provided sensitive business and trade information to Panasonic, including, but not limited to, sales volumes, financial statements, and the identity of Oreman's customers for Panasonic's goods. Oreman invested substantial time, money, and effort in promoting Panasonic's products and even expended its business into other states in order to discharge its responsibilities as a Panasonic distributor.

Oreman suggests the source of this "confidential relationship composing a fiduciary duty" as being "the contract between plaintiff and defendant." Oreman further suggests that the termination provisions in section 16 of the agreement are unenforceable:

Oreman specifically pleads that the termination provisions of the contract that Panasonic relied upon in terminating the regional distribution agreement was sic unconscionable under Article 2-302 of the Uniform Commercial Code. Oreman specifically alleges that in order to distribute Panasonic products it had no meaningful choice but to agree to the provisions allowing Panasonic to terminate the agreement without cause. Oreman further alleges that the contract terms are unreasonably favorable to Panasonic and that they allow Oreman Sales to be terminated as a distributor at virtually any time notwithstanding the substantial investment of time and money by Oreman in order to promote Panasonic products.

Thus, Oreman asserts...

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