Tavarez v. Champion Products, Inc.

• Decision Date: 01 November 1995
• Docket Number: Civ. No. 94-2295 (HL).
• Citation: 903 F. Supp. 268
• Parties: Jose Cruz TAVAREZ, Plaintiff, v. CHAMPION PRODUCTS, INC., Defendant.
• Court: U.S. District Court — District of Puerto Rico

903 F. Supp. 268

Jose Cruz TAVAREZ, Plaintiff, v. CHAMPION PRODUCTS, INC., Defendant.

Civ. No. 94-2295 (HL).

United States District Court, D. Puerto Rico.

November 1, 1995.

Jose L. Machicote, Santurce, PR, for plaintiff.

Edward M. Borges, O'Neill & Borges, Hato Rey, PR, for defendant.

OPINION AND ORDER

LAFFITTE, District Judge.

Defendant has moved to dismiss Plaintiff's claim and for partial summary judgment. Plaintiff has opposed both motions. After carefully reviewing the record, the Court finds that there is no genuine issue as to any material fact on Plaintiff's Law 21 claim, and, therefore Defendant is entitled to partial summary judgment.

STANDARD OF REVIEW

Plaintiff, Jose Cruz Tavarez ("Cruz"), filed a complaint against Defendant, Champion Products, Inc. ("Champion"), alleging that Champion breached a contract and violated Puerto Rico's Sales Representatives Act ("Law 21"). See P.R.Laws Ann. tit. 10, § 279 (1978). In turn, Champion filed a motion to dismiss and, shortly thereafter, a motion entitled "Motion to Dismiss and/or for Partial Summary Judgment" requesting the dismissal of Cruz' Law 21 claim. The Court shall rule on Champion's motion for partial summary judgment.

The Court shall grant a motion for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) (emphasis added). The law governing the dispute identifies which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Facts which affect the outcome of the dispute are material. "Factual disputes that are irrelevant or unnecessary will not be counted." Id. In determining if a material fact is "genuine," the Court does not weigh the facts but, instead, ascertains whether "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.; Leary v. Dalton, 58 F.3d 748, 751 (1st Cir. 1995).

Significantly, the moving party bears the initial responsibility of "pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). The movant must establish that it is entitled to a judgment as a matter of law. See Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 928 (1st Cir. 1983). Moreover, under the local rules for the District of Puerto Rico, the movant has the additional burden of filing a brief statement of material facts as to which it contends there is no genuine issue to be tried. Local Rule 311.12. The movant must explain why there is no genuine issue as to each of these facts and properly support its argument by specific reference to the record. Id.

Once this threshold is met, the burden shifts to the nonmoving party. The nonmovant may not rest on mere conclusory allegations or wholesale denials. Libertad v. Welch, 53 F.3d 428, 435 (1st Cir.1995). It also must "set forth specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e); Local Rule 312.11. These material facts must be properly supported by reference to the record, including "any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves." Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.

Not all factual disputes will defeat a motion for summary judgment. "If the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-250, 106 S.Ct. at 2511. Moreover, a trivial "scintilla of evidence" will not save the nonmovant's case from collapsing. Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. The evidence must be precise and competent. Libertad, 53 F.3d at 435. The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

Normally, the Court construes all material facts and reasonable inferences drawn therefrom in favor of the nonmoving party. Leary, 58 F.3d at 751. However, when the nonmovant fails to annex a short, concise statement of material facts in its opposing motion, the movant's statement of contested facts is uncontroverted and deemed admitted.¹ Local Rule 311.12; Laracuente v. Chase Manhattan Bank, 891 F.2d 17, 19 (1st Cir.1989); Stepanischen, 722 F.2d at 930. This procedural defect shackles the nonmoving party to the moving party's portrayal of the events. Although this omission does not signify an automatic defeat, it launches the nonmovant's case down the road toward an early dismissal.

FACTUAL SETTING

In Cruz' opposition to Champion's motion for summary judgment, he omitted a statement of material facts. As a result of this procedural defect, Champion's statement of material facts are deemed admitted. The facts recounted below reflect Champion's portrayal of the events that lead to this lawsuit.

On July 1, 1985, Champion, a New York corporation, and Domingo García & Associates ("García"), a Puerto Rico corporation located in Caparra Heights, Puerto Rico, entered into a sales representation agreement. Champion granted Garcia the exclusive right to solicit orders for Champion products in four territories: Puerto Rico, the Dominican Republic, Jamaica, and the Virgin Islands. Champion agreed to pay García a commission. In return, García assented to use its best efforts to sell the products and to meet a minimum sales quota each year. Both parties agreed to terminate the arrangement on June 30, 1990.

Initially, Plaintiff Cruz was an employee of García. In 1988, however, Cruz acquired the company. Thereafter, Cruz replaced García as Champion's exclusive sales representative. Cruz and Champion never signed a new contract. Cruz simply adopted García's role under the original sales agreement. Champion considered Cruz and García to be interchangeable entities. Accordingly, Champion paid Cruz with checks issued, at times, directly to Cruz and, at other times, to García.² When the sales agreement terminated on June 30, 1990, Cruz and Champion continued the same commercial relationship without any interruption until this arrangement finally ended on May 6, 1994.³

THE LEGAL FRAMEWORK

Shortly after Champion dismissed Cruz as its sales representative in the Caribbean region, Cruz filed a complaint in this Court. Cruz alleged that: (1) Champion breached its sales representation contract with Cruz; and (2) Champion violated Puerto Rico's Law 21. Champion has moved for partial summary judgment on Cruz' Law 21 claim.

Law 21 is an offspring of the Dealer's Contract Law, P.R.Laws Ann. tit. 10, § 278 (1976). The Dealer's Contract Law, also known as Law 75, protects Puerto Rican "dealers" from a manufacturer's arbitrary dismissal. It is designed to prevent manufacturers from terminating their commercial relationship with the Puerto Rican distributors who have developed a favorable market for their products. Medina & Medina v. Country Pride Foods, Ltd., 858 F.2d 817, 820 (1st Cir.1988) (Puerto Rico Supreme Court response to certified question, 122 P.R.D. 172 (1988)). Pursuant to Law 75, a manufacturer can not terminate its agreement with a dealer except for "just cause." P.R.Laws Ann. tit. 10, § 278a (1976).

In 1988, the Supreme Court of Puerto Rico in Roberto, Inc. v. Roberto Colon v. Oxford Indus., Inc., 108 J.T.S. 115 (1988) held that Law 75 did not protect sales representatives. Alarmed by the lack of legal protection for sales representatives, the Puerto Rico legislature passed Law 21. See 1990 Leyes y Resoluciones de Puerto Rico, Pt. 2, Num. 21, at 1482. Resembling Law 75, Law 21 protects Puerto Rico sales representatives from arbitrary dismissal after they create an auspicious market for their employers. The Puerto Rico legislature found that the employers controlled every aspect of the commercial relationship. Paid by only commissions, the employees are exposed to termination without just cause leaving these individuals without a livelihood. Law 21 is an attempt to prevent this disastrous outcome. Id.

An essential element of a Law 21 claim is the existence of a "sales representation contract" that is formed after December 5, 1990. P.R.Laws Ann. tit. 10, § 279 (1991). The legislative history of Law 21 states: "This act this chapter shall take effect immediately after its approval Dec. 5, 1990, but it shall not be understood as an impairment to the contractual obligations that may have arisen prior to the same." 1990 Leyes y Resoluciones de Puerto Rico, Pt. 2, Num. 21, Art. 10, at 1487; Cf. Warner Lambert v. Superior Court, 101 D.P.R. 378, 1 Official Translations 527, 561 (1973) (holding unconstitutional the retroactive application of Law 75 to contracts existing at the time of the law's enactment). Neither Champion nor Cruz dispute this prerequisite to a Law 21 claim.

Law 21, therefore, does not apply to Cruz' contract with Champion unless the contract was formed after December 5, 1990 or the parties agreed on a novation after December 5, 1990 altering the conditions to the contract. The existence of a "novation is never presumed ... it must be established without any trace of doubt." Warner Lambert, 1 Official Translations at 544 (1973). If the parties do not expressly declare its existence and if the new contract is not incompatible with the old agreement "on all points," there is no novation. Id. at 544-549; P.R.Laws Ann. tit. 31, § 3242 (1991).

Champion has furnished overpowering evidence that Cruz' sales representation contract began in 1988 when Cruz assumed García's obligations under the contract. Although the contract ended by its own terms on June 30, 1990, Cruz and Champion never entered into a new...