Triangle Trading v. Robroy Indus.

• Decision Date: 15 November 1999
• Docket Number: No. 98-2366,98-2366
• Citation: 200 F.3d 1
• Parties: (1st Cir. 1999) TRIANGLE TRADING CO., INC., Plaintiff, Appellant, v. ROBROY INDUSTRIES, INC., Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1

200 F.3d 1 (1st Cir. 1999)

TRIANGLE TRADING CO., INC., Plaintiff, Appellant, v. ROBROY INDUSTRIES, INC., Defendant, Appellee.

No. 98-2366.

United States Court of Appeals, for the First Circuit.

Heard Nov. 15, 1999.

Decided December 29, 1999.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Salvador E. Casellas, U.S. District Judge.

Sigfredo A. Irizarry-Semidei for appellant.

Anthony Cillo, with whom Ira L. Podheiser, Cohen & Grigsby, P.C. and Bruce J. McGiverin were on brief, for appellee.

Before Torruella, Chief Judge, Campbell and Wallace,^* Senior Circuit Judges.

TORRUELLA, Chief Judge.

This case comes before the court against a backdrop of Puerto Rico and federal case law limiting the scope of the Puerto Rico Dealers' Act of 1964, 10 L.P.R.A. §§ 278a-d (1994), commonly referred to as Act 75. Act 75 was enacted to "remedy the abusive practices of suppliers who arbitrarily eliminated distributors after they had invested in the business" and had successfully established a market in Puerto Rico for the supplier's product or service.¹ Gonzalez v. Brown Group, Inc., 628 F. Supp. 436, 438-39 (D.P.R. 1985) (citing Warner Lambert v. Tribunal Superior, 101 D.P.R. 378, 1 P.R. Offic. Trans. 527) WL 35652 (1973). The Act protects dealers only, see Roberco Inc. & Roberto Colon, v. Oxford Indus., Inc., 122 D.P.R. 115, 132-33 (1988) (relying on the legislative history), and provides a broad definition thereof, see 10 L.P.R.A. § 278(a). However, the blurred line between dealers and other middlemen in the distribution process, see Gonzalez, 628 F. Supp. at 439, induced a succession of cases to flesh out the controversial confines of Act 75.

Thus, we arrive at the case in hand. The plaintiff-appellant, Triangle Trading Co., Inc., purports to be a dealer protected by Act 75 with a claim against Robroy Industries for terminating its sales agreement without just cause. The district court, however, concluded that Triangle is not a dealer under the Act and granted summary judgment in favor of Robroy. For the reasons discussed below, we affirm.

I. STANDARD OF REVIEW

Summary judgment is an accepted "means of determining whether a trial is actually required." Serapion v. Martnez, 119 F.3d 982, 987 (1st Cir. 1997); see also Wynne v. Tufts Univ. Sch. of Med., 976 F.2d 791, 793-94 (1st Cir. 1992) ("[S]ummary judgment's role is to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required."). Unless the party opposing a motion for summary judgment can identify a genuine issue as to a material fact, the motion may end the case. See Fed. R. Civ. P. 56(c); Smith v. F.W. Morse & Co., Inc., 76 F.3d 413, 428 (1st Cir. 1996). A "genuine" issue is one supported by such evidence that "a reasonable jury, drawing favorable inferences," could resolve it in favor of the nonmoving party. Id. at 427; see also Libertad v. Welch, 53 F.3d 428, 435 (1st Cir. 1995).

To defeat Robroy's Motion for Summary Judgment, Triangle is required to produce "specific facts, in suitable evidentiary form, to . . . establish the presence of a trialworthy issue." Morris v. Government Dev't Bank of Puerto Rico, 27 F.3d 746, 748 (1st Cir. 1994). "'[C]onclusory allegations, improbable inferences, and unsupported speculation,'" are insufficient to establish a genuine dispute of fact. Smith, 76 F.3d at 428 (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)); see Serapion, 119 F.3d at 986; Libertad, 53 F.3d at 435; Morris, 27 F.3d at 748.

We review the district court's summary judgment de novo and assess the facts in a light most favorable to Triangle. See Morris, 27 F.3d at 748. This standard of review permits us to uphold the district court's order of summary judgment regardless of whether we reject or adopt its rationale, so long as an "independently sufficient ground" is made manifest by the record. Mesnick v. General Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) (citing Garside v. Osco Drug, Inc., 895 F.2d 46, 48-49 (1st Cir. 1990)); see also Houlton Citizens' Coalition v. Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999); Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir. 1996).

II. DISCUSSION

A. FACTS

The following facts are not in dispute. On April 22, 1985, Triangle and Robroy entered into a Sales Agency Agreement, and thereby Triangle became Robroy's exclusive sales agent in Puerto Rico for certain products manufactured by Robroy. Per the Agreement, Triangle was to "use [its] best efforts to promote the sale" of Robroy's products, and in exchange for all sales procured in Puerto Rico, Triangle would receive a commission.²

On February 7, 1996, Robroy announced the termination of the relationship, effective March 31, 1996. Triangle initiated this action on June 2, 1996. Robroy responded with a Motion for Summary Judgment asserting that Triangle is not a "dealer" within the meaning of Act 75. See 10 L.P.R.A. § 278. After concluding that, as a matter of law, Triangle's contention that it is a dealer under the Act is untenable, the district court granted summary judgment in favor of Robroy on the Act 75 claim.³

The appellant argues that the district court improperly weighed the evidence and made factual findings in reaching its determination that Triangle is not an Act 75 Dealer. Particularly troublesome is the district court's statement, "the preponderance of the evidence heavily weighs against Triangle's alleged distributor status." Although we concur that the district court's choice of words is unfortunate, any error is harmless, as we conclude that the record before us, as a matter of law, does not support Triangle's Act 75 dealer status.⁴ See Houlton Citizens' Coalition, 175 F.3d at 184; Hachikian, 96 F.3d at 504; Mesnick, 950 F.2d at 822.

Construing all facts in favor of Triangle, we acknowledge that Triangle maintained a facility and dedicated two employees to Robroy sales; it invested $7,000 per year into building a customer base for and promotion of Robroy's products; it received a commission for each sale in Puerto Rico, even if the customer dealt with Robroy directly; it held some Robroy inventory in its warehouse for which it was compensated in the form of an additional two percent commission; and it assisted Robroy with collection efforts.⁵ However, we are compelled by Triangle's admissions that it did not purchase Robroy products for resale; it had no control over the price or authority to approve credit, discounts, rebates, concessions or inducements; it did not handle billing or delivery of products; it did not pay for promotional literature; and it bore no financial risk in a sale, other than loss of commission. In addition, Triangle identified itself as a "commissionist" in its tax returns and annual reports.

B. ACT 75

The sole issue before us is whether, on the current record, the district court properly concluded that Triangle was not a dealer under Act 75, as a matter of law. The statute itself does not resolve the matter. The Act defines a dealer as a "person actually interested in a dealer's contract because of his having effectively in his charge in Puerto Rico the distribution, agency, concession or representation of a given merchandise or service." 10 L.P.R.A. § 278(a). The Act expands on this definition by explaining that a dealer's contract is a

relationship established between a dealer and a principal or grantor whereby and irrespectively of the manner in which the parties may call, characterize or execute such relationship, the former actually and effectively takes charge of the distribution of a merchandise, or of the rendering of a service, by concession or franchise, on the market of Puerto Rico.

Id. § 278(b).

Despite the intent of the legislature to protect dealers, the statutory definition of dealer encompasses a wide range of actors within the distribution process and threatens to extend Act 75's protective sweep well beyond the end that the statute sought to achieve. See Sudouest Import Sales Corp. v. Union Carbide, 732 F.2d 14, 16 (1st Cir. 1984) (citing San Juan Mercantile Co., v. Canadian Trans. Co., 108 D.P.R. 211, 215, 1978 WL 48787 (1978) 8 P.R. Offic. Trans. 218); Roberco, 122 D.P.R. at 124 (citing J. Soler Motors, Inc. v. Kaiser Keep Int'l Corp., 108 D.P.R. 134, 139, 1978 WL 48795 8 P.R. Offic. Trans. 138). Consequently, the courts directed their attention to the key requirement that the dealer "actually and effectively take[] charge of the distribution." In other words, the core question is whether the dealer obtained a certain level of control over the distribution of the supplier's products in Puerto Rico. See EBI, Inc. v. Gator Indus., Inc., 807 F.2d 1, 2-4 (1st Cir. 1986); Sudouest, 732 F.3d at 15-17; Kolthoff v. Fernandez, 1996 WL 288486, at *3-*6 (D.P.R. 1996); Jorge Rivera Surillo & Co., Inc. v. Cerro Copper Prods. Co., 885 F. Supp. 358, 361-62 (D.P.R. 1995); Gonzalez, 628 F. Supp. at 439-41; Mario R. Franceschini, Inc. v. Riley Co., 591 F. Supp. 414, 415-20 (D.P.R. 1984); Cruz Ramos, 445 F. Supp. at 984-85; Roberco, 122 D.P.R. at 125-26 (citing Cruz Ramos v. Brother Int'l Corp., 445 F. Supp. 983 (D.P.R. 1978)); San Juan Mercantile, 108 D.P.R. at 215, 8 P.R. Offic. Trans. 218; J. Soler Motors, 108 D.P.R. at 139, 8 P.R. Offic. Trans. 138.

Although we previously suggested criteria by which to measure this level of control in Sudouest Import Sales Corp. v. Union Carbide, 732 F.2d 14 (1st Cir. 1984), and EBI, Inc. v. Gator Industries, Inc., 807 F.2d 1 (1st Cir. 1986), we defer to the analysis set out in the 1988 opinion of the Supreme Court of Puerto Rico in Roberco, Inc. & Roberto Colon v. Oxford Industries, Inc., 122 D.P.R. 115. The Roberco court reviewed the legislative history of Act 75 and the existing case law, of both Puerto Rico and federal courts, to develop an inclusive list of factors to be weighed equally in consideration of whether a party has the...