Twin County Grocers, Inc. v. Mendez and Co., Inc.

• Decision Date: 03 December 1999
• Docket Number: No. Civ.97-2052(DRD).,Civ.97-2052(DRD).
• Citation: 81 F.Supp.2d 276
• Parties: TWIN COUNTY GROCERS, INC., Plaintiff, v. MENDEZ AND CO., INC., et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

81 F.Supp.2d 276

TWIN COUNTY GROCERS, INC., Plaintiff, v. MENDEZ AND CO., INC., et al., Defendants.

No. Civ.97-2052(DRD).

United States District Court, D. Puerto Rico.

December 3, 1999.

Francisco A. Besosa, Axtmayer, Adsuar, Muniz & Goyco, San Juan, PR, Roger B. Kaplan, Wilentz, Goldman & Spitzer, Woodbridge, NJ, for plaintiff.

Luis E. Dubon, Dubon & Dubon, San Juan, PR, William E. Estrella-Lopez-De-Vi, William Estrella Law Offices, San Juan, PR, Jose A. Gonzalez-Gierbolini, Cancio, Nadal, Rivera & Diaz, San Juan, PR, Jorge I. Peirats, Pietrantoni Mendez & Alvarez, Hato Rey, PR, for defendants.

OPINION AND ORDER

DOMINGUEZ, District Judge.

Pending before the court is a Motion for Partial Summary Judgement ("the Motion") filed by plaintiff, Twin County Grocers, Inc., ("Twin County"), on November 3, 1997. (Docket No. 37). Twin County seeks summary judgment on Counts III, IV and V of its Amended Complaint. (Docket No. 4). In a joint filing, Mendez and Co. Inc. ("Mendez") and Twin County submitted a master copy containing Twin County's motion for partial summary judgment, Mendez' opposition thereto and cross-motion for partial summary judgment ("the Opposition"), Twin County's reply brief in further support of plaintiff's motion for summary judgment and in opposition to Mendez' cross-motion for partial summary judgment (the "Reply"), and Mendez' brief in further support of Mendez' opposition and in further support of Mendez's cross-claim (the "Sur-Reply"). (Docket No. 92).¹

I. FACTUAL BACKGROUND

Plaintiff Twin County, a corporation organized under the laws of the state of New Jersey, is a cooperative-based warehouse distributor of supermarket merchandise with offices in New Jersey and New York. Twin County supplies supermarkets and other customers with over 17,000 types of products and general merchandise. Twin County purchases said products from numerous national brand name suppliers and then distributes them from warehouses in New Jersey and New York. In the course of its business, Twin County purchases in excess of $500 million in goods each year which in turn are sold to customers and members located in various states including New York, New Jersey, Connecticut, Pennsylvania and Puerto Rico.

Defendant Mendez, a Puerto Rico Corporation, is a wholesale distributor of certain brand name liquor and grocery products procured from the United States, Canada, Europe, South America and Puerto Rico and then resold to supermarkets and other retail customers in Puerto Rico.

Since 1994, Twin County has sold products from its warehouses in New Jersey and New York to certain customers with supermarkets located in Puerto Rico. Such customers included Supermercados Amigos ("Amigos"), the second largest supermarket chain in Puerto Rico operating at least 50 supermarket stores in the Commonwealth, Supermercados Grande ("Grande"), the third largest supermarket chain in Puerto Rico operating approximately twenty eight (28) retail supermarkets, and Supermercados Unidos ("Unidos"), a cooperative of supermarkets owners operating under the name Unidos.

On October 4, 1996, A. Cordero Badillo, Inc. d/b/a Supermercados Grande became an owner/member of the Twin County cooperative organization and, as an owner/member, acquired the right to purchase supermarket goods and general merchandise from Twin County on a purchase-order-by-purchase-order basis. "As a member of Twin County, Grande is also under a requirement to purchase a certain percentage of its total wholesale purchases `from all suppliers in the United States mainland.'" (Plaintiff's Motion, p. 7). Grande's membership in the co-cooperative, however, imposes no restriction on the goods or amount thereof that it may purchase from suppliers in Puerto Rico. Twin County supplies Grande with numerous categories of national brand name merchandise. All sales by Twin County to clients in Puerto Rico have been "F.O.B. Twin County's dockside," with all risk of loss and title passing to the purchasing retailers at Twin County's warehouse dockside in New Jersey and New York. Twin County has no facilities or operations in Puerto Rico.

On June 6, 1997, Mendez informed a number of its suppliers/principals of what Mendez named "the diversion scheme" by Grande and Twin County and demanded that they honor their contractual obligations by requiring Twin County to stop selling to Puerto Rico retailers items for which they had granted Mendez an exclusive distributorship. (See Plaintiff's Motion, Exhibit E). Otherwise, Mendez forewarned that it would seek the protection and remedies of Law 75. (See Docket No. 6. p. 3). Mendez also wrote to Grande on June 7, 1997 stating that Grande's purchases of products from Twin County "interfere and jeopardize the relation between Mendez [as the] exclusive Distributor" of several national brand name manufacturers. As such, Mendez demanded that Grande "stop and desist" its purchases from Twin County. (See Plaintiff's Motion, Exhibit D).

II. PROCEDURAL BACKGROUND

In response to Mendez' demands, on July 11, 1997 Twin County filed the instant complaint against Mendez. (Docket No. 1). Shortly thereafter, on August 14, 1997, Twin County filed an Amended Complaint naming, Grande and eleven principles/suppliers as co-defendants. (Docket No. 4). In its Amended Complaint, Twin County asserts claims against Mendez for violations of the Sherman Act, 15 U.S.C. § 1 and 2 (Count I), and for tortious interference with Twin County's relationship with its customers and national brand suppliers (Count II). Twin County also seeks declaratory judgement declaring that it has not interfered with Mendez' relationship with the eleven suppliers (Count III); declaring that Law 75, Laws of P.R.Ann. tit. 10, § 278 et seq., does not require the national brand name suppliers to prevent Twin County from reselling their products to Grande and others in New Jersey and New York (Count IV); and declaring that, if Law 75 is found to prohibit such sales, it is unconstitutional as contrary of the Interstate Commerce Clause (Count V).

In its counter claim (Docket No. 6), Mendez maintains that the actions undertaken by Twin County and Grande constitute tortious interference with the contracts containing an exclusive distributing promise between Mendez and each individual supplier resulting in damages for which Twin County and Grande are jointly and severally liable. (Counter claim I). Mendez also asserts that the contractual relationship between Twin County and Grande impairs Mendez' exclusive distribution contracts with its suppliers. Mendez claims that "[s]ince the contractual relationship between Twin County and Grande has an illicit cause and/or consideration ..." the court should declare it void and unenforceable. (Counter claim II).

On November 3, 1997, Twin County filed a motion for partial summary judgment on counts III, IV and V. Twin County moved the court to declare that: 1) Twin County has not interfered with or impaired Mendez' contractual relationship with any party; 2) Law 75 does not prevent Twin County from selling to Grande and other retailers, where title passes in New York and New Jersey for merchandise acquired from national suppliers; 3) Mendez is not protected by Law 75 with respect to Twin County's purchases from national suppliers and subsequent sales to Puerto Rico retailers; and 4) Grande and other retailers may continue to purchase goods from Twin County. In the counter motion for summary judgment Mendez requests the court to find that Twin County's activities at issue constitute tortious interference with contractual relationships and contracts prejudicial to a third party.

III. SUMMARY JUDGMENT STANDARD

The function of summary judgment is "to pierce the boilerplate of the pleadings and examine the parties' proof to determine whether a trial is actually necessary" Vega-Rodriguez v. Puerto Rico Tel. Co., 110 F.3d 174, 178 (1st Cir.1997) (citing Wynne v. Tufts Univ. Sch. of Medicine, 976 F.2d 791, 794 (1st Cir.1992)). Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). The party moving for summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The opposing party must then designate specific facts that show that there is a genuine triable issue. Id. at 324, 106 S.Ct. at 2553; Fed.R.Civ.P. 56(e).

At the summary judgment level, the evidence must be examined "drawing all reasonable inferences helpful to the party resisting summary judgement." Cortes-Irizarry v. Corporación Insular De Seguros, 111 F.3d 184, 187 (1st Cir.1997); see United States v. Diebold, Inc., 369 U.S. 654, 655 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam) ("On summary judgement the inferences to be drawn from the underlying facts [] must be viewed in the light most favorable to the party opposing the motion."). In order to survive the "swing of the summary judgment axe," Mack v. Great Atlantic and Pacific Tea Co., Inc., 871 F.2d 179, 181 (1st Cir.1989), the mover must satisfactorily show that there is a "genuine issue of material fact" left to be tried. Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 94 (1st Cir.1996). A fact is deemed "material" if the same "potentially affect[s] the suit's determination." Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.1990). "An issue concerning such a fact is "genuine" if a reasonable factfinder, examining the evidence and drawing all reasonable inferences helpful to the party resisting summary judgment, could resolve the dispute in that party's favor." Cortes-Irizarry v. Corporacion Insular, 111 F.3d at 187. If the party opposing summary judgment "generates uncertainty as to the true state of any material fact, the procedural weapon of summary judgement is...