Sie sind auf Seite 1von 47

USCA1 Opinion

February 9, 1996
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

____________

No. 95-1870

A.M. CAPEN'S CO., INC.,

Plaintiff, Appellee,

v.

AMERICAN TRADING AND PRODUCTION CORPORATION


AND BLAS ROSSY ASENCIO AND HIS CONJUGAL PARTNERSHIP,

Defendants, Appellants.

____________

ERRATA SHEET

The opinion of

this court

issued on January

18, 1996,

is

amended as follows:

Page 14, line 6:

Laws Ann. tit. 14".

Change "P.R. Laws Ann. tit. 13"

to "P.R.

UNITED STATES COURT OF APPEALS


UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

____________________

No.

95-1870

A.M. CAPEN'S CO., INC.,

Plaintiff, Appellee,

v.

AMERICAN TRADING AND PRODUCTION CORPORATION


AND BLAS ROSSY ASENCIO AND HIS CONJUGAL PARTNERSHIP,

Defendants, Appellants.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Dominguez, U.S. District Judge]


___________________
____________________

Before

Selya, Circuit Judge,

_____________
Bownes, Senior Circuit Judge,
____________________
and Stahl, Circuit Judge.
_____________

____________________

Jos Enrique Colon Santana for appellant.


__________________________
Philip E. Roberts for appellee.
_________________

____________________

January 18, 1996


____________________

BOWNES, Senior Circuit Judge.


BOWNES, Senior Circuit Judge.
_____________________

from a

preliminary injunction

issued by the

barring defendant-appellant American

Corp.

("ATAPCO")

from

This is

an appeal

district court

Trading and

Production

terminating plaintiff-appellee

A.M.

Capen's Co., Inc. ("Capen's") as an exclusive distributor for

Puerto

Rico of

ATAPCO's

products.

action

in the United States

Capen's

had filed

an

District Court for the District

of Puerto Rico alleging that

tit. 10,

ATAPCO violated P.R. Laws

278, et seq. (1976 and


__ ____

the Puerto Rico Dealer's

of the distributorship.

Supp. 1989)(a.k.a. Law 75,

Act) by terminating the exclusivity

Section 278a of title 10 provides:

Notwithstanding

the

dealer's contract of
to

Ann.

the parties

existence

a clause

the existing

principal

or

grantor

reserving

the unilateral

terminate

in

right to

relationship, no
may

directly

or

indirectly perform any act detrimental to


the established relationship or refuse to
renew

said

contract

on

its

normal

expiration, except for just cause.

The injunction was issued

pursuant to the provisional remedy

provision, Section 278b.1 of the Act, which provides:

In

any litigation

directly

or

in which

indirectly

there is

involved

the

termination of a dealer's contract or any


act

in

established

prejudice
between

of
the

the

relation

principal

or

grantor and
grant,

the

dealer, the

Court

may

during the time the litigation is

pending solution,

any provisional remedy

or

interdictory nature to

measure of an

do or to desist

from doing, ordering any

of the parties, or both, to continue,


all its terms,
by

the

abstain

the relation

dealer's

contract,

from performing

-22

in

established
and/or

any act

to

or any

omission

in prejudice

case

which

in

consider

In any

provisional

remedy

requested, the

Court

the

herein provided is
shall

thereof.

the

interests

of

all

parties concerned and the purposes of the


public policy contained in this chapter.

There

1978,

Capen's

predecessor,

of

is no

entered

an

and Steelmaster

Rico, the Caribbean, the

South America.

the law that

to the

basic facts.

agreement

with

In

ATAPCO's

the exclusive distributor

office

products in

Puerto

Dominican Republic, and Central and

The agreement did not

Although confirmed in

did not sign a

on

into

Sheller-Globe, to be

Globe-Weiss

date.

dispute as

contain an expiration

a written letter,

formal contract because they could

would apply to

the contract.

the parties

not agree

When ATAPCO

took over, the arrangement with Capen's continued, as did the

disagreement as to choice-of-law and forum selection clauses.

ATAPCO,

Missouri,

wanted

with its

principal place

Missouri law

to

apply

of

business in

to the

contract.

Capen's, a New Jersey corporation with its principal place of

business in

that state, wanted Puerto Rico law to apply.

a result, ATAPCO and Capen's never signed a

In December 1993, ATAPCO

formal contract.

wrote a letter to Capen's

it terminated the exclusive aspect of the dealership.

did

sell

As

in which

ATAPCO

not end the Capen's dealership; it reserved the right to

to

others.

ATAPCO made

representative for the area

Blas

Rossy Asencio

a sales

for which Capen's originally had

-33

the exclusive rights.

This lawsuit ensued.1

Proceedings of the District Court


Proceedings of the District Court
_________________________________

The

the

Magistrate

district court

Judge that

adopted the

the

recommendation of

provisional

Puerto Rico Dealer's Act be granted.

remedy in

the

The court then issued a

full-blown opinion

giving the reasons

for its

action.

It

found that Capen's

"has exhibited a likelihood of success on

the merits."

A.M. Capens Co., Inc. v. American Trading and


_______________________________________________

Prod. Corp., 892 F.


____________

Supp. 36,

38 (D.P.R.

1995).

held:

Capens
business

has

also

shown

will suffer

if the injunction

that

his

irreparable injury

is not granted because

Mr.

Rossy Asencio will

the

products in the areas wherein Capens

had

the

exclusivity

competitive

with

advantage

will

business

will

added

Asencio

by ATAPCO.

obviously mean

market

the

for

freight charges assumed


above

continue to sell

be

of
The

that Capens'
significantly

irreparably diminished.

The harm that Capens will


certainly
harm:

outweighs
the

ATAPCO's

business area

unchanged (the Caribbean and


South America) and
receiving
Rossy

benefits,

Asencio

or

suffer most
possible

will

remain

Central and

ATAPCO will

continue

either through
through A.M.

Mr.

Capens;

It then

however, the harm is for Capens who


lose

business

Asencio

market

continue

should Mr.

to interfere

will
Rossy

with the

customers.

Id.
___

at 38-39.

Finally, the

court

held that

the

public

____________________

1.

Capen's

has

sued

Blas

Rossy

inference with contractual relations.

-44

Asencio

for

tortious

interest

-55

would

not

injunction.

be

adversely

affected

by

the

preliminary

Id. at 39.
___

It is

obvious that

what we

are reviewing

is not

only a provisional remedy under the Puerto Rico Dealer's Act,

but

preliminary injunction

that

meets,

at least

prima
_____

facie, all federal requisites.


_____

reviewing a

The appropriate standard for

preliminary injunction

is abuse

Jiminez Fuentes v. Torres Gaztambide, 807 F.2d


____________________________________

of discretion.

236, 239 (1st

Cir. 1986)(en banc), cert. denied, 481 U.S. 1014 (1987).


_____ ______

Analysis
Analysis
________

We

start our analysis with the only finding of the

district court to which defendant has objected -- probability

of success on the

merits.

two

that Puerto

contentions:

Defendant's appeal is

Rico law does

posited on

not apply; and

that plaintiff is not a dealer under the Puerto Rico Dealer's

statute.

matter."

As the

Id.
___

district court

noted,

this is

"a close

That

is because Capen's does not fit the mold of a

typical Puerto Rican dealer.

Rico

and has

Island.

neither

a warehouse

It sells exclusively to

Though Capen's sometimes

does

It does not advertise in Puerto

not have

a showroom

on

the

retailers and wholesalers.

sends an agent

resident agent

qualified to do business

nor

on the

to Puerto Rico,

Island and

in Puerto Rico on a

it

is not

regular basis.

On the other hand, the annual sales made by Capen's in Puerto

-66

Rico under its exclusive distributorship increased from about

$30,000 in 1978 to $423,000 in 1993.

of

ATAPCO products

for the

Total Puerto Rico sales

five-year period

spanning from

1989 to 1993 came to about $1,976,000.

The

first

issue

is

what

law

applies.

This

necessitates an examination of the conflict of law principles

governing contract and tort law.

Contract Factors
Contract Factors
________________

ATAPCO contends that the district court incorrectly

applied Puerto

Rico choice of

law rules to

the facts.

It

stresses

that

none
____

contract, performance

of

the

acts

--

negotiation

of

the

of the contract obligations, or breach

of the contract -- took place in Puerto Rico.

that neither it nor Capen's

It points out

has offices or employees located

in Puerto Rico.

The Supreme

Court of Puerto Rico

has approved the

"dominant or significant contacts" test for contract and tort

actions.

F.

Supp.

In re San Juan Dupont Plaza Hotel Fire Litig.,


_____________________________________________

79, 82

(D.P.R. 1990).

jurisdiction with the most

Thus, "the

issue should

apply."

this

recourse

the

Conflict

of the

significant contacts with respect

to the disputed

question,

laws

745

to

of Laws is appropriate.

Id.
___

In

Restatement

determining

(Second)

of

Id. (citing Sections 6 and

___

188).

Under

Section

188 of

the

Restatement, absent

-77

contractual

choice

of law,

the contacts

account in a contract action include:

to be

taken into

(a)

the place of contracting,

(b)

the place of negotiation of the contract,

(c)

the place of performance,

(d)

the location of the

subject matter

of
the contract, and

(e)

the domicil, residence, nationality,

place

of

corporation

and

place

of

business of the parties.

Restatement (Second) of Conflict of Laws

The

places

of

contracting

contract

in question

States.

ATAPCO and Capen's

discuss the

occurred

contract; they

"[s]tanding alone,

in

188 (1971).

and

the

continental

met in St.

also spoke

Id.

the

United

Louis, Missouri, to

by phone.

the place of contracting

insignificant contact."

negotiating

188 cmt. e.

However,

is a relatively

___

The

part, in

performance of

ATAPCO's

customer

Missouri.

The goods

to the point of

trailer

contract takes

the continental United States.

to purchase products

or

the

to

merchandise.

the

from ATAPCO,

service

When Capen's wishes

it places

offices

in

an order

Pennsylvania

are then sent to Capen's

embarkation.

Pennsylvania

Sometimes

office

But performance also occurs

where the market is

-88

place, in

with

or

in New Jersey

Capen's sends a

to

pick

up

the

in Puerto Rico --

-- because the contract

to sell

state

granted Capen's the exclusive right

ATAPCO's products there.

where

practice

is to

contract

See Id.
___ ___

provides

be pursued

has an

that

188 cmt. c ("[A]

given

obvious interest

business

in the

application of its rule designed to regulate or to deter that

business practice.").

The location of the

subject matter of the contract

similarly varies, depending on one's

view.

If the

products
________

sold

by ATAPCO,

and

subject matter,

(and

then by

they start

Capen's,

are considered

out in Pennsylvania

or Missouri

Kentucky according to ATAPCO) and end up in New Jersey.

Arguably, this is the end of the line because

are

the

shipped to

Puerto

contracts between

Rico,

they

become the

Capen's and its customers

ATAPCO, not surprisingly,

when the goods

subject

of

in Puerto Rico.

takes this position, pointing

out

that it has no direct contacts in Puerto Rico.

The

status of

other subject

Capen's as

merchandise.

matter of

the exclusive distributor

This, it

seems clear,

Rico.

It is this subject matter which

than,

say, the

price of

delivery to Capen's.

the contract

the goods or

is the

of ATAPCO's

is located

in Puerto

is in dispute, rather

the manner

The essential purpose of the

of their

exclusive

distributor-ship was

to enable Capen's to

sell the products

it purchased from ATAPCO in Puerto Rico without competition.

The

last factor -- the

location of the parties --

-99

does

not

point

to

Puerto

Rico.

ATAPCO,

Missouri

corporation,

and

also

apparently

Kentucky.

of

has main offices

conducts

in Pennsylvania

business

in

and Missouri

Maryland

and

Capen's is a New Jersey corporation with its place

business

there.

Capen's

does

not have

any

offices,

warehouses or permanent employees in Puerto Rico; it does not

have

a Puerto Rico address

however,

regularly send

or phone number.

employees

to Puerto

Capen's does,

Rico to

take

orders from customers.

Tort Factors
Tort Factors
____________

breach of Law 75 is considered a "tortious act."

Telenetworks, Inc. v. Motorola Universal Data Sys., Inc., ___


________________________________________________________

F.

Supp. ___,

1995).

___ 1995

WL 707412,

Section 278b of the

at

2 (D.P.R.

Nov. 28,

Dealer's Act provides:

"[i]f no

just cause exists

shall have

for the

executed a

termination . .

tortious act

. the

principal

against the dealer

and

shall indemnify it."

The Restatement of

in

tort

action the

Conflict of Laws

law

of

the

state

provides that

with

the

most

significant relationship to "the

occurrence and the parties"

controls.

of Conflict

(1971).

Restatement (Second)

The

following

contacts

should

of Laws

be

taken

consideration:

(a)

the place where the injury occurred,

(b)

the place where the conduct causing

the injury occurred,

-1010

145

into

(c)
place

the domicil, residence, nationality,


of

incorporation

and

place

of

business of the parties, and

(d)

the place where the relationship, if


any,

between

the

parties

is

centered.

Id.
___

The injury occurred in

where the

Puerto Rico because that is

exclusive Capen's dealership was

terminated.

The

termination directly impacts the position Capen's held in the

Puerto Rico

274

F.

market.

Supp.

corporation

See Colletti v. Ovaltine Food Products,


___ __________________________________

719, 722

(D.P.R.

1967)

(where an

Illinois

terminated the distributorship of a Puerto Rican

dealer, its failure to "place the goods in Puerto Rico at the

disposal of

the . . .

dealer" is a tortious

not take place anywhere but

in Puerto Rico").

because Law 75 is aimed at compensating victims

terminations,

Puerto Rico,

the site

greater interest in applying its laws.

cmt. c; Colletti, 274


________

manner

of the

Additionally,

for wrongful

injury,

. . .

termination of

has a

See Restatement
___

F. Supp. at 722 ("[R]egardless

in which the defendant

plaintiff"

of the

act which "did

145

of the

allegedly notified the

its distributorship,

the

defendant

executed the

tortious act

Viewing all of the relevant factors

within Puerto

Rico.).

as a whole, we find they

cut in favor of applying Puerto Rico law.

General Considerations
General Considerations
______________________

Section 6 of

the Restatement (Second)

-1111

of Conflict

of Laws sets forth

general choice of law principles.

Where

there is no statute on point, the following factors should be

considered:

(a)

the needs of the interstate and

international systems,

(b)

the relevant policies of the forum,

(c)

the relevant policies of other

interested
interests

states
of

and

those

the
states

relative
in

the

determination of the particular issue,

(d)

the protection of justified expecta-

tions,

(e)

the basic policies underlying the

particular field of law,

(f)

certainty, predictability and

uniformity of result, and

(g)

ease in the determination and

application of the law to be applied.

Restatement (Second) of Conflict of Laws

Taking

the

policy

recognized that Law 75 "was

of

commercial

issues

6 (1971).

first,

courts

passed to protect the

distributors

working

in

Puerto

Ballester Hermanos, Inc. v. Campbell Soup Co., 797


______________________________________________

103,

106 (D.P.R. 1992).

Law 75 is

have

interests

Rico."

F. Supp.

"'directed to level the

contractual conditions between two groups financially unequal

in their strength.'"

Draft-Line Corp. v. Hon Co., 781


_____________________________

F.

Supp 841, 844 (D.P.R. 1991) (quoting Walborg Corp v. Tribunal


________________________

Superior,
________

140 D.P.R. 184, 189 (1975)),

(1st Cir. 1993).

aff'd, 983 F.2d 1046


_____

-1212

The
Puerto

Dealer's Act
Rico

economic

was enacted

Legislature to

exploitation of

by the

prevent the

local dealers.

The Legislature had observed that dealers


in

Puerto

vulnerable

Rico
to

were

particularly

summary termination

they had established

a favorable

for a principal's products.

once
market

Id. at 843-44.
___

The Puerto Rico Dealer's

embodying

a "strong

public

Act has been described as

policy."

Medina & Medina v.


____________________

Country Pride Foods, Ltd., 858 F.2d 817, 820 (1st Cir. 1988)
__________________________

(response

question

Puerto

of

Puerto

Supreme

concerning Law 75).

Rico

has

distributorships

are,

Rico

that "due

The

substantial

Court

certified

case law establishes that

interest

are not arbitrarily

reparation" is

to

in

seeing

that

terminated or, if they

provided to

them.

Puerto Rico Int'l Airlines, Inc., 518 F.2d 89, 91


_________________________________

Bonn v.
_______

(1st Cir.

1975).

As the district court pointed out, there is nothing

in the

statute that requires

a dealer to

be a

resident of

Puerto

Rico,

to

be

Commonwealth,

or

to have

office,

authorized

to

a place

of

do

business

business such

showroom or warehouse on the Island.

ested

Dealer:

person actually inter-

in a dealer's

contract because of

his having effectively


Puerto

Rico

the

in his charge

distribution,

concession or representation
merchandise or service;

-1313

of a

the

as an

Section 278 of

the Act defines "Dealer" and "Dealer's Contract":

(a)

in

in

agency,
given

(b)

Dealer's contract:

established
principal

between
or

relationship
dealer

grantor

and

whereby

a
and

irrespectively of the manner in which the


parties may call, characterize or execute
such
and

relationship,
effectively

distribution of a

the former

takes

charge

actually
of

the

merchandise, or of the

rendering of a service, by

concession or

franchise, on the market of Puerto Rico.

P.R.

Laws Ann.

tit.

Accordingly, Capen's

10,

278

appears to

(1976

satisfy

and

Supp.

1989).

the definition

of

dealer within the Dealer's Act.

Although both Missouri and New Jersey have statutes

protecting

dealers, we do not think that either state has an

interest in protecting Capen's in

Missouri provides

notice

to

agreement

that a

that,

franchisee may recover

407.410

franchisor must give

franchisee of

and

(1974

in

the

termination

absence

damages.

and Supp.

the instant circumstances.

of

ninety days'

of

a franchise

such

notice,

Mo. Rev. Stat.

1975).

The law,

407.405,

however,

only

applies to distributors with a place of business in Missouri.

Mo. Rev. Stat.

407.400(1) (1974 and Supp. 1975) (definition

of "franchise").

It

is plain that Capen's has

no franchise

presence in Missouri.

New

Jersey

provides that notice

termination

of

has a

Franchise

(60 days)

franchise

Practices Act

must be given

agreement

and

which

prior to

that

such

the

termination only can

Stat.

be based

56:10-5 (1971).

on "good cause."

N.J.

Rev.

As in Missouri, the Act applies only

-1414

to

a franchisee who establishes a "place of business" in New

Jersey.

Id.
___

56:10-4.

Thus, even though Capen's is located

in New Jersey, it does not qualify for the Act's protection.

Because

policy of

all three

jurisdictions evince

protecting distributors, we can

fairly infer that

the application of Puerto Rico law would not

or

New

Jersey.

By

New Jersey

markets

are concerned

to

only those

within the state, Missouri and

with dealers who

within their borders.

case, to apply the

offend Missouri

restricting protection

dealers who service customers

a general

have established

Thus, it makes sense, in this

law of the jurisdiction in

which Capen's

maintains its market.

In this context, ATAPCO argues that under P.R. Laws

Ann. tit. 14,

2403 (1989),

informational

documents

statement

Department

of assets

Capen's is not required to file

(certificate

and liabilities)

of State to

of

incorporation,

with the

qualify as doing

Puerto Rico

business in Puerto

Rico.

Section 2403

exempts from filing

which only receive,

outside Puerto Rico,

otherwise

the orders

and fill

Puerto Rico

Section

business

from the

2403 exempts

orders by mail

shipping the

ATAPCO argues

Capen's from having

or

goods into

that because

to qualify

to do

in Puerto Rico, Puerto Rico can have no interest in

protecting the

presents

outside.

by

those corporations

no

status of Capen's

cases in

support

-1515

as a distributor.

of this

contention

ATAPCO

and, as

already noted, there

is nothing in

the Dealer's Act

giving

rise to such a requirement.

This

injunctive

is

relief.

an appeal

When

from

an appeal

posture, the appellate court's

of

grant of

comes

to us

law of

Indian Tribe v. Guilbert, 934


__________________________

in

that

injunction are to be

statements of probable outcomes,"

comprising the ultimate

preliminary

"conclusions as to the merits

the issues presented on preliminary

understood as

as

the case.

F.2d 4,

6 (1st

rather than

Narragansett
____________

Cir. 1991);

accord Jimeniz Fuentes v. Torres Gatzambide, 807 F.2d at 238.

______ ____________________________________

In this case, we conclude that, bringing all the factors into

consideration, the

to

this

hybrid

law of Puerto Rico

contract/tort

district

court properly

Dealer's

Act for

the

most probably applies

action

and,

made reference

purpose of

the

perforce,

the

to the

Puerto Rico

motion to

impose

provisional remedy.

Because ATAPCO

other factors

has neither briefed

that the district court

the preliminary injunction,

note, however,

after reviewing

that

we agree

the district

with

Capen's would suffer

considered in issuing

we need not

must

consider them.

the record

court's

irreparable harm

nor argued the

carefully,

findings:

unless a

We

that

preliminary

injunction issued; that no appreciable harm would be incurred

by

ATAPCO

interest

by reason

would not

of such

relief;

be adversely

-1616

injunction.

Affirmed.
Affirmed.
_________

and that

affected by

the public

a preliminary

-1717