Court Opinion

ID: 2966142
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:49:24.683213+00
Date Added: 2024-06-11T11:43:08.721845
License: Public Domain

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<pre>                  United States Court of Appeals <br>                      For the First Circuit <br>                       ____________________ <br> <br>No. 98-2366 <br> <br>                   TRIANGLE TRADING CO., INC., <br> <br>                      Plaintiff, Appellant, <br> <br>                                v. <br> <br>                     ROBROY INDUSTRIES, INC., <br> <br>                       Defendant, Appellee. <br> <br>                       ____________________ <br> <br>           APPEAL FROM THE UNITED STATES DISTRICT COURT <br> <br>                 FOR THE DISTRICT OF PUERTO RICO <br> <br>         [Hon. Salvador E. Casellas, U.S. District Judge] <br> <br>                       ____________________ <br> <br>                              Before <br> <br>                     Torruella, Chief Judge, <br> <br>           Campbell and Wallace, Senior Circuit Judges. <br> <br>                      _____________________ <br> <br>    Sigfredo A. Irizarry-Semidei for appellant. <br>    Anthony Cillo, with whom Ira L. Podheiser, Cohen & Grigsby, <br>P.C. and Bruce J. McGiverin were on brief, for appellee. <br> <br> <br>                       ____________________ <br> <br>                       December 29, 1999 <br>                       ____________________

         TORRUELLA, Chief Judge.  This case comes before the court <br>against a backdrop of Puerto Rico and federal case law limiting the <br>scope of the Puerto Rico Dealers' Act of 1964, 10 L.P.R.A.  278a- <br>d (1994), commonly referred to as Act 75.  Act 75 was enacted to <br>"remedy the abusive practices of suppliers who arbitrarily <br>eliminated distributors after they had invested in the business" <br>and had successfully established a market in Puerto Rico for the <br>supplier's product or service.  Gonzlez v. Brown Group, Inc., 628 <br>F. Supp. 436, 438-39 (D.P.R. 1985) (citing Warner Lambert v. <br>Tribunal Superior, 101 D.P.R. 378, 1 P.R. Offic. Trans. 527 <br>(1973)).  The Act protects dealers only, see Roberco Inc. & Roberto <br>Coln, v. Oxford Indus., Inc., 122 D.P.R. 115, 132-33 (1988) <br>(relying on the legislative history), and provides a broad <br>definition thereof, see 10 L.P.R.A.  278(a).  However, the blurred <br>line between dealers and other middlemen in the distribution <br>process, see Gonzlez, 628 F. Supp. at 439, induced a succession of <br>cases to flesh out the controversial confines of Act 75. <br>         Thus, we arrive at the case in hand.  The plaintiff- <br>appellant, Triangle Trading Co., Inc., purports to be a dealer <br>protected by Act 75 with a claim against Robroy Industries for <br>terminating its sales agreement without just cause.  The district <br>court, however, concluded that Triangle is not a dealer under the <br>Act and granted summary judgment in favor of Robroy.  For the <br>reasons discussed below, we affirm. <br>                      I.  STANDARD OF REVIEW <br>         Summary judgment is an accepted "means of determining <br>whether a trial is actually required."  Serapin v. Martnez, 119 <br>F.3d 982, 987 (1st Cir. 1997); see also Wynne v. Tufts Univ. Sch. <br>of Med., 976 F.2d 791, 793-94 (1st Cir. 1992) ("[S]ummary <br>judgment's role is to pierce the boilerplate of the pleadings and <br>assay the parties' proof in order to determine whether trial is <br>actually required.").  Unless the party opposing a motion for <br>summary judgment can identify a genuine issue as to a material <br>fact, the motion may end the case.  See Fed. R. Civ. P. 56(c); <br>Smith v. F.W. Morse & Co., Inc., 76 F.3d 413, 428 (1st Cir. 1996).  <br>A "genuine" issue is one supported by such evidence that "a <br>reasonable jury, drawing favorable inferences," could resolve it in <br>favor of the nonmoving party.  Id. at 427; see also Libertad v. <br>Welch, 53 F.3d 428, 435 (1st Cir. 1995).   <br>         To defeat Robroy's Motion for Summary Judgment, Triangle <br>is required to produce "specific facts, in suitable evidentiary <br>form, to . . . establish the presence of a trialworthy issue."  <br>Morris v. Government Dev't Bank of Puerto Rico, 27 F.3d 746, 748 <br>(1st Cir. 1994).  "'[C]onclusory allegations, improbable <br>inferences, and unsupported speculation,'" are insufficient to <br>establish a genuine dispute of fact.  Smith, 76 F.3d at 428 <br>(quoting Medina-Muoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 <br>(1st Cir. 1990)); see Serapin, 119 F.3d  at 986; Libertad, 53 F.3d <br>at 435; Morris, 27 F.3d at 748.   <br>         We review the district court's summary judgment de novo <br>and assess the facts in a light most favorable to Triangle.  See <br>Morris, 27 F.3d at 748.  This standard of review permits us to <br>uphold the district court's order of summary judgment regardless of <br>whether we reject or adopt its rationale, so long as an <br>"independently sufficient ground" is made manifest by the record.  <br>Mesnick v. General Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) <br>(citing Garside v. Osco Drug, Inc., 895 F.2d 46, 48-49 (1st Cir. <br>1990)); see also Houlton Citizens' Coalition v. Town of Houlton, <br>175 F.3d 178, 184 (1st Cir. 1999); Hachikian v. FDIC, 96 F.3d 502, <br>504 (1st Cir. 1996). <br>                         II.  DISCUSSION <br>                             A. FACTS <br>         The following facts are not in dispute.  On April 22, <br>1985, Triangle and Robroy entered into a Sales Agency Agreement,  <br>and thereby Triangle became Robroy's exclusive sales agent in <br>Puerto Rico for certain products manufactured by Robroy.  Per the <br>Agreement, Triangle was to "use [its] best efforts to promote the <br>sale" of Robroy's products, and in exchange for all sales procured <br>in Puerto Rico, Triangle would receive a commission.  <br>         On February 7, 1996, Robroy announced the termination of <br>the relationship, effective March 31, 1996.  Triangle initiated <br>this action on June 2, 1996.  Robroy responded with a Motion for <br>Summary Judgment asserting that Triangle is not a "dealer" within <br>the meaning of Act 75.  See 10 L.P.R.A.  278.  After concluding <br>that, as a matter of law, Triangle's contention that it is a dealer <br>under the Act is untenable, the district court granted summary <br>judgment in favor of Robroy on the Act 75 claim. <br>         The appellant argues that the district court improperly <br>weighed the evidence and made factual findings in reaching its <br>determination that Triangle is not an Act 75 Dealer.  Particularly <br>troublesome is the district court's statement, "the preponderance <br>of the evidence heavily weighs against Triangle's alleged <br>distributor status."  Although we concur that the district court's <br>choice of words is unfortunate, any error is harmless, as we <br>conclude that the record before us, as a matter of law, does not <br>support Triangle's Act 75 dealer status.  See Houlton Citizens' <br>Coalition, 175 F.3d at 184; Hachikian, 96 F.3d at 504; Mesnick, 950 <br>F.2d at 822. <br>         Construing all facts in favor of Triangle, we acknowledge <br>that Triangle maintained a facility and dedicated two employees to <br>Robroy sales; it invested $7,000 per year into building a customer <br>base for and  promotion of Robroy's products; it received a <br>commission for each sale in Puerto Rico, even if the customer dealt <br>with Robroy directly; it held some Robroy inventory in its <br>warehouse for which it was compensated in the form of an additional <br>two percent commission; and it assisted Robroy with collection <br>efforts.  However, we are compelled by Triangle's admissions that <br>it did not purchase Robroy products for resale; it had no control <br>over the price or authority to approve credit, discounts, rebates, <br>concessions or inducements; it did not handle billing or delivery <br>of products; it did not pay for promotional literature; and it bore <br>no financial risk in a sale, other than loss of commission.  In <br>addition, Triangle identified itself as a "commissionist" in its <br>tax returns and annual reports.

                            B.  ACT 75 <br>         The sole issue before us is whether, on the current <br>record, the district court properly concluded that Triangle was not <br>a dealer under Act 75, as a matter of law.  The statute itself does <br>not resolve the matter.  The Act defines a dealer as a "person <br>actually interested in a dealer's contract because of his having <br>effectively in his charge in Puerto Rico the distribution, agency, <br>concession or representation of a given merchandise or service."  <br>10 L.P.R.A.  278(a).  The Act expands on this definition by <br>explaining that a dealer's contract is a  <br>                  relationship established between a dealer and <br>         a principal or grantor whereby and <br>         irrespectively of the manner in which the <br>         parties may call, characterize or execute such <br>         relationship, the former actually and <br>         effectively takes charge of the distribution <br>         of a merchandise, or of the rendering of a <br>         service, by concession or franchise, on the <br>         market of Puerto Rico. <br> <br>Id.  278(b). <br>         Despite the intent of the legislature to protect dealers, <br>the statutory definition of dealer encompasses a wide range of <br>actors within the distribution process and threatens to extend Act <br>75's protective sweep well beyond the end that the statute sought <br>to achieve.  See Sudouest Import Sales Corp. v. Union Carbide, 732 <br>F.2d 14, 16 (1st Cir. 1984) (citing San Juan Mercantile Co., v. <br>Canadian Trans. Co., 108 D.P.R. 211, 215, 8 P.R. Offic. Trans. 218 <br>(1978)); Roberco, 122 D.P.R. at 124 (citing J. Soler Motors, Inc. <br>v. Kaiser Keep Int'l Corp., 108 D.P.R. 134, 139, 8 P.R. Offic. <br>Trans. 138 (1978)).  Consequently, the courts directed their <br>attention to the key requirement that the dealer "actually and <br>effectively take[] charge of the distribution."  In other words, <br>the core question is whether the dealer obtained a certain level of <br>control over the distribution of the supplier's products in Puerto <br>Rico.  See EBI, Inc. v. Gator Indus., Inc., 807 F.2d 1, 2-4 (1st <br>Cir. 1986); Sudouest, 732 F.3d at 15-17; Kolthoff v. Fernndez, <br>1996 WL 288486, at *3-*6 (D.P.R. 1996); Jorge Rivera Surillo & Co., <br>Inc. v. Cerro Copper Prods. Co., 885 F. Supp. 358, 361-62 (D.P.R. <br>1995); Gonzlez, 628 F. Supp. at 439-41; Mario R. Franceschini, <br>Inc. v. Riley Co., 591 F. Supp. 414, 415-20 (D.P.R. 1984); Cruz <br>Ramos, 445 F. Supp. at 984-85; Roberco, 122 D.P.R. at 125-26 <br>(citing Cruz Ramos v. Brother Int'l Corp., 445 F. Supp. 983 (D.P.R. <br>1978)); San Juan Mercantile, 108 D.P.R. at 215, 8 P.R. Offic. <br>Trans. 218; J. Soler Motors, 108 D.P.R. at 139, 8 P.R. Offic. <br>Trans. 138. <br>         Although we previously suggested criteria by which to <br>measure this level of control in Sudouest Import Sales Corp. v. <br>Union Carbide, 732 F.2d 14 (1st Cir. 1984), and EBI, Inc. v. Gator <br>Industries, Inc., 807 F.2d 1 (1st Cir. 1986), we defer to the <br>analysis set out in the 1988 opinion of the Supreme Court of Puerto <br>Rico in Roberco, Inc. & Roberto Coln v. Oxford Industries, Inc., <br>122 D.P.R. 115.  The Roberco court reviewed the legislative history <br>of Act 75 and the existing case law, of both Puerto Rico and <br>federal courts, to develop an inclusive list of factors to be <br>weighed equally in consideration of whether a party has the <br>requisite autonomy to be a dealer under the Act.  See Roberco, 122 <br>D.P.R. at 120-32.  Observing that something beyond "mere contact <br>with the product as it moves down the chain from manufacturer to <br>supplier" is necessary, the court restricted the definition of a <br>dealer to "an independent entrepreneur who has established a <br>continuing relationship, either fixed or indeterminate, with <br>another principal for the distribution of a product or <br>service. . . . geared to create, develop, and coordinate a market <br>and to obtain new clients."  Id. at 131.  From this definition, the <br>court derived the following characteristics of a dealership:  <br>promotion of the product, keeping an inventory, fixing prices, <br>delivery and billing responsibilities, authority to extend credit, <br>advertising campaigns, assumption of risk, purchasing the product, <br>maintaining facilities, and offering product-related services to <br>clients.  See id. at 131-32. <br>                      C.  TRIANGLE'S STATUS <br>         We agree with the appellant that our examination does not <br>end with the fact that the contract between the parties is entitled <br>a "Sales Agency Agreement," see 10 L.P.R.A.  278(b), but it <br>certainly is a point from which to begin, particularly as the <br>undisputed evidence shows that Triangle identified itself as a <br>commissionist for tax purposes.  Although we find some support in <br>the record for Triangle's contention that it developed a market for <br>Robroy and made a financial investment, those facts alone are not <br>determinative as they apply to any sales agent or middleman.  See <br>Gonzlez, 628 F. Supp. at 440; see also Roberco, 122 D.P.R. at 132 <br>("No single factor is conclusive by itself and none has more weight <br>or importance than the others.").  Instead, we are swayed by the <br>facts which demonstrate a lack of the requisite control of the <br>distribution chain. <br>         In Roberco, the plaintiff obtained purchase orders in <br>Puerto Rico and forwarded them to the defendant on a commission <br>basis.  The commissions were based exclusively on sales, regardless <br>of whether the orders were billed later.  The plaintiff did not buy <br>the defendant's merchandise to resell it or keep an inventory of <br>the merchandise, and it was therefore not responsible for <br>delivering the merchandise.  The plaintiff's contribution to <br>defendant's advertising was minimal, and in fact most ads placed by <br>Roberco were for the company itself.  The plaintiff had no <br>discretion to extend credit to its customers, nor did the plaintiff <br>handle the billing.  See Roberco, 122 D.P.R. at 119-21.  Similarly, <br>EBI involved a sales representative that "ma[de] no investment in <br>promotion, inventories, or facilities; [and] ha[d] no <br>responsibilities for credit, collections, shipment or <br>deliveries. . . ."  EBI, 807 F.2d at 4; see also Gonzlez, 628 F. <br>Supp. at 437-38, 441 (holding that plaintiff who hired no <br>employees, carried no inventory, rented no warehouse, and did no <br>advertising, is not an Act 75 dealer). <br>         Triangle more closely resembles the plaintiffs in <br>Franceschini and Kolthoff, who arguably invested in the development <br>of a market and promotion of the suppliers' product, but "'assumed <br>neither the risks nor the responsibilities that go with an Act 75 <br>dealership.'"  Gonzlez, 628 F. Supp. at 441 (quoting Franceschini, <br>591 F. Supp. at 420).  The plaintiff in Franceschini, like <br>Triangle, invested in the business by hiring employees and <br>advertising the product, but did not have authority to approve or <br>reject orders, fix prices, or extend credit.  In addition, it did <br>not bill the customers or handle deliveries.  See Franceschini, 591 <br>F. Supp. at 414-15.   Kolthoff was not a dealer because he could <br>not close deals, determine prices, or grant discounts or credit.  <br>Likewise, he did not purchase products for resale and assumed no <br>credit risk.  See Kolthoff, 1996 WL 288486, at *5.  The distinctive <br>fact that Triangle actually had a warehouse where it would hold <br>Robroy's products is insignificant once one accounts for the <br>contractual requirement that Robroy pay Triangle for this service. <br>         Based on the record, we are compelled to conclude that <br>Triangle is indistinguishable from "route or area salesmen who, <br>without making any investment or commitment or taking any risk <br>other than the value of their own time, are permitted to take <br>orders and are paid commissions on orders finally accepted by the <br>principal."  EBI, 807 F.2d at 3.  We concur with the district court <br>that, as a matter of law, Triangle is not a dealer and does not <br>qualify for protection under Act 75. <br>         Affirmed. <br></pre>

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