# Opposition Brief — A. M. Capen's Co. v. American Trading & Production Corp.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_0884%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2000
- **Citation:** 531 U.S. 823

## Text

TT
. ELDED
>) AUG 14 2000
Nene!
No. 99-2012 AQEEICE OF THE GLERN |
IN THE ,
Supreme Court of the United States
A.M. CAPEN’S CO., INC.,
Petitioner,

Vv.

AMERICAN TRADING AND PRODUCTION CORPORATION,
BLAS ROSSY-ASENCIO and RAFAELA FULANA DE TAL,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

BRIEF IN OPPOSITION

|

José ENRIQUE COLON-SANTANA
Attorney for Respondents
Ave. César Gonzalez #513
Hato Rey, Puerto Rico 00918
(787) 763-4111

161580 @ Counsel Press LLC
(800) 274-3321 + (800) 359-6859

i

STATEMENT PURSUANT TO RULE 29.6

Respondent, American Trading and Production
Corporation, has no parent corporation and no publicly held
company owns 10% or more of its stock.

il

TABLE OF CONTENTS

Statement Pursuant to Rule 29.6 .............-.
Tabbbe OF CORMOMNS oak ccs ceca esi eseeseisenss
“Tobie of Cited Authorities... 0.55 svccrxaee se.
Reasons for Denying the Writ .................
Factual Backerownd «2... icc ces series cieires
I. Neither The Record Nor The Decision Of The
First Circuit Court Of Appeals Raise The
Question Presented For Review ..........

Il. The First Circuit Ruling Does Not Conflict

With Either Puerto Rico Dealers’ Act Nor
Puerto Rico Supreme Court Precedent

Ill. This Case Does Not Have Far-reaching
Implications In The Federal Judiciary And
The Commonwealth Relations, It Is Simply
An Opinion Of Statutory Construction .

Oiiieiee 8. cbivenns eee

il

lil

11

21

ll

TABLE OF CITED AUTHORITIES

Page
Cases:
A. M. Capen’s Co, Inc. v. American Trading and
Production Corporation, 74 F.3d 317 (1st Cir.
ea hae Caled rR CANS ba haw Se ok 7
Blair v. Oesterlein Co., 275 U.S. 220 (1927) ..... 5
Cruz Ramos v. Brother Int'l Corp., 445 F. Supp. 983
(D.P.R. 1978), aff'd mem. sub nom., 588 F.2d 817
SR SSSR ER: ea grea ts og aa 9,10
Draft Line Corp. v. The Hon Co., 781 F. Supp. 841
ae a ahr ono cs ah G's «as « 4604 bs 21
Ebi, Inc. v. Gator Industries, Inc., 807 F.2d 1 (1st
Oe ee fo i aN i'n ed ohh AA 9

Erie R.R. Co. v. Tompkins, 304 U.S. 64 (i938) ...8i2

Fornaris v. Ridge Tool, 423 F.2d 563 (1st Cir. 1970)

Fornaris v. Ridge Tool Co., 400 U.S. 41 (1970) .. 8,14
Frisey v. Schultz, 487 U.S. 474 (1988) .......... 14

Gloria Blimzer v. Marriot International, Inc., 81
EE, © REE. ov ck vended edveccanve 12

iv

Cited Authorities
Page
Gonzalez v. Brown Group, Inc., 628 F. Supp. 436
CEA es SEE 0c beeen ha ean ea eae ee oe 9
Haring v. Prosise, 462 U.S. 306 (1983) ......... 14
Heckler v. Campbell, 461 U.S. 458 (1982) ....... 3
Holloway v. United States, 526 U.S. 1 (1999) .... 11
:
J. Soler Motors v. Kaiser Jeep Int'l, 108 D.P.R. 134 |
a | SR erm ea, rope npr Or eye eee 17
|
( Lugo v. Matthew Bender & Co., Inc., 579 F. Supp. |
ae ee a CE is x bore ne cesses 10
Mario R. Franceschini, Inc. v. Riley Co., 591 |
2 F. Sop. 416 COP. FOGG) oes ccc cv issue g
Miree v. Dekalb Country, 433 U.S. 25 (1977) .... 4
Moore v. Illinois, 408 U.S. 786 (1972) .......... 5
Morales v. Gregg Shirt Makers, Inc., 682 F. Supp. :
kg | SER P TORT OCTETS ere eee 10
New Orleans v. Dukes, 427 U.S. 297 (1976) ..... 4

Representaciones Ebi, Inc. v. Gator Industries, Inc.,
629 F. Supp. 662 (D.P.R. 1986), aff'd sub. nom. -
Ebi, Inc. v. Gator Ind@ustries, Inc., 807 F.2d 1 (Cir.
SE oa 5 «Wee eee eee 9

scieeaiiiaaiiaiaaiiiaiilaiiiis

Cited Authorities

San Juan Mercantile Corp. v. Canadian T, ransport
Co. Ltd., 108 P.R.R. 211 (1978) .............
Soler Motors, Inc. v. Kaiser Jeep Int’l Corp., 108
Pn ROE IME 6 oda ee a ck

Sudouest Import Sales Corp. v. Union Carbide
Corp., 569 F. Supp. 1547 (D.P.R. |

Sudouest Import Sales Corp. v. Union Carbide
Corp., 732 F.2d 14 (Cir. 1 1984), aff'd, 569
F. Supp. 1547 (D.P.R. 1983) ................

Tacon v. Arizona, 410 U.S. 351 oo: Beane

Triangle Trading Co. v. Robroy Industries, Inc., slip
op. at 2 (Ist Cir., Dec. 29, 1999) .............

University of California Regents y. Bakke, 438 U.S.
PPI 6655s a

Warner Lambert v. Ti ribunal Superior, 101 P.R.R.
PUR EREEE os bys bee eo ae

Page

vi

Cited Authorities

Page

Statutes:
Mo. Rev. Stat. § 400(1) (1974 and Supp. 1975) ... 6
Mo. Rev. Stat. § 405 (1974 and Supp. 1975) ..... 6
Mo. Rev. Stat. § 407 (1974 and Supp. 1975) ..... 6
Mo. Rev. Stat. § 410 (1974 and Supp. 1975) ..... 6
N.J. Rev. Stat. § 56:10-4 (1971) ............... 6
NJ. Rev. Stat. § S6:1G-S CISFA). 2. kev ieeeine, 6
United States Constitution:
Article 1, § 8, clause3 ............... ; apna 3
Other Authorities:
Antonetti, Puerto Rico Dealers Act Fourteen Years

(ber, 33 Cath. 1 BAGS TGA ss 0 eau n kes onan 7
18 Diario de Sesiones, Comision de Industria

y Comercio, May, 14, 1964 .............. 16, 18, 19

Lawrence Tribe, American Constitutional Law,
See I, BIE gino ues ae eR eee 5

Cited Authorities
Page
Mario Rodriguez-Vidal, The conceptual just cause
for the Lawful Termination of a Dealership Under
the Dealers Contract Law of Puerto Rico, 58 Rev.
~~ TOE, CFs Oe CUOUOD: ks dec ccchcrwektee ds 10

Salomone, Puerto Rico's Distributors’ Law: Law Ta,
A Primer, 18 Rev. Jur. 67 (1983) ............. 7

l

REASONS FOR DENYING THE WRIT

The sole question presented for review by the Petition,
albeit segmented in three issues by Capen’s, is one of
statutory interpretation. That is, whether Puerto Rico Dealers
Act of 1964 (Act 75) express language and purpose in its
definition of a “dealer” under the law, only applies to a
distributor that has its place of business in Puerto Rico.
Petitioner argues that the First Circuit Court of Appeal’s
opinion improperly holds that it does. However, the First
Circuit Court’s decision, Honorable Judge Torruellas
Presiding, and whose rehearing en banc was denied, is not
in conflict with Act 75’s plain language and legislative
history, nor Puerto Rico Supreme Court’s holdings. Petitioner
has made a “federal case” out of what is, and always should
have been, nothing more then a contract dispute between
two continental United States’ corporations, Petitioner with
its sole and principal place of business in New Jersey, and
Respondent with its principal place of business in Missouri.
The First Circuit’s ruling is proper in all respects and
Respondents respectfully urge this Honorable Court to deny
the Petition for Writ of Certiorari.

FACTUAL BACKGROUND

The exception Respondents take to Petitioner’s statement
of facts is its averment that Capen’s was not required to have
any kind of physical presence in Puerto Rico in order to
engage as a dealer in Puerto Rico. This is a misstatement
since it gives the impression that Respondent American
Trading did not require it or had some kind of opinion to
give on the business’ site options. Capen’s is a New Jersey
corporation with its principal place of business in New
Jersey. Said state is also the sole site where Petitioner has

2

an office, a business place and a warehouse. American
Trading is an entity with principal place of business in
Missouri. Capen’s made a giant leap, in its effort to do some
legal remedies shopping, and filed in the Federal Court for
the District of Puerto Rico two separate diversity actions
against Respondents. Both cases were consolidated at the
district and court of appeals level.' The First Circuit Court
of Appeals made a clear and specific statement of facts, to
which Respondents adhere. Petitioner’s App. 1.

I.

NEITHER THE RECORD NOR THE DECISION OF
THE FIRST CIRCUIT COURT OF APPEALS RAISE
THE QUESTION PRESENTED FOR REVIEW

While, as Respondents will show, Petitioner’s claims
are not a fair reading of Judge Torruellas’ First Circuit panel
opinion and order, it must be first stated that the arguments
of Certification to the Puerto Rico Supreme Court, and the
constitutional claims against the Dealers’ Act, were never
brought to the attention of the First Circuit Court nor were
they part of its ruling.

Where the ground presented has not been raised below,
this court has decline to decide arguments not raised

1. The case against Respondents Mr. and Mrs. Blas Rossy, was
based on Petitioner’s claim of contractual interference. Said action
was legally dependent on the main litigation against American
Trading. Having no remedies under Act 75, Respondent American
Trading could terminate or modify at will the agreement with
Capen’s, thereby the Rossy’s liability was terminated pursuant the
First Circuit’s opinion, and Petitioner has not raised this issue as a
question in its Petition.

3

by Petitioner in the Court of Appeals. Heckler v. Campbell,
461 U.S. 458, 468-469 n.12. While this Court is

... largely dependent upon the assertions made
by the parties as to what that record will
demonstrate concerning the manner in which a
federal question was raised below; Webb v. Webb,
451 U.S. 493, 494 (1980), this Honorable Court
may note that nowhere in the First Circuit Court’s
opinion is any federal question mentioned. App.
1. Also, in Petitioner’s enumeration of error on
its cross appeal the sole error argued on its claim
was that the Puerto Rico District Court made an
erroneous interpretation of Act 75’s damage
formula as applied to a contractual impairment
case versus a termination claim. As admitted by
Petitioner ... A.M. Capen’s filed a cross-appeal
in disagreement with the sum awarded”.
Petitioner’s brief at page 10.

Petitioner, as a matter of law, alleged only diversity of
citizenship as the basis for its filing of the lawsuit in the
United States District Court for the District of Puerto Rico.
Capen’s did not rely on federal question jurisdiction. Capen’s
complaint seeked recovery under Puerto Rico Dealers Act
of 1964, on the grounds of breach or contract. There is not a
single indication that Petitioner alleged a violation of Puerto
Rico Dealers Act of the Federal Constitution nor any remedy
upon such claim. Thereby, petitioner’s timid reference to
Article 1, § 8, clause 3 of the Constitution of the United
States in its Petition has no relevance to the controversy
decided by Honorable Judge Torruellas’ First Circuit Court
of Appeals’ panel. In its Petition Capen’s argues that the
First Circuit ruling will have a“... discriminating [effect]

4

against interstate commerce”, brief at page 18; that “. . . there
has been no showing that change in the statute’s coverage
cannot be promoted by alternative means that do not burden
interstate commerce”; and that “[t]he First Circuit did not
address this issue and therefore its decision is thus open to a
constitutional attack”. /bid. at 18. This Supreme Court,
should not give any consideration to this constitutional claim
brought by Capen’s for the first time in this litigation, since
“.. . It was neither pleaded, argued nor briefed either in the
District Court or in the Court of Appeals ... Cf Lawn vy.
United States, 355 U.S. 339, 362-363 n.16 (1958)”, Miree v.
Dekalb Country, 433 U.S. 25, 34 (1977)?.

Respondents sustain that the questions presented by
Petitioner are not properly before this Honorable Court.
It was not raised by Capen’s on the record before the district

2. This Supreme Court has held, when reviewing equal
protection challenges, such as Capen’s has made for the first time
in its request for Certiorari, to local economic regulations of the
Puerto Rico Dealers Act, that:

When local economic regulation is challenged
solely as violating the Equal Protection Clause, this
Court consistently defers to legislative determinations
as to the desirability of particular statutory
discriminations. See, e.g., Lehnhausen v. Lake Shore
Auto Parts Co., 410 U.S. 356 (1973). Unless a
classification trammels fundamental personal rights or
is drawn upon inherently suspect distinctions such as
race, religion, or alienage, our decisions presume the
constitutionality of the statutory discriminations and
require only that the classification challenged be
rationally related to a legitimate state interest.

New Orleans v. Dukes, 427 U.S. 297, 303 (1976).

5

court nor at the First Circuit Court. This is only an ordinary
case and “[iJt is only in exceptional cases, and then only in
cases from the federal courts, that questions not pressed or
passed upon below are considered here. Dwingan v. United
States, 274 U.S. 195”. Blair y. Oesterlein Co., 275 US. 220,
225 (1927). There is no reason to deviated from this rule
now. Tacon v. Arizona, 410 U.S. 351, 352 (1973); Moore v.
Illinois, 408 U.S. 786, 799 (1972); Stanley v. Illinois, 405
U.S. 645, 658 n.10 (1972); and University of California
Regents v. Bakke, 438 U.S. 265, 283 (1978) all cases decided
in the context of federal constitutional issues on review of
State court decisions.

On the basis of equal protection and economic
regulation,

... Itis significant that the [Supreme] Court never
wholly abandoned the position that legislatures,
at least in their regulatory capacity, must always
act in furtherance of public goals transcending the
shifting summation of private interest through the
political process. The pluralist thesis that there
exist no public interest beyond that summation
(note omitted) never became judicial dogma in
economic life any more than in other sectors of
human concern.

Lawrence Tribe, American Constitutional Law, 2d Edition,
1988, p. 583. See also Op. cit., page 582 n.16 and citations
thereunder.

Equality is not violated, as claimed by Petitioner, by the
fact that the Commonwealth requires, as a matter of law,
that the persons claiming protection under its laws to reside

6

within its borders, have offices, and pay taxes, to say the
least. As a matter of fact, the states where Petitioner could
have filed and litigate its claim, have the same statutory
requirements as the Commonwealth of Puerto Rico does.’
Since the Certification request, and the constitutional attack
on the law as the record will show, were not even mentioned
by Petitioner in its errors, nor its briefs at the District or the
Court of Appeals’ level, this questions are not reviewable.

THE FIRST CIRCUIT RULING DOES NOT CONFLICT
WITH EITHER PUERTO RICO DEALERS’ ACT NOR
PUERTO RICO SUPREME COURT PRECEDENT

Petitioner Capen’s claims as question C that the First Circuit
Court of Appeals “added” a “physical presence requirement”
to Act 75 thereby invaded the Commonwealth’s Legislative
Branch and has the overreaching interpretative consequence of
“discriminating” against dealers, such as Capen’s, that do not
pay taxes to Puerto Rico, have no address, no telephone, no
taxes, no p.o.. box, no warehouse, no office and no agents in
the Commonwealth.

Petitioner’s claims are mistaken. In the case of Fornaris v.
Ridge Tool, 423 F.2d 563 (1st Cir. 1970), the First Circuit Court
of Appeals had an opportunity to examine the law and held that
the Act could not validly apply td contracts entered before its

3. Missouri Law only applies to distributors with a place of
business in Missouri. Mo. Rev. Stat. § 407 .400(1) (1974 and Supp.
1975) (definition of “franchise). Mo. Rev. Stat. §§ 407 .405, 407
410 (1974 and Supp. 1975). New Jersey has a Franchise Practices
Act which applies only to a franchisee who establishes a “place of
business” in New Jersey, § 56:10-4., and that such a termination
only can be based on “good cause”. N.J. Rev. Stat. § 56:10-5 (1971).

7

enactment. As discussed later, this Honorable Supreme Court
reversed said decision on abstention grounds. During this first
years it was not a happy understanding with the Puerto Rico
Dealers Act of 1964. See Antonetti, Puerto Rico Dealers Act
Fourteen Years Later, 83 Com. L. J. 453 1978, and
see Salomone, Puerto Rico's Distributors’ Law: Law 75,
A Primer, 18 Rev. Jur. 67, ( 1983).

Respondents must state that at the preliminary
injunctions stage of this case the First Circuit (or First panel
as designated by the petitioner) held and agreed with the
District Court in that petitioner Capen’s’ dealership status
was “a close matter”. A. M. Capen’s Co, Inc. y. American
Trading and Production Corporation, 74 F.3d 317, 319
(Ist Cir. 1996), petitioner’s appendix at page 19. The First
Circuit Court (in the injunction’s opinion), also noted that:

[t]his is an appeal from a grant of preliminary
injunctive relief. When an appeal comes to us in
that posture, the appellant’s “conclusions as to
the merits of the issues presented on preliminary
injunction are to be understood as statements of
probable outcomes”, rather than as comprising the
ultimate law of the case.

App. 28. Finally, the First Circuit’s injunction opinion solely
sustained that “the law of Puerto Rico most probably
applies”. App. 28.

Contrary to Capen’s representations of what happened
after the first panel issued the preliminary injunction’s
opinion, Respondents affirm that at the “damages’ ” opinion,
12 F. Supp. 2d 222 (1998), which was appealed and cross
appealed, the district court held on footnote number | that:

8

Later, at the hearing on damages, Plaintiff
confirmed that all goods sold in Puerto Rico were
sold F.O.B. Continental U.S.A. and further that
no taxes whatsoever were paid in Puerto Rico.
The matter of dealership, hence, is extremely close
since Plaintiff therefore contributes slimly to the
Puerto Rican economy raising serious doubts as
to legislative intent in the coverage of Plaintiff
under the Act.

Ibid. at 223-231.

The First Circuit incursion in Act 75 is not new. It has
decided many cases pertaining to Puerto Rico Dealers Act
of 1964. The reading of the law and its history, as applied to
the facts, AFTER TRIAL, of the instant case is not a prime
for the Court of Appeals, and no mistake has been committed.
Thirty years have elapsed since the opinion issued by this
Supreme Court in the case of Fornaris v. Ridge Tool Co.,
400 U.S. 41 (1970). In Fornaris, this court reversed on
abstention grounds the First Circuit Court’s holding that Act
75, precisely the same statute claimed by petitioner to apply
on its behalf, was unconstitutional. Three years later, Puerto
Rico’s Supreme Court in Warner Lambert v. Tribunal
Superior, 101 P.R.R. 378 (1973) held that Puerto Rico
Dealers Act could not be enforced in a contract entered before
the law was approved. In San Juan Mercantile Corp. v.
Canadian Transport Co. Ltd., 108 P.R.R. 211 (1978), and
Soler Motors, Inc. v. Kaiser Jeep Int'l Corp., 108 P.R.R.
134 (1978), Puerto Rico’s Supreme Court redefined the
“dealer” concept by considering certain duties in order to
qualify, as well as clarifying that the introduction of
intermediaries in the distribution chain does not impedes the
application of Act 75 against the principal manufacturer.

9

After this rulings, and in accordance with them, federal
courts have had the opportunity to interpret and apply the
concept of “dealer”. Cruz Ramos v. Brother Int'l Corp., 445
F. Supp. 983 (D.P.R. 1978) (distinguishes duties of dealer
and sales representative, finding that plaintiff could not
maintained an action under Act 75); Ebi, Inc. v. Gator
Industries, Inc., 807 F.2d 1 (1st Cir. 1986) (the statute’s
definition of “dealer” cannot fairly be read to include sales
representatives who made no investments in promotion,
inventories or facilities, took no risk in credit, collections,
shipment and delivery of goods and are paid commissions
on orders finally accepted by the principal); Sudouest Import
Sales Corp. v. Union Carbide Corp., 569 F. Supp. 1547
(D.P.R. 1983) (performance not within definition of dealer),
affirmed in Sudouest Import Sales Corp. v. Union Carbide
Corp., 732 F.2d 14 (Cir. 1 1984) (representative did not
handle manufacturer’s product (shipping, delivery, storage]
nor billing and receipts, and whose involvement in sales and
promotional activities was limited, is not a “dealer” under
Puerto Rico Dealers’ Act), aff'd, 569 F. Supp. 1547 (D.P.R.
1983); Representaciones Ebi, Inc. v. Gator Industries, Inc.,
629 F. Supp. 662 (D.P.R. 1986), aff’’d sub. nom. Ebi, Inc. v.
Gator Industries, Inc., 807 F.2d 1 (Cir. 1 1986) (no ‘dealer/
principai relation under Act 75 found where it did not invest
in advertisement or promotional literature, had no inventories
or items in stock, and did not assume credit or payment risk);
Gonzalez v. Brown Group, Inc., 628 F. Supp. 436, 440
(D.P.R. 1985) (Gonzalez was more of a commission
salesperson albeit he expanded the market, he assumed no
financial risk, no responsibilities for the business once the
orders were submitted to the principal’s main office, and
had no authority to approve or reject sale); Mario R.
Franceschini, Inc. v. Riley Co., 591 F. Supp. 414, 420(D.P.R.
1984) (it is an essential characteristic included in a “dealer”

10

under Act 75 market development for a product or service
through promotion, closing on sales contracts, and acting
on its own with full ownership of the goods sold); Lugo v.
Matthew Bender & Co.,Inc.,579 F. Supp. 638 (D.P.R. 1984),
(the test for considering a party a dealer or an employee, is
the nature and degree of control or right to direct the worker,
whether work performed is within business of the party
sought to be charged, investment required, delegation of
performance, who furnishes equipment, materials and
assistance, degree of initiative and judgment, generation of
profit and losses, and independent business with the party to
be charged); Morales v. Gregg Shirt Makers, Inc., 682
F. Supp. 142 (D.P.R. 1988) (sales representative for shirt
manufacturer is not a “dealer” under Act 75, even though
representative increased sales of manufacturer’s goods an
average of 53% over predecessor, since Morales had no
responsibility to deliver goods, collection of money, no credit
risk or price setting, maintained no inventory, and took no
significant entrepreneurial risk); Cruz Ramos v. Brother
International Corp., 445 F. Supp. 983 (D.P.R. 1978) (sales
representative who had no obligation to purchase inventory;
had no warehousing facilities; employed no salesmen nor
had any of the responsibilities of the distribution is not
protected by the Act and found only to be a commissioned
salesman), aff'd mem. sub nom., 588 F.2d 817 (1st Cir. 1978);
and Triangle Trading Co. v. Robroy Industries, Inc., slip
op. at 2 (Ist Cir., Dec. 29, 1999). See also Mario Rodriguez-
Vidal, The conceptual just cause for the Lawful Termination
of a Dealership Under the Dealers Contract Law of Puerto
Rico, 58 Rev. — Jur. UPR 261, 264 n.10 (1989).

11

Ill.

THIS CASE DOES NOT HAVE FAR-REACHING

IMPLICATIONS IN THE FEDERAL JUDICIARY AND

THE COMMONWEALTH RELATIONS, IT IS SIMPLY
AN OPINION OF STATUTORY CONSTRUCTION

The First Circuit’s holding simply made an statutory
construction of the Puerto Rico Dealers Act of 1964. It did
not create, nor invent its language, its purpose nor its
legislative history as Petitioner appears to argue.

This Supreme Court noted and held, in the context of
reading federal statutes, that

[w]riting for the Court in United States v.
Turkette, 452 U.S. 576, 593 (1981), Justice White
reminded us that the language of the statutes that
congress enacts provides “the most reliable
evidence of its intent”. For that reason, we
typically begin the task of Statutory construction
by focusing on the words that the drafters have
chosen. In interpreting the statute at issue, “[w]e
consider not only the bare meaning” the critical
word or phrase “but also its placement and
purpose in the statutory scheme”, Bailey v. United
States, 516 U.S. 137, 145 (1995).

Holloway v. United States, 526 U.S. | (1999).

Under the principles of Erie R.R. Co. v. Tompkins, 304
U.S. 64, 78, the Commonwealth of Puerto Rico’s laws supply
the substantive rule of decision in this diversity case. As a
matter of comity, the federal courts are bound to accent an

12

asserted rule of state law where the evidence and
jurisprudence is sufficiently conclusive, and the asserted
rules are established with sufficient definiteness and finality.

Except in matters governed by the federal
constitution or by Acts of Congress, the law to be
applied in any case is the law of the State. And
whether the law of the State should be declared
by its Legislature in an statute or by its highest
court in a decision is not a matter of federal
concern.

Erie at 78.

Honorable Judge Selya, for First Circuit, has comment
on the role of a federal court when adjudicating issues
controlled by state law. He stated:

In its barest essence, borrowing state law demands
nothing more than interpreting and applying the
rules of substantive law enunciated by the state’s
highest judicial authority, or, on questions to
which that tribunal has not responded, making an
informed prophecy of what the court would do in
the same situation.‘ See Moores v. Greenberg,
834 F.2d 1105, 1112 (Cir. 1, 1987). In the latter

- 4. Footnote number | to the above cited Blimzer First Circuit’s
Opinion:

“Indeed, this kind of predictive approach is among our
conceptions of law itself. See Oliver Wendell Holmes,
The Path of the Law, 10 Harv. L. Rev. 457, 461 (1897)
(“the prophecies of what the courts will do in fact, and
nothing more pretentious, are what I mean by law”.)

13

instance, we seek guidance in analogous state
court decisions, persuasive adjudication by courts
of sister states, learned treatises, and public policy
considerations identified in state decisional law.
See Ryan v. Royal Ins. Co., 916 F.2d 731, 734-35
(Cir. 1, 1990); Kathios v. General Motors Corp.,
862 F.2d 944, 949 (Cir. 1, 1988). As long as these
signposts are legible, our task is to ascertain the
rule the state court would most likely follow under
the circumstances, even if our independent
judgment on the questions might differ. See
Moores, 834 F.2d at 1107 n.3.” Gloria Blimzer
v. Marriot International, Inc., 81 F.2d 1 148, 1151
(Cir. 1. 1996).

Of course, this Supreme Court in the voice of Honorable
Judge Rehnquist has stated in Weinberger v. Rossi, 456 U.S.
25, 28 (1981), that:

Simply because the question presented is entirely
one of statutory construction does not mean that
the question necessarily admits of an easy answer.
Chief Justice Marshall long ago observed that
“[w]here the mind labours to discover the design
i of the legislature, it seizes every thing from which
aid can be derived. .. .” United States v. F isher,
2 Cranch 358, 386 (1805). More recently, the
Court has stated: -

“Generalities about statutory construction help us

little. They are not rules of law but merely axioms
of experience. They do not solve the special
difficulties in construing a particular statute. The
variables render every problem of statutory

14

construction unique.” United States v. Universal
Corp., 344 U.S. 218, 221 (1952) (citations
omitted).

This is particularly important when a Puerto Rican
Statute is in controversy. This Honorable Supreme Court has
declared that “[t]he relations of the federal courts to Puerto
Rico have often raised delicate problems. It is a Spanish-
speaking Commonwealth with a set of laws still impregnated
with the Spanish Tradition. Federal Courts, reversing Puerto
Rican courts, were inclined to construe Puerto Rican laws
in the Anglo-Saxon tradition which often left little room
for the overtones of Spanish culture. Out of that experience
grew a pronouncement by this Court that a Puerto Rican
court should not be overruled on its construction of local
law unless it could be said to be “inescapably wrong”.
See Bonet v. Texas, 308 U.S. 463, 471”. Fornaris v. Rigde
Tool, at 42-43.

Following this Supreme Court’s normal practice, it
should “defer to the construction of a state statute given it
by the lower federal courts. . . to reflect our belief that district
courts and court of appeal are better schooled and more able
to interpret the laws of their respective states. Brockett v.
Spokane Arcodes, Inc., 472 U.S. 491, 499-500 (1985)”.
Frisey v. Schultz, 487 U.S. 474, 482 (1988). As a matter of
fact and law, it is the practice of this court ... “to accept a
reasonable construction of state law by the court of appeals
‘even if an examination of state — law issue without such
guidance might have justified a different conclusion’. Bishop
v. Wood, 426 U.S. 341, 346 (1976)”, cited in Haring v.
Prosise, 462 U.S. 306, 314 n.8 (1983).

15

The legislative history of Act 75 Supports the
interpretation of the provision that the First Circuit Court,
Judge Torruella Presiding, derived from its language and
context. The legislative Committee that submitted reports
on the various bills that ultimately became the Puerto Rico
Dealer’s Act (Act 75) and its subsequent amendments
expressly suggested that Act 75 would cover claims only
from dealers who operate in Puerto Rico under similar
requirements as do comparable statutes in New Jersey and
Missouri. App. 9.

The Legislative record clearly points out to the purpose
of the law to protect dealers in and within the
Commonwealth’s borders. The express language of the law
when defining dealer clearly provides that the dealer must
have in his charge “in Puerto Rico” said distribution.

The Commonwealth’s Senate Report supportive of the
Act’s purpose states in part that:

The problem created in the distribution,
System in Puerto Rico has worsened recently by
the ill-timed actions of local and foreign |
manufacturing companies that, without just cause,
terminate their relationships with their dealers and
agents in Puerto Rico, as soon as the latter have
created a favorable market for their products, thus
frustrating the legitimate exportations and
interests of those who so efficiently carried out
their responsibilities.‘

5. Recientemente se ha recrudecido el problema creado en el
sistema de distribucién en Puerto Rico por la accion intempestiva
de empresas manufactureras domésticas y del exterior que, sin causa

(Cont’d)

16

18 Diario de Sesiones, Comision de Industria y Comercio,
May, 14, 1964 page 1531.

The Commonwealth, when enacting Act 75 considered
that it could not remain indifferent to the abuses and
exploitation of the distributors in Puerto Rico. See Statement
of Motives. It further states as a justification in support of
the law that: “. . . the reasonable stability in the distribution
relationships in Puerto Rico is vital to the general economy
of the country, to public interest, and, IN THE
EXERCISE OF POLICE POWER, considers necessary
to regulate, in its pertinent part, said relationships to avoid
abuses”... . See 18 Diario de Sesiones at 1724. (Translation
ours).

On the other hand, Hon. Representative Mr. Iglesias-
Silva expressed himself in support of the legislative intent
of the then P. C. 1012 when indicating:

“Mr. President: Go ahead.

Mr. Iglesias-Silva: Mr. President and Brothers of
the House: This project words off the
discrimination to which agents representatives of
import entities in Puerto Rico...

(Cont'd)

justificada, dan por terminadas sus relaciones con sus distribuidores
y agentes en Puerto Rico, tan pronto como éstos han creado un
mercado favorable para sus productos, frustrando las legitimas
expectativas e intereses de los que tan eficientemente han cumplido
con sus responsabilidades.

17

In the last months this event has occurred in
Puerto Rico, individuals that have represented
American entities for fifteen, twenty years, that
dedicated all their youth to produce and raise the
standard of a given product to abstain higher
benefits, without notice or compensations for the
years they sacrificed to create the market for said
product were ripped off, as it there performance
of many years were worthless, and it is casually
this Proposal who comes to correct this mistake
present in our Island, AND IT IS NECESSARY
AND IMPORTANT FOR US TO PROTECT
THOSE PERSONS RESIDING IN PUERTO
RICO who engage in the representation of
principals United States’ or anywhere on Earth.

On account of this I am in favor of the proposed
bill and will vote for its approval.

Mr. President: For the approval of the motion.
(The bill was subject to vote and approved).°®
(Emphasis added).

6. See also J. Soler Motors y. Kaiser Jeep Int'l, 108 D.P.R.
134, 140 (1978).

Mr. President: “Sr. Presidente: Adelante.

Sr. Iglesias Silva: Sefior Presidente y Compaiieros
| de Camara: Este Proyecto viene a conjurar un discrimen
| que se ha venido cometiendo hasta ahora con los agentes
| comisionistas de casas importadoras en Puerto Rico.

(Cont'd)

'
3
ai,

18

Subsequent amendments proposed to Act 75 approved
in 1966 reaffirmed that the Commonwealth’s purpose when
enacting said law was that only distributors within the borders
of the Commonwealth of Puerto Rico were the subjects to
be protected under the Distributor’s Act. The Senate’s
Comision de Industria y Comercio when considering P.S.
266, enacted into law as Act 105 June 23, 1966, at the Diario
de Sesiones, page 578, concluded that:

For the above stated reasons, and considering
that the proposed amendments tend to offer Puerto
Rican businessman more guarantees, impeding

(Cont'd)

En los ultimos meses ha sucedido ese fenomeno
en Puerto Rico que individuos que representaron casas
americanas por espacio de quince, veinte afios, que toda
su juventud la dedicaron a la produccion y a levantar el
standard de ese producto para obtener los mayores
beneficios, sin avisarle y sin recompensar el numero de
afios que ellos perdieron en el sacrificio para levantar
ese producto, se les quité asi como si el trabajo que
ellos realizaron durante muchos afios no valiera nada, y
es casualmente este Proyecto de Ley quien viene a
corregir esa falla que existe en nuestra Isla, y es
necesario e importante que nosotros protejamos a
los individuos residentes en Puerto Rico que se
dedican a representar casas de los Estados Unidos o de
cualquier sitio del mundo.

Por tal concepto yo estoy a favor del Proyecto y
lo votaré a favor.

Sr. Presidente: A la aprobacion de la mocién.

(Se somete a votacion el Proyecto y es aprobado.)

Sr. Presidente: Aprobado. Adelante.”

19

that Act 75’s dispositions be avoided in their reach
and original intention, your commission has the

; honor of proposing the Senate the approval of said
measure, without amendments.

Luis Mufioz Rivera
President
Rafael Picé-Secretary’

On the other hand, the Comisién de lo Judicial (Judiciary
Commission) of the House of Representatives, at page 1522,
Diario de Sesiones 1966, sustained that:

The amendments respond to the ill-timed
action of domestic and foreign manufacturers
who, without just cause, terminate their
relationship with their representatives and agents
in Puerto Rico as soon as the latter have created
a favorable local market.* (Emphasis added).

7. “Por las razones anteriormente expuestas, y por
considerar que las enmiendas que se proponen tienden
a ofrecer mayores garantias a los comerciantes
puertorriquenos, evitando que las disposiciones de
la Ley num. 75 puedan ser evadidas, en su alcance e
intencion original. Vuestra Comisién tiene el honor
de proponer al Senado la aprobacién de dicha medida,
sin enmiendas.

Respetuosamente sometido,

Luis Mujfioz Rivera,
President

Rafael Picé
Secretario

8. “Las enmiendas corresponden a la necesidad de evitar
practicas indeseables ocurridas durante los ultimos anos, mediante
(Cont'd)

20

The proposed amendment covered situations where the
distributor instead of being terminated is prejudiced by
impairment actions or omissions of the principal.

Act 75’s legislative history demonstrate that it was
enacted to protect ONLY persons residents of Puerto Rico,
doing business in Puerto Rico and thereby paying taxes to
the Commonwealth and the municipalities within its borders.
Why?, because:

The dealers Act was enacted by the Puerto
Rican Legislature to prevent the economic
exploitation of local dealers.

“The Legislature had observed that dealers
in Puerto Rico once they had established a
favorable market for a principal’s products were
particularly vulnerable to summary termination”.
(Emphasis added) Draft Line Corp. v. The Hon
Co. 781 F Supp. 841, 843.

As upheld by the Commonwealth’s Supreme Court in
San Juan Mercantile, supra, at 215, “the definition of dealer
and dealers’ contract in this section are too schematic and
require delimitation in light of the purpose of the law”’.

(Cont'd)
las cuales empresas domésticas y del exterior obligan indirectamente
a los distribuidores, concesionarios 0 agentes en Puerto Rico a

abandonar la relacion contractual una vez que han creado el mercado
local favorable.”(Emphasis Added).”

PORE PAGES RSE RIT tes, ey

PORES AS 66 hile 6 Cae athlete dal

21

Puerto Rico’s United States District Judge Fusté in Draft
Line, supra, stated in footnote 7 that

Medina & Medina (88 JTS 6162) could be read
as opening Law 75 up to a more liberal in one
which treats the economic interests of both parties
equally in all situations. But that would be
contrary to the history of the law as an
instrument for the protection of local dealers.

(Emphasis added).

Thereby, considering the plain language of the law, its
legislative record, and the statute as a whole, it is evident
why the First Circuit Court of Appeals held that the sole
purpose of Act 75 was no other than to protect dealers in
Puerto Rico, with place of business within the
Commonwealth not non resident merchants such as
Petitioner.

CONCLUSION

For the foregoing reasons, the petition for writ_of
certiorari should be denied.

Respectfully submitted,

JOSE ENRIQUE COLON-SANTANA
Attorney for Respondents
Ave. César Gonzalez #513
Hato Rey, Puerto Rico 00918
(787) 763-4111

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_0884%3A2. Public record. Not legal advice.