Casas v. MitaCasas v. Mita
I.
Incorporated in Puerto Rico, Casas sells and distributes office and photocopying equipment in that Commonwealth. In 1983, Casas entered into an agreement with Mita, a supplier of office and photographic equipment, to distribute Mita products in Puerto Rico. As noted, Mita is a California corporation with its principal place of business in New Jersey. Following a period of strained business relations, Casas and Mita executed a second agreement in 1989 (the “1989 Agreement“) granting Casas the exclusive right to distribute Mita‘s products in the “Greater San Juan” area. Paragraph 5 of the 1989 Agreement, however, provided that Casas‘s inability to meet or exceed 85% of a set sales quota would result in termination of the exclusivity provisions of the contract. Asserting that Casas had failed to achieve the 85% threshold, Mita terminated Casas‘s exclusive distribution rights but retained Casas as a distributor and designated two new distributors in the “Greater San Juan” area. Casas responded on February 1, 1991, by suing Mita, John Doe, and Richard Roe1 in the Superior Court of Puerto
Codefendants Caguas Copy, Inc. and Oficentro J.P., Inc. are, upon information and belief, corporate entities organized pursuant to the laws of the Commonwealth of Puerto Rico, with Principal offices located at Suite B-3, Goyco Street # 10, Caguas, P.R., and Diamante Street # 24, Villa Blanca, Caguas, P.R., respectively. Said defendants are the corporate and/or judicial entities who together with MITA have conspired, with knowledge of the contractual relationship between MITA and Casas, to deprive the latter of said contractual relationship, directly and indirectly interfering therewith, causing the damages hereinafter itemized. To plaintiff‘s best knowledge and understanding, Caguas Copy, Inc. and Oficentro J.P., Inc. are citizens and residents of the Commonwealth of Puerto Rico and are also liable to plaintiff pursuant to the allegations mentioned hereinafter.
(emphasis added).
The United States magistrate judge reviewed Mita‘s motions to dismiss and for summary judgment, as well as Casas‘s cross-motion for summary judgment. In a report and recommendation issued on September 2, 1993, the magistrate judge concluded that (1) Casas had not committed fraud on the court, (2) Casas was not barred by the doctrine of laches from pursuing its claims under Law 75, (3) Mita did not have just cause under Law 75 to terminate Casas‘s exclusive distribution rights because it failed to demonstrate that the quota provision in the 1989 Agreement was reasonable at the
II.
Before we reach the issue of subject matter jurisdiction, we respond to Casas‘s challenge to our appellate jurisdiction. Casas maintains that, under Carson v. American Brands, Inc., 450 U.S. 79, 101 S. Ct. 993, 67 L. Ed. 2d 59 (1981), jurisdiction under
III.
Mita argues that there is no subject matter jurisdiction in federal court because complete diversity of citizenship was destroyed when the fictitious defendants were replaced with Caguas and Oficentro after removal. Although Mita raises this issue for the first time on appeal, we are obliged to address it because a defense of lack of jurisdiction over the subject matter is expressly preserved against waiver by
A.
This case involves no federal question. Jurisdiction stands or falls upon diversity of citizenship. It has long been settled that a “lack of `complete diversity’ between the parties deprives the federal courts of jurisdiction over the lawsuit.” Sweeney v. Westvaco Co., 926 F.2d 29, 41 (1st Cir.) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L. Ed. 435 (1806)), cert. denied, 112 S. Ct. 274, 116 L. Ed. 2d 226 (1991). There was complete diversity between the parties on March 6, 1991, when Mita removed the case to federal court: Casas is a Puerto Rico corporation, and Mita was incorporated in California and maintains its principal place of business in New Jersey. That the fictitious defendants, John Doe and Richard Roe, might reside in Puerto Rico as suggested by Casas in the original complaint was properly disregarded under
Casas argues that as diversity jurisdiction was established at the commencement of the proceeding, it was not later defeated by the mere naming of the fictitious parties, who were dispensable, not indispensable. E.g., Freeport- McMoRan Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S. Ct. 858, 112 L. Ed. 2d 951 (1991) (per curiam) (holding that, because there was complete diversity when the action commenced, diversity jurisdiction was not defeated by the addition of a nondiverse plaintiff, which was not indispensable); Wichita R.R. & Light Co. v. Public Util. Comm‘n, 260 U.S. 48, 54, 43 S. Ct. 51, 67 L. Ed. 124 (1922). Under the general principle reflected in the above cases, the existence of federal jurisdiction here might seem to depend simply upon whether Caguas and Oficentro were dispensable or indispensable parties. But “[f]ederal courts are courts of limited jurisdiction, and . . . may exercise only the authority granted to them by Congress.” Commonwealth of Mass. v. Andrus, 594 F.2d 872, 887 (1st Cir. 1979); e.g., Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978) (“The limits upon
As part of the Judicial Improvements and Access to Justice Act of 1988, Pub. L. No. 100-702, 102 Stat. 4669 (1988), Congress enacted
If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder,
or permit joinder and remand the action to the State court.
Although this provision relates expressly to joinder, the legislative history to the Judicial Improvements and Access to Justice Act of 1988 indicates that
Federal courts and commentators have concluded that, under
Section 1447(e)‘s legislative history supports this conclusion. In enacting
This is not to say that it is unimportant whether a nondiverse defendant whom a plaintiff seeks to join or substitute after removal is dispensable or indispensable to the action. If the defendant is indispensable, the district court‘s choices are limited to denying joinder and dismissing the action pursuant to
B.
Although diversity jurisdiction was defeated when Caguas and Oficentro were substituted for the fictitious defendants after removal, jurisdiction could be restored retroactively in appropriate circumstances, if Caguas and Oficentro were dispensable parties, by dismissing them from the action. In Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989), the Supreme Court held that federal courts of appeals have the authority like that given to the district courts in
Courts may not, of course, dismiss indispensable parties from an action in order to preserve federal jurisdiction. But, contrary to Mita‘s assertions, we conclude that Caguas and Oficentro are dispensable parties.
Mita‘s principal contention is that Casas is barred by the doctrine of judicial estoppel from asserting that Caguas and Oficentro are dispensable parties because Casas, in a motion requesting relief from the automatic stay, represented to the United States Bankruptcy Court for the District of Puerto Rico that Oficentro is an indispensable party. In that motion, Casas argued in the bankruptcy court that:
2. Creditor CASAS wishes to duly serve process, litigate and try the above mentioned lawsuit in the U.S. District Court against Debtor [(Oficentro)], and the other defendants [(Mita and Caguas)] before a jury. If CASAS is not allowed to serve process and litigate its claims against Debtor, CASAS would be effectively precluded from obtaining recovery under its tortious interference and contract in prejudice of third party‘s claims, due to a lack of an indispensable party. Concomitantly, CASAS’ constitutional right to have a trial by jury on all its legally tenable claims would be impaired.
(emphasis added).
Mita next argues that Caguas and Oficentro are indispensable parties under a Federal Rules of Civil Procedure 19(b) analysis. It submits that, because the permanent injunction compels it to resume an exclusive distribution relationship with Casas in the Greater San Juan area, Caguas‘s and Oficentro‘s contractual rights to distribute Mita products in that area are necessarily canceled. Moreover, Mita points out that Casas is seeking a declaratory judgment decreeing Mita‘s distribution agreements with Caguas and Oficentro null and void. Under these circumstances, says Mita, this action cannot “in equity and good conscience” proceed without Caguas and Oficentro, which are entitled to protect their contractual interests. We are not persuaded. A leading commentator writes:
When a person is not a party to the contract in litigation and has no rights or obligations under that contract, even though he may have obligated himself to abide by the result of the pending action by another contract that is not at issue, he will not be regarded as an indispensable party in a suit to determine obligations under the disputed
contract, although he may be a Rule 19(a) party to be joined if feasible.
7 Charles A. Wright et al., Federal Practice and Procedure 1613, at 199-200 (1986) (footnotes omitted) (citing cases); see Ferrofluidics Corp. v. Advanced Vacuum Components, Inc., 968 F.2d 1463, 1472 (1st Cir. 1992) (“`[I]t is generally recognized that a person does not become indispensable to an action to determine rights under a contract simply because that person‘s rights or obligations under an entirely separate contract will be affected by the result of the action.‘” (quoting Helzberg‘s Diamond Shops, Inc. v. Valley West Des Moines Shopping Ctr., Inc., 564 F.2d 816, 820 (8th Cir. 1977) (explaining the rationale for the rule))). The present case fits within this principle.
As to Casas‘s request for declaratory judgment, Casas, in its appellate brief, “voluntarily relinquishes its request for a declaratory judgment seeking the annulment of [Caguas‘s] and [Oficentro‘s] dealership agreements.” Although the only claims before us on appeal are those alleging violation of Law 75, we note that Caguas and Oficentro are similarly dispensable parties with respect to the remaining claims. In each of the remaining claims, the defendants are alleged to be joint tortfeasors or co- conspirators and are thus jointly and severally liable. It is well-established that joint tortfeasors and co- conspirators are generally not indispensable parties. See
That Caguas and Oficentro are dispensable to this action does not, in and of itself, compel their dismissal. While the Supreme Court held in Newman-Green that “the courts of appeals have the authority to dismiss a dispensable nondiverse party,” 490 U.S. at 837, it “emphasize[d] that such authority should be exercised sparingly,” id. The Court explained: “the appellate court should carefully consider whether the dismissal of a nondiverse party will prejudice any of the parties in the litigation. It may be that the presence of the nondiverse party produced a tactical advantage for one party or another.” Id. at 838. In this context, Mita argues that Casas gained a tactical advantage by Caguas‘s and Oficentro‘s presence in the case because Casas was able to obtain financial and business records under Federal Rules of Civil Procedure 33(a) and 34(a), which apply expressly to parties. We do not agree, however, with Mita‘s suggestion that these records would have been beyond Casas‘s reach had Caguas and Oficentro not been designated as parties. Under
Nevertheless, we are concerned that Caguas and Oficentro could themselves face prejudice if dismissed from this suit. Caguas and Oficentro, while initially characterized as John Doe and Richard Roe, were contemplated as parties to this litigation from the start, and have actively participated in it since June of 1992, when they were substituted for the fictitious defendants. Had the jurisdictional defect been called to the district court‘s attention at that point, the district court would have either dismissed Caguas and Oficentro from this action, thereby requiring Casas to sue them separately in the commonwealth court, or joined them to this action, thereby remanding the entire case to the commonwealth court. Either way, Caguas and Oficentro would have had their liability determined in a single proceeding. Instead, because of the jurisdictional oversight, dismissal of Caguas and Oficentro at this stage could subject them to a new lawsuit before a new judge in the Superior Court of Puerto Rico.
In Newman-Green, there was a similar difficulty. The problem there was remedied by terminating the litigation against the dismissed defendant with prejudice. 490 U.S. at 838. A similar remedy may be appropriate in this case. We note, however, that Newman-Green presents a stronger case than this one for dismissing the nondiverse party with prejudice, since the nondiverse party in that case had already had its claim adjudicated by the district court. Here, by contrast, Caguas and Oficentro have not yet had their claims adjudicated by the district court. Since this case is closer than the case in Newman-Green and since this issue has not been argued by either party, we think it best to allow it to be decided initially by the district court, on remand, where the parties will have an opportunity to present their arguments.
Accordingly, we dismiss Caguas and Oficentro from this action to preserve jurisdiction but direct the district court, on remand, to determine whether the injury to Caguas and Oficentro from being dismissed from this proceeding is such that their dismissal should be ordered to be with prejudice to any further suit by Casas. Caguas and Oficentro having been dismissed, complete diversity is restored per Newman-Green, and we retain subject matter jurisdiction over the claims between Casas and Mita.
IV.
Having disposed of the jurisdictional issues, we come to the merits of Mita‘s appeal. This appeal, of course, is interlocutory, see note 6, supra, being taken solely from the granting of the injunction against Mita. But the injunction can stand only if the court properly awarded summary judgment. We accordingly confront the merits of that ruling.
On summary judgment, we review the district court‘s decision de novo. Velez-Gomez v. SMA Life Assur., Co., 8 F.3d 873, 874-75 (1st Cir. 1993). A court of appeals will uphold summary judgment only if the record, viewed in the light most favorable to the nonmovant, reveals that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).
Mita‘s primary argument is that genuine issues of material fact preclude the granting of summary judgment to Casas on its Law 75 claims. Specifically, Mita argues that genuine issues exist as to: (1) whether Mita impaired its contract with Casas and (2) whether Mita had “just cause” to do so. To understand these arguments, we will need to step back and take a look at the applicable law.
Law 75 protects Puerto Rico-based dealers from summary cancellation of their dealership contracts by their
Notwithstanding the existence in a dealer‘s contract of a clause reserving to the parties the unilateral right to terminate the existing relationship, no principal or grantor 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.
For the purposes of this Act . . . it shall be presumed, but for evidence to the contrary, that a principal or grantor has impaired the existing relationship . . . when the principal or grantor establishes a distribution relationship
with one or more additional dealers for the area of Puerto Rico, or any part of said area in conflict with the contract existing between the parties.
Law 75‘s “just cause” limitation applies even where a contract includes a clause providing for termination under specified circumstances. Because many such termination clauses were tied to distribution quotas or goals, amendments to Law 75 in 1988 clarified what “just cause” meant in the context of contracts that contain such clauses:
The violation or nonperformance by the dealer of any provision included in the dealer‘s contract fixing rules of conduct or distribution quotas or goals because it does not adjust to the realities of
the Puerto Rican market at the time of the violation or nonperformance by the dealer shall not be deemed just cause. The burden of proof to show the reasonableness of the rule of conduct or of the quota or goal fixed shall rest on the principal or grantor.
The contract between Mita and Casas granted Casas an exclusive dealership in the greater San Juan area, so long as Casas met 85% of a specific performance quota.11 Mita terminated the exclusive dealership when, it alleges, Casas failed to meet 85% of the quota. Under Law 75, however, Mita could not impair its contract without just cause. Under the above provisions of Law 75, Mita had “just cause” to terminate the exclusivity provision only if the quota was adjusted to the realities of the Puerto Rican market at the time of Casas‘s failure to meet the quota. Moreover, Law 75
places on Mita‘s shoulders the burden of proving the reasonableness of the quota. Thus, once Casas moved for summary judgment and alleged an absence of evidence showing that the quota provision was reasonable, Mita was required to come forth with such evidence in order to survive summary judgment. Celotex, 477 U.S. at 325 (Where the nonmovant has the burden of proof, the movant need do no more than aver “an absence of evidence to support the nonmoving party‘s case“.); Pagano v. Frank, 983 F.2d 343, 347 (1st Cir. 1993).
Mita contends that it submitted evidence sufficient to raise a genuine issue of material fact as to the reasonableness of the quota. It points to letters between its counsel and Casas‘s counsel, and a declaration by Masaharu Ishidoya, vice president of Mita‘s international division, describing the negotiation of the quota. Ishidoya‘s declaration indicated that Casas itself requested that the exclusivity provision be conditioned upon a yearly performance goal. At his deposition, Ishidoya indicated that the 300 copier quota in the contract was a negotiated reduction from a quota of 500 copiers first proposed by Mita. The 1989 contract contained express language in which Casas “acknowledges that the annual quotas . . . adjust to the realities of the market” in Puerto Rico. Ishidoya states in his declaration that he relied upon Casas‘s representations to that effect. Mita also submitted a copy of the letter it
Mita further submitted the declaration of Rafael Martinez Margarida, the Managing Partner and Partner-in- Charge of Management Consulting Services at Price Waterhouse. Mita retained Martinez as an expert witness to testify as to the reasonableness of the contract quota. In his declaration, Martinez stated that he examined Puerto Rico‘s External Trade Statistics (“PRETS“) for imports of copy machines to Puerto Rico for the period of 1985-1990. The declaration included the following table:
| YEAR | QTY. IMPORTED | VALUE | GROWTH OVER PRIOR YEAR |
|---|---|---|---|
| 1985 | 3,054 | 3,427,143 | N/A |
| 1986 | 4,170 | 6,058,273 | 77% |
| 1987 | 7,375 | 8,103,991 | 34% |
| 1988 | 6,026 | 8,148,662 | 1% |
| 1989 | 7,056 | 9,259,856 | 14% |
| 1990 | 8,983 | 10,032,200 | 8% |
Martinez noted that the value of imports increased every year between 1985 and 1990. Martinez also noted that the quota in the contract was a projection based on Casas‘s actual sales figures in 1985 (279 units), 1986 (153 units) and 1987 (230 units). Finally, Martinez noted that Casas‘s sales for 1989 (80 units) and 1990 (110 units) decreased significantly, while the overall number of imports increased during that
Casas points to various alleged flaws in Martinez‘s methodology, and argues that these flaws require that his declaration be completely excluded as unprobative and incompetent. Casas argues that, in failing to deduct from the import figures the number of copiers exported from Puerto Rico, Martinez based his conclusions on an inaccurate picture of the internal copier market. Casas also argues that these same import figures include imports of all categories of copiers, not just the categories of copiers that Casas sold as part of its exclusive dealership agreement, and thus do not accurately reflect the precise market in which Casas was operating.12 Casas also argues that the quota, although based on historical sales figures, unreasonably required
The district court found that Mita had failed to present evidence sufficient to raise a genuine issue as to the reasonableness of the quota. The court stated:
The magistrate found, and we agree, that the quota provision was unreasonable at the time of Casas’ nonperformance. In support of its claim that the quota was reasonable, Mita presented an unsworn13 declaration by Rafael Martinez Margarida, a certified public accountant (CPA). In this declaration the CPA asserted that his examination of the Puerto Rico External Trade‘s [sic] Statistics (PRETS) reflected a growing market for photocopying machine imports from the period of 1985 to 1990, inclusive. Thus, he concluded, Casas’ failure to meet the quota could not be attributed to market conditions. As the magistrate found, Casas proved that Mita‘s argument was based on erroneous statistics. Among the factors cited by the magistrate which we find most convincing, the CPA‘s report failed to take into account essential aspects of
the Puerto Rican market such as the effects of Hurricane Hugo and the recession on the economy. The CPA‘s report also failed to take into account the effect of intrabrand rivalry on Casas‘s market share, a rivalry fostered by Mita‘s impairment of Casas’ exclusive distributorship. Additionally, Mita‘s data as to the market for copying machines in Puerto Rico erroneously included types of copying apparatus that were not machines manufactured by Mita and sold to Casas. Thus, Mita‘s evidence exaggerated the size of the market by including within it devices such as thermocopying mechanisms, which were not among those apparatuses made and sold to Casas by Mita, and minimized market conditions by failing to include negative factors such as Hurricane Hugo, the recession, the intrabrand rivalry etc. Clearly, Mita‘s evidence fails to create a sufficient question to prevent the entry of summary judgment in Casas’ favor since Mita has the burden of proving that the quota‘s [sic] were reasonable at the time of Casas’ nonperformance, given the legal presumption that they were not unreasonable. Thus, it was “unreliable, lacked probative value, and does not constitute competent evidence.” [Citing Magistrate‘s Report.] Mita claims now that its failure to submit more probative evidence was due to its lack of time in which to gather and present it. We find this excuse pathetic and unconvincing.
Casas, 847 F. Supp. at 988-89.
Mita argues that, in granting summary judgment to Casas, the district court exceeded its authority by improperly weighing the conflicting evidence, supra, and deciding an issue of material fact, notably, that the quota provision was unreasonable at the time of Casas‘s nonperformance. In particular, Mita claims
Casas responds that the district court did not weigh Martinez‘s declaration, but instead properly excluded it under
A. Martinez‘s Declaration was not Excludable
It is not clear that the district court meant to treat Martinez‘s declaration as excludable under
Under Rule 56(e), an affidavit must meet three requirements. It:
[1] shall be made on personal knowledge, [2] shall set forth such facts as would be admissible in evidence, and [3] shall show affirmatively that the affiant is competent to testify to the matters stated therein.
In moving below to strike the Martinez deposition under Rule 56(e), Casas made much the same arguments it now makes on appeal. Casas did not argue under the first clause in Rule 56(e) that Martinez lacked personal knowledge sufficient to testify as to the PRETS and sales figures. Nor did Casas argue under the third clause that Martinez was
The district court characterized the declaration as containing “erroneous statistics.” Casas, 847 F. Supp. at 988. But neither Casas nor the court asserted that the figures in the declaration were not accurate reproductions of Puerto Rico‘s External Trade Statistics, nor did they dispute the correctness of the other data mentioned in the declaration. The court‘s reason for calling the statistics “erroneous” seems not to have been their inaccuracy as such but rather its belief that they did not constitute an accurate measure of the Puerto Rico copier market. The district court also criticized the alleged failure of Martinez‘s declaration to account for the impact of Hurricane Hugo, the effect of the local recession, and the impact of intrabrand rivalry, matters raised in Casas‘s materials. But the increase in copier imports between 1989 and 1990, as reflected in the PRETS, implicitly rebutted Casas‘s evidence that the hurricane and the local recession had had a materially adverse effect on the Puerto Rican copier market. In finding that the declaration failed to consider these
Casas‘s argument that the PRETS and other data did not account for the impact of intrabrand competition is more troubling. See infra. While the PRETS figures suggest that the market grew in spite of the hurricane and recession, they indicate nothing directly about the possible impact of increased intrabrand competition. However, it is one thing to note this silence of the evidence, another to exclude the PRETS figures because of it. Evidence may be relevant and admissible even though, standing alone, it fails to address
The district court found that the PRETS figures were also “erroneous” because they included other categories of copying machines that were not the types of machines sold by Casas. Casas, 847 F. Supp. at 988. Casas pointed to the fact that the 1990 PRETS figure included imports of five categories of copiers, while Casas sold copiers in only three of these categories. This “exaggerated the size of the market.” The absolute size of the market was not, however, the issue. Rather, the issue was the trend in the market, i.e. whether the market was increasing or decreasing, whether Casas‘s sales were consistent with the trend, and whether the quota was consistent with Casas‘s historical market share. Martinez explained in his deposition that it was necessary to include the additional categories in the 1990 PRETS figures in order to obtain comparable yearly data, since prior to that year the data for the copier market had not been broken up into the five subcategories. The inclusion of these categories did not necessarily make his testimony about the
We conclude that the reasons set forth by the district court were insufficient bases for rejecting the Martinez declaration altogether, assuming this was what the court intended to do. Nor do we find Casas‘s additional arguments sufficient for its outright exclusion. Casas complains: that Martinez failed to deduct export figures from the import figures in order to obtain a true measure of the internal copier market; that Martinez failed to consider the fact that the quota, according to Casas, required Casas to double its market share within thirteen months; that Martinez failed to consider the fact that during the period of the contract, Casas had a smaller region of exclusive dealership than before. While these additional arguments are not without force, a party may not exclude, on summary judgment, relevant and otherwise admissible factual evidence solely on the ground that the evidence leaves a number of unanswered questions or that it appears somewhat less persuasive than the movant‘s evidence offered in rebuttal. If there are genuine issues of fact, the nonmovant is entitled to have
B. Sufficiency of Mita‘s Evidence to Raise Issue of Fact
Having found no adequate basis to exclude from consideration Martinez‘s declaration, we next consider whether that declaration and Mita‘s other evidence were sufficient to raise a genuine issue of fact as to the reasonableness of the quota in light of the Puerto Rico market.16 It is instructive first to review the summary judgment standard. “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment, the requirement is that there is no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-48 (1986). For a dispute to be “genuine,” there must be sufficient evidence to permit a reasonable trier of fact to
Viewing Mita‘s evidence in its most favorable light, we think that, although the question is close, Mita‘s evidence and the reasonable inferences therefrom are sufficient to raise a genuine issue as to the reasonableness of the quota. First, the contract executed by the parties contains a clause in which Casas expressly agreed that the quota was reasonable in light of the realities of the Puerto Rico market. We do not suggest that such a clause was
Casas, to be sure, presented much persuasive evidence in opposition. Summary judgment, however, is not a substitute for trial. We do not think Casas‘s evidence so undermined Mita‘s case that Mita can be said to have failed to raise a genuine issue of fact concerning the reasonableness of the quota. At most, it indicated that many issues of fact remained to be resolved at trial. Casas presented a declaration by its president, stating that he thought the quota unreasonable and that Mita had imposed the quota unilaterally by threatening to cancel their preexisting distribution relationship. Mita‘s vice president, however, asserted that he “relied on Casas’ representations that the
Casas‘s strongest argument is that Mita‘s statistical evidence of market growth and of past sales fails to account for the fact that, prior to 1988, Casas was the only distributor of Mita products for all of Puerto Rico (even though its contract then was nonexclusive). By contrast, during the term of the contract, Casas argues, it faced stiff intrabrand competition. Its exclusive dealership covered only a portion of Puerto Rico, the greater San Juan area. While it could also sell Mita products elsewhere in Puerto Rico on a nonexclusive basis, it now faced competition from two other authorized Mita dealers outside the exclusive San Juan area as well as from alleged unauthorized sales of Mita‘s copiers by Caguas and Oficentro. According to Casas, its competitors sold 327 Mita copiers during the 13-month period of the contract. Casas argues that Mita‘s past sales figures simply do not address the issue of this increased
But we do not think that this argument so undermines Mita‘s case as to eliminate any contested factual issue. It is unclear how to assess the effects of intrabrand competition in calculating the reasonableness of the quota. The fact that other nonexclusive dealers were able to sell 327 Mita copiers during the relevant period outside of San Juan is a double-edged sword. While, to be sure, these sales suggest that Casas faced stern competition, it also indicates the existence of a strong demand for Mita copiers on which Casas was presumably free to capitalize to the extent it was capable. It is unclear, moreover, in measuring quota reasonableness, how intrabrand competition is to be distinguished from the effects of competition from copiers made by other manufacturers. Such interbrand competition would have existed earlier as well as in 1989-90. While the new factor of intrabrand competition doubtless weakens the predictive value of Casas‘s earlier sales figures, it does not totally vitiate their relevance to quota reasonableness. Casas knew when it signed the contract that its exclusivity would be limited to the San Juan area, and presumably also knew of the intrabrand competition it faced elsewhere. The evidence permits an inference that in Casas‘s then judgment the quota was reasonable despite the anticipated interbrand
We conclude that Mita presented evidence sufficient to raise a genuine issue as to the reasonableness of the quota. Particularly where the standard here, “reasonableness,” is so amorphous, and “hard” evidence to prove “reasonableness” so obviously difficult to come by and subject to multiple interpretations, we are disinclined to deny Mita its day in court by raising the threshold barrier of proof too high. See Rogen, 361 F.2d at 265-66 (suggesting that delicate issues of fact “may well indicate a preference for the antennae of the factfinder over the cruder instrument of summary judgment“); Newell, 20 F.3d at 23 (deferring to the jury‘s judgment that supplier failed to meet its burden of proving that a quota was “reasonable” under Law 75). To the extent that we have doubts about the appropriateness of summary judgment, we are required to resolve them in Mita‘s favor.
Throughout its brief, Casas repeatedly asserts that Mita has failed to satisfy its burden of proving that the quota is reasonable. This misapprehends the burden Mita faces at summary judgment. Mita is not required to prove
V.
In accordance with this opinion, we hereby dismiss Caguas and Oficentro from this suit and remand to the district court to determine whether the dismissal of Caguas and Oficentro should be with or without prejudice. Having determined that the district court erred in granting Casas‘s motion for partial summary judgment, we vacate the court‘s order granting Casas a permanent injunction. The parties’ claims will proceed in the district court consistently with this opinion.20
So ordered. Each party shall bear its own costs.
Notes
(emphasis added).Codefendants John Doe and Richard Roe are fictitious names used to refer to defendants whose names are unknown at present. Said defendants are the natural persons and/or corporate and/or judicial entities who together with MITA have conspired, with knowledge of the contractual relationship between MITA and Casas, to deprive the latter of said contractual relationship, directly and indirectly interfering therewith, causing the damages hereinafter itemized.
To plaintiff‘s best knowledge and understanding, John Doe and Richard Roe are citizens and residents of the Commonwealth of Puerto Rico and are also liable to plaintiff pursuant to the allegations mentioned hereinafter.
[T]he courts of appeals shall have jurisdiction of appeals from:
(1) Interlocutory orders of the district courts of the United States . . ., or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court.
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.