Thursday, December 8, 2016

Law 21 federal case dismissed for failing to meet jurisdictional amount requirement

Plaintiff Grupo Alimentaria had been an exclusive sales representative of food products of Defendant Conagra’s predecessor company. Conagra acquired the assets and liabilities of the predecessor, including Plaintiff’s contract. After a two-year relationship, Conagra terminated the agreement. In Grupo Alimentaria, LLC v. Conagra Foods, Inc., 2016 WL 5415651 (D.P.R. Sept. 28, 2016) (Gelpí, J.), Plaintiff sued Conagra in federal court and asserted a Law 21 claim for unjustified termination of the sales representative agreement and a Civil Law claim for breach of contract. The complaint alleged damages of $200,000.

Defendant moved to dismiss under Rule 12(b)(1) for not meeting the jurisdictional amount. The relevant First Circuit test shifts the burden to Plaintiff, once Defendant contests subject-matter jurisdiction, to prove with affidavits or an amended pleading that the claim is not to a legal certainty less than the jurisdictional amount in excess of $75,000.

Plaintiff had sold roughly $83,000 in 2013 or 2014 so that applying the stipulated commission rate of 3% to the average historical sales volume for the two-year term of the relationship and multiplying that sum by 5 in Law 21 did not exceed $7,000. Because Plaintiff did not plead facts for any other items of damages in Law 21 and recovery of future loss of earning potential is not allowed by the statute, the Law 21 claim did not meet the jurisdictional amount requirement. The court noted that no Supreme Court of Puerto Rico precedent had interpreted the damages provisions of Law 21. Without citing any authority, the court dismissed the Civil Code claim as duplicative or derivative of the Law 21 claim.