Friday, June 12, 2009

Arbitration Panel awards $4.655 million in damages to terminated distributor

In one of the largest awards in Law 75 cases in Puerto Rico, a three-member arbitration panel, after holding evidentiary hearings in the matter of Mendez & Co. Inc. v Plumrose USA et. al., awarded our client, one of the leading groceries distributors in Puerto Rico, over $4.655 million in damages for lost profits, goodwill, pre and post-judgment interest, and expert witness and attorney's fees for an unjustified termination and impairment of an exclusive distributorship. The Panel had previously entered a Partial Award on liability against respondents finding that the manufacturer's purported reason for the termination, namely, that the agreeement had a fixed term and would not be renewed, was illegal as a matter of public policy under Law 75. The distributor's expert on damages was Reynaldo Quinones, CPA. The manufacturer's expert was Reynaldo Landa, CPA.

The dispute underscores the importance of seeking legal advice from local counsel when problems arise during the relationship, and timely documenting the alleged business reasons that may serve to support a defense of just cause for a termination.

The award was under review in the U.S. District Court for the District of Puerto Rico in Mendez v. Plumrose, Civ. No. 08-2166(ADC), on cross-motions to confirm and vacate the award. The court also had before it a motion for garnishment of assets pre-confirmation of the award. The motions were unresolved as the case settled on confidential terms.