Wednesday, July 8, 2009

“Hot topics” in Law 75 litigation

A few issues come up frequently during contractual negotiations or litigation and some are cutting-edge or even novel. These are my "top ten", but not in order:

1) Do retailers qualify for protection as Law 75 dealers, and for the retailers that might, what types of activities or services do they perform that make them qualify?
2) Is verbal evidence of an alleged exclusive distributorship admissible or barred by Puerto Rico substantive law or does the issue of admissibility depend on whether there is a clearly non-exclusive and integrated written agreement in effect?
3) What is the meaning and scope of exclusivity in Law 21(i.e., the Sales Representative Act)?
4) When is product diversion (sales outside the territory) just cause?
5) Is a principal responsible for market interference caused by third parties that sell product into an exclusive territory?
6) Does Puerto Rico Law 75 or the doctrine of tortious interference apply when title of the product passes outside Puerto Rico but the resale of the infringing product takes place within Puerto Rico?
7) In what circumstances would a sale of assets by the principal, including the distribution rights, constitute a justified market withdrawal?
8) Of course, there are many issues involving the methodology of damages, such as, when is recovery of goodwill appropriate, what should be the correct method to compute goodwill, and what should be the measure for recovery of lost profits?
9) Do the requirements for preliminary injunctive relief in the Federal Rules preempt Law 75 if read to allow a preliminary injunction without a showing of irreparable harm etc.?
10) Would the Federal Arbitration Act preempt Law 75 if an arbitration clause in a written distribution agreement includes a choice of law clause applying laws other than Puerto Rico?

There’s case law pre-2009, sometimes conflicting, on some of these issues, but stay tuned for future developments.