Tuesday, June 4, 2013

Law 75 case gets thrown out of federal court for failing to meet the jurisdictional amount requirement

I don’t recall a single case, but this one, dismissing a Law 75 action for not meeting the jurisdictional amount requirement for diversity jurisdiction. This one, Industria de Refrigeracion v. Gutierrez, 2013 WL 2378580 (D.P.R. June 3, 2013)(FAB) was skeletal from the start. But see General Motors v. Royal Motors Corp., 769 F. Supp. 2d 73 (D.P.R. Feb. 1, 2011)(Gelpí, J.)(reported on 12/5/2011); Ramirez de Arellano v. Budenheim USA, Inc. 2010 WL 3810078 (D.P.R. Sept. 22, 2010)(Perez-Gimenez,J)(reported on 11/23/2010).

There, plaintiff-supplier, a Colombian corporation, filed suit against a Puerto Rico distributor for breach of contract and collection of moneys of past due bills of lading totaling $45,653 and for declaratory judgment that termination of the non-exclusive distribution contract was with cause. Defendant’s sales of plaintiff’s products exceeded $300,000 over the past five years.

The court entered an order to show cause why the complaint should not be dismissed and the defendant followed with a motion to dismiss. Plaintiff opposed dismissal arguing that aggregation of the two claims exceeded the jurisdictional amount. See FRCP 18. The claim for declaratory judgment had to exceed $29,347 to establish jurisdiction, and it did not. The court framed the test as whether the “object giving value to plaintiff’s claim for declaratory judgment is the economic stake in the agreement.” To meet its burden, plaintiff filed an affidavit “on information and belief” attesting that the value of the agreement exceeded $40,000 based on sales of $300,000. Trouble loomed on the horizon. The Court disregarded the affidavit holding that it contained “bald statements based on round numbers as to the value of the contract.” Finally, it dismissed the action holding that “anyone familiar with the applicable law could [not] objectively view that the aggregate claims reach the jurisdictional minimum.”