Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

BERGSTEIN v. JORDACHE ENTERPRISES

United States District Court, Southern District of New York


June 24, 1991

DAVID BERGSTEIN, PLAINTIFF,
v.
JORDACHE ENTERPRISES, INC., DEFENDANT.

The opinion of the court was delivered by: Cannella, District Judge:

MEMORANDUM AND ORDER

Defendant's motion to dismiss plaintiff's complaint is granted in part and denied in part. Fed.R.Civ.P. 12(b)(6).

BACKGROUND

In April 1982, Jordache Enterprises, Inc., ["Jordache"] a New York
corporation with its principal place of business in New York, engaged
David Bergstein, a Pennsylvania domiciliary, to be its sales
representative in Western Pennsylvania and West Virginia. Bergstein
agreed to develop accounts among clothing retailers within his territory
and in return Jordache promised to pay him a five percent commission on
all goods shipped into his area. Jordache terminated its relationship
with Bergstein in 1989. Bergstein thereafter commenced the instant action
alleging the following claims: (1) wrongful discharge (count one); (2)
prima facie tort (alternative count one); (3) breach of contract (count
two); (4) intentional interference with contract (count three); and (5)
violation of the Pennsylvania Commissioned Sales Representative Act, 43
Pa.Cons.Stat.Ann. §§ 1471 et seq.  (Purdon 1991) [the "Sales
Representative Act"] (count four). Jordache now moves to dismiss
Bergstein's complaint in its entirety under Rule 12(b)(6) of the Federal
Rules of Civil Procedure.

DISCUSSION

In deciding a motion to dismiss for failure to state a claim upon which
relief can be granted, the court must accept as true all of plaintiff's
factual allegations and must construe the complaint in the light most
favorable to the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94
S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). All permissible inferences from
those facts must also be drawn in plaintiff's favor. See Murray v. City
of Milford, 380 F.2d 468, 470 (2d Cir. 1967). A complaint should not be
dismissed for failure to state a claim unless it appears beyond doubt
that no relief can be granted under any set of facts plaintiff could
prove in support of his claim. See Hishon v. King & Spalding,

467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984);
Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir. 1984), cert. denied,
470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed.2d 144 (1985).

I. Wrongful Discharge

The jurisdictional basis for all of plaintiff's claims, including wrongful discharge, is diversity of citizenship; therefore, state law controls plaintiff's recovery. See Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 LEd. 1188 (1938). To decide which state's law applies, the court must look to the choice of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941).

New York applies the interest analysis approach to choice of law questions in tort actions. See Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 197, 480 N.E.2d 679, 684, 491 N.Y.S.2d 90, 95 (1985); Babcock v. Jackson, 12 N.Y.2d 473, 481, 191 N.E.2d 279, 283, 240 N.Y.S.2d 743, 749 (1963). Under this formulation, "`controlling effect' must be given `to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.'" Schultz, 65 N.Y.2d at 196, 480 N.E.2d at 683, 491 N.Y.S.2d at 94 (quoting Babcock, 12 N.Y.2d at 481, 191 N.E.2d at 283, 240 N YS.2d at 749). In making this determination, the most relevant contacts are the parties' domicile and the locus of the tort. See id. at 197, 480 N.E.2d at 684, 491 N YS.2d at 95.

Here, plaintiff is a Pennsylvania domiciliary and defendant is a New York corporation with its principal place of business in New York. Under New York law, where defendant's negligent conduct occurs in one jurisdiction and plaintiff's injuries are suffered in another, the place of the wrong is deemed to be "the place where the last event necessary to make the actor liable occurred." Id. at 195, 480 N.E.2d at 683, 491 N YS.2d at 94. Since plaintiff's injuries occurred in Pennsylvania, the locus of the tort is Pennsylvania. Given that Bergstein lived in Pennsylvania and that the tort occurred in that state, Pennsylvania has the greatest nexus with the controversy. See Perdue v. J. C. Penney Co., 470 F. Supp. 1234, 1238 (S.D.N.Y. 1979) (finding that Texas had the greatest interest in wrongful discharge claim asserted by Texas domiciliary working in Texas against New York corporation).

Nevertheless, Pennsylvania law could be displaced. In Neumeier v. Keuhner, 31 N.Y.2d 121, 286 N.E.2d 454, 335 N.Y.S.2d 64 (1972), an action involving parties with different domiciles, the court observed as follows:

  Normally, the applicable rule of decision will be that
  of the state where the accident occurred but not if it
  can be shown that displacing that normally applicable
  rule will advance the relevant substantive law
  purposes without impairing the smooth working of the
  multi-state system or producing great uncertainty for
  litigants.

Id. at 128, 286 N.E.2d at 458, 335 N.Y.S.2d at 70. Neither party contends that New York has a substantial interest in the underlying controversy which would justify displacing Pennsylvania law on wrongful discharge. Absent cause to deviate from the usual rule, the Court finds that Pennsylvania law governs plaintiff's wrongful discharge claim. In the context of Jordache's motion to dismiss, the issue before the Court is whether Pennsylvania recognizes a claim for wrongful discharge, and if so, whether the facts plaintiff alleges sufficiently state a claim.

The long standing rule in Pennsylvania is that absent an express statutory or contractual provision concerning the duration of the contract or the permissible grounds for dismissal, employee at will principles apply. See Pociask v. KDI Sylvan Pools, Inc., No. 89 Civ. 3447, slip op. at 8, 1990 WL 161256 (E.D.Pa. Oct. 17, 1990); McGonagle v. Union Fidelity Corp., 383 Pa. Super. 223, 556 A.2d 878, 881 (Super.Ct. 1989); Darlington v. General Elec., 350 Pa. Super. 183, 504 A.2d 306, 309 (Super.Ct. 1986). An at-will employee may be terminated "at any time, for any reason, or for no reason at all." Martin v. Capital Cities Media, Inc., 354 Pa. Super. 199, 207, 511 A.2d 830, 834 (Super.Ct. 1986). Thus, an at-will employee has no right of action against his employer for wrongful discharge. See Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174, 176 (1974); McGonagle, 556 A.2d at 881; Richardson v. Charles Cole Memorial Hosp., 320 Pa. Super. 106, 466 A.2d 1084, 1085 (Super.Ct. 1983). The rule is designed to safeguard the employer's right to manage his business as he sees fit and to uphold freedom of contract. See Darlington, 504 A.2d at 309.

There is one narrow exception to the rule. The leading case of Geary
v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974)
established a nonstatutory cause of action for wrongful discharge from
employment at-will where the employee discharge violates public policy
and there is no legitimate or plausible reason for termination. See 319
A.2d at 180. To recover, the employee must show a "clearly mandated
public policy" of the type that "strikes at the heart of a citizen's
social rights, duties, and responsibilities." Novosel v. Nationwide Ins.
Co., 721 F.2d 894, 899 (3d Cir. 1983) (applying Pennsylvania law).
Pennsylvania courts, however, are reluctant to recognize a wrongful
discharge claim based on an employee's allegation that his discharge
violated public policy, see Rossi v. Pennsylvania State Univ.,
340 Pa. Super. 39, 489 A.2d 828, 837 (Super.Ct. 1985), and recognize the
exception only in narrow circumstances, see Hineline v. Stroudsburg
Elec. Supply Co., 384 Pa. Super. 537,  559 A.2d 566, 568 (Super.Ct.
1989).

A survey of Pennsylvania case law indicates that there are two factual situations which give rise to a claim that an employer's termination contravenes public policy. First, a wrongful discharge claim is recognized where the employee is terminated for fulfilling a statutory duty or exercising a constitutional right. See Novosel, 721 F.2d at 900 (discharge for exercising first amendment rights); Perks v. Firestone Tire & Rubber Co., 611 F.2d 1363, 1366 (3d Cir. 1979) (discharge for refusal to submit to polygraph examination which by statute an employer could not legally require an employee to take); Field v. Philadelphia Elec. Co., 388 Pa. Super. 400, 565 A.2d 1170, 1180 (Super.Ct. 1989) (discharge for performing statutory duty of notifying Nuclear Regulatory Commission of public safety violations); Reuther v. Fowler & Williams, Inc., 255 Pa. Super. 28, 386 A.2d 119, 121 (Super.Ct. 1978) (discharge for fulfilling jury duty, a statutory obligation). Pennsylvania also affords relief where the employee is discharged for refusing to comply with his employer's order to violate the law. See Woodson v. AMF Leisureland Centers, Inc., 842 F.2d 699, 702 (3d Cir. 1988) (discharge for refusal to serve alcohol to clearly intoxicated patron); Shaw v. Russell Trucking Lines, Inc., 542 F. Supp. 776, 779 (W.D.Pa. 1982) (termination for refusal to commit motor vehicle violation); McNulty v. Borden, Inc., 474 F. Supp. 1111, 1119 (E.D.Pa. 1979) (termination for refusal to participate in antitrust violation).

An employee's termination does not threaten a clear mandate of public policy, however, where a nonmanagement employee is discharged merely for objecting to company policy, regardless of the commendable nature of his action. This is best illustrated by the Pennsylvania Supreme Court's decision in Geary, which introduced the public policy exception but found that the facts presented did not give rise to a wrongful discharge claim. In Geary, a former salesman alleged that he had been wrongfully discharged for complaining to management about the marketing of a product he believed was defective. The court distinguished Geary's discharge from employee discharges for refusing to commit perjury or for filing a workmen's compensation claim. The public policy implicated in these situations was "clear and compelling." Id. at n. 16. However, the court concluded that any public policy considerations raised by Geary's complaint were outweighed by the employer's legitimate interest in maintaining normal business operations. See id.; see also Callahan v. Scott Paper Co., 541 F. Supp. 550, 563 (E.D.Pa. 1982) (no claim existed where sales managers discharged for objecting to company's antitrust violations); Hineline, 559 A.2d at 569 (no claim existed where former employee discharged for dismantling employer's illegal video camera without authority or right).

Bergstein alleges that pursuant to the parties' "partly oral and partly
written" contract, he "would not be terminated without good cause so long
as his performance was satisfactory." Complaint, at  ¶¶ 5, 15. Under
Pennsylvania law, however, "terms such as employment will continue so
long as performance is satisfactory are too ambiguous to overcome the
[at-will] presumption." Darlington, 504 A.2d at 312 (emphasis in
original). Moreover, an intent to offer an express duration of employment
may not be inferred from the employer's statement that the term of
employment is contingent on satisfactory performance. See Mc Williams v.
AT & T Information Sys. Inc., 728 F. Supp. 1186, 1195 (W.D.Pa. 1990).
Since Bergstein lacks a contract for a specific term he is presumed to be
an employee at-will.

In count one of his complaint, Bergstein alleges that his discharge violates public policy. According to Bergstein, Jordache sold directly to customers in his territory at prices lower than those which Jordache permitted Bergstein to offer in violation of the antitrust laws. See Complaint, at ¶¶ 20, 25(b). As a result of Jordache's illegal price discrimination, Bergstein claims that his sales were less than what they otherwise would have been, thereby reducing the amount of his commissions. See id. at ¶ 25(a). When Bergstein complained to Jordache about its unlawful practices he was terminated to discourage other sales persons from exposing Jordache's illegal acts. See id. at ¶¶ 25(c), 27.

Bergstein's termination clearly differs from the two types of
discharges which Pennsylvania recognizes contravene public policy.
First, there is no allegation that Bergstein had a statutory duty to
object to Jordache's pricing policy. In this respect, Bergstein's claim
is similar to Callahan.  In Callahan, former employees argued that they
had been discharged for objecting to and attempting to stop unlawful
price discounts an promotional allowances that their employer offered to
certain customers but not to others in violation of the antitrust laws.
See Callahan, 541 F. Supp. at

552. The district court found that these facts failed to state a
cognizable wrongful discharge claim based upon the Pennsylvania Supreme
Court's decision in Geary:

  In Geary the Supreme Court held that employee
  complaints on matters generally entrusted to
  management even where motivated by a sincere concern
  for human safety do not outweigh the employer's
  interest in preventing disruptions to its operations.
  Surely if this is so, the employer's interest must
  also be paramount where the employee objects to
  pricing decisions of his employer on the ground that
  they cause harm to competition.

Id. at 563. Thus, despite the worthiness of Bergstein's objections, Jordache's legitimate interest in running its business as it desires outweighs any public policy considerations arising from his termination.

Bergstein's attempts to distinguish Callahan are unavailing. First, he
argues that the employees in Callahan were salaried employees and
therefore not directly harmed by the employer's unlawful pricing
practices. Bergstein misstates the facts of Callahan, as the employees in
Callahan  expressly alleged that "as a direct result of [the employer's]
anticompetitive activity they have suffered reduced compensation [and]
lost the opportunity to increase their sales. . . ." Id. at 553.

Bergstein also contends that unlike Callahan, the prices Jordache charged retailers are not exclusively a management decision. In support, Bergstein points to his allegation that Jordache's pricing scheme breached Bergstein's contract, as well as the antitrust laws. See Complaint, at ¶ 55. However, even drawing all reasonable inferences in Bergstein's favor, the allegation does not suggest that Bergstein participated in determining price with Jordache management; rather, it is clear that Bergstein sold the goods at a price decided upon by Jordache management. In any event, while Bergstein may have had a contractual right to require Jordache to set prices evenly, Bergstein did not have a statutory duty to object to Jordache's pricing policies. Consequently, his discharge does not threaten a significant public policy, in contrast to the discharges involving employees' actions expressly protected by the Pennsylvania legislature.

Bergstein's discharge is also different from the second type of
discharge Pennsylvania recognizes as violating a significant public
policy. McNulty highlights the deficiencies in Bergstein's claim, as that
case also involved an employee's claim that his employer engaged in
pricing practices violative of antitrust laws. In McNulty, however, the
court found that the employee could state a wrongful discharge claim
because the employer ordered his employee to offer deals to a customer
account in violation of the antitrust laws. See McNulty,  474 F. Supp. at
1114, 1119. Here, there is no indication that Jordache asked Bergstein to
participate in Jordache's illegal conduct.

In sum, given that Bergstein was not under a legal duty to object to his employer's antitrust violations and was not ordered to participate in his employer's illegal conduct, his termination did not violate a clear mandate of public policy-the cornerstone of the public policy exception to employment at-will. Accordingly, plaintiff's wrongful discharge claim based on the public policy exception is dismissed with prejudice. Fed.R.Civ.P. 12(b)(6).

In count one Bergstein also asserts a claim for wrongful discharge
based on his employer's specific intent to harm. See  Complaint, at
¶ 29. Bergstein's reliance on Geary in support of his contention that
Pennsylvania recognizes a wrongful discharge claim based on the
employer's specific intent to harm is without merit. In Geary, the
Pennsylvania Supreme Court merely noted that the specific intent theory
was "on the frontier of the law of tort." See Geary, 319 A.2d at 177. The
court's holding was limited to discharges in violation of public policy.
See id. at 180; see also Mc Williams, 728 F. Supp. at 1193 (finding that
the Geary court did not adopt specific intent theory to the employee
at-will exception).

Bergstein's reliance on Tourville v. Inter-Ocean Ins. Co., 353 Pa. Super. 53, 508 A.2d 1263 (1986) is equally without merit. Although the Pennsylvania Superior Court recognized the specific intent to harm theory, recent Pennsylvania Supreme Court cases strongly indicate that this ground does not support a cognizable wrongful discharge claim. First, in Clay v. Advanced Computer Applications, 522 Pa. 86, 559 A.2d 917 (1989), the Pennsylvania Supreme Court explained Pennsylvania's firmly entrenched employee at-will doctrine as follows:

  [As] a general rule, there is no common law cause of
  action against an employer for termination of an
  at-will employment relationship. Geary v. United
  States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974).
  Exceptions to this rule have been recognized in only
  the most limited of circumstances, where discharges of
  at-will employees would threaten clear mandates of
  public policy.

559 A.2d at 918 (emphasis added); see also Paul v. Lankenau Hosp., 524 Pa. 90, 569 A.2d 346, 348 (1990) (quoting Clay with approval). Thus, while Pennsylvania's intermediate court in Tourville liberalized Pennsylvania's employee at-will doctrine to include the specific intent to harm exception, the Pennsylvania Supreme Court has rejected such an exception. The Pennsylvania Supreme Court's latest decisions are consistent with Pennsylvania's staunch adherence to the employee at-will rule and the limited availability of the public policy exception. In view of the most recent pronouncements of Pennsylvania's highest court, the Court finds that Pennsylvania does not recognize a wrongful discharge claim arising out of an employer's specific intent to harm. See Asko v. Bartle, 762 F. Supp. 1229, 1233 (E.D.Pa. 1991); Mann v. J.E. Baker Co., 733 F. Supp. 885, 890 (M.D.Pa. 1990); Mc Williams, 728 F. Supp. at 1194. Accordingly, Bergstein's claim for wrongful discharge based on his employer's specific intent to harm is dismissed with prejudice. Fed.R.Civ.P. 12(b)(6).

II. Prima Facie Tort

In the event of dismissal of his wrongful discharge claim, Bergstein asserts a claim of nina facie tort under New York law. The Court previously determined that Pennsylvania law applies to all of plaintiff's tort causes of action, absent a policy reason to displace Pennsylvania law. Since Bergstein has not proffered any policy reasons which would justify displacing the law of Pennsylvania, Bergstein's assertion that New york law applies to his prima facie tort claim is without merit. Moreover, the New York Court of Appeals has expressly stated that a plaintiff may not use New York's law of prima facie tort to circumvent "the unavailability of a tort claim for wrongful discharge." Murphy v. American Home Prods., 58 N.Y.2d 293, 304, 448 N.Ed.2d 86, 91, 461 N.Y.S.2d 232, 237 (1983). Accordingly, Jordache's motion to dismiss alternative count one is granted. Fed.R.Civ.P. 12(b)(6).

III. Breach of Contract

In count two of his complaint, Bergstein asserts a breach of contract claim based upon an implied contract of employment and the parties' express contract. Since plaintiff's claim concerns defendant's performance of the contract and the contract was to be performed in Pennsylvania, the claim is governed by the law of Pennsylvania. See Babcock, 12 N.Y.2d at 479, 191 N.E.2d at 282, 240 N.Y.S.2d at 747.

First, Bergstein asserts that an implied contract of employment existed
between the parties based on additional consideration that he provided to
Jordache. In the absence of an express contract for a definite term, an
employee may avoid the at-will presumption by establishing additional
consideration passing from the employee to the employer. See Mc
Williams,  728 F. Supp. at 1195; Darlington, 504 A.2d at 314. Additional
consideration is present when "an employee affords his employer a
substantial benefit other than the services which the employee is hired
to perform, or when the employee undergoes substantial hardship other
than the services which he is hired to perform." Veno v. Meredith,

357 Pa. Super. 85, 515 A.2d 571, 580 (Super. Ct. 1986) (quoting
Darlington, 504 A.2d at 315).

The presence of additional consideration indicates an implied promise to discharge only for cause. See Schleig v. Communications Satellite Corp., 698 F. Supp. 1241, 1247 (M.D.Pa. 1988); Darlington, 504 A.2d at 514. An implied promise to discharge only for cause based upon additional consideration continues for a reasonable length of time. See Darlington, 504 A.2d at 314. Thus, during the duration of the implied contract, the employee cannot be terminated without just cause, but after a reasonable time, the employee may be terminated for any reason or no reason at all. See id. at 311, 314. A reasonable term of employment should "be commensurate with the hardship the employee has endured or the benefit he has bestowed." Veno, 515 A.2d at 580.

Only one of Bergstein's several allegations satisfies Pennsylvania's definition of additional consideration. His allegation that Jordache encouraged and required him to expend time and energy to "develop customers and accounts among retailers," Complaint, at ¶ 9, does not show that Bergstein was required to do anything beyond the expected duties of a sales agent. His allegation that he developed a loyal following of customers entitling him to commissions, see id. at ¶¶ 12-13, also does not indicate that Bergstein either incurred a substantial detriment or afforded Jordache a benefit above and beyond the normal services for which he was hired to perform. The allegation that he gave up other business opportunities in favor of taking a position with Jordache, see id. at ¶ 48, is simply a reasoned career decision. See Darlington, 504 A.2d at 315. Contrary to Bergstein's contention, none of these allegations permit the inference that he brought a following of customers to Jordache.

However, Bergstein's allegation that he invested $200,000 of his own
money to foster his customer base is sufficient to withstand Jordache's
motion to dismiss. See  Complaint, at ¶ 49. In Marder v. Conwed
Corp., 75 F.R.D. 48 (E.D.Pa. 1977), the district court considered whether
plaintiffs had presented sufficient additional consideration to rebut the
employee at-will presumption. In Marder, plaintiffs were defendant's
sales representatives for defendant's product known as space dividers.
Plaintiffs alleged that they furnished additional consideration to
defendant in the form of their extra efforts to obtain the government as
a client and that they could not be terminated until they recovered their
investment through commissions on sales to the government. See id. at
53. The court found sufficient evidence to support the jury's finding
that plaintiffs' sales to the government required unusual or
extraordinary effort. See id. at 58-59. Thus, Bergstein's allegation that
he invested $200,000 constitutes additional consideration if the
investment was unusual and not the kind of effort that would normally be
required of a sales agent.

Jordache further argues that more than seven years of employment is per se unreasonable. Under Pennsylvania law, the duration of employment depends upon the hardship suffered by the employee or extraordinary benefit afforded the employer. See Veno, 515 A.2d at 580. Clearly, there is no basis for finding that seven years employment is per se unreasonable. See Lubrecht v. Laurel Stripping Co., 387 Pa. 393, 127 A.2d 687 (1956) (finding breach of implied contract where employee discharged six years into his employment).

In sum, Bergstein's claim that his termination was in breach of an implied contract sufficiently states a claim for relief. Accordingly, insofar as count three is based on Bergstein's discharge, defendant's motion to dismiss is denied. Fed.R.Civ.P. 12(b)(6).

Bergstein also asserts a breach of contract claim based upon Jordache's failure to pay commissions, reduction of accounts, merchandise and sales territory, and sale of merchandise at prices lower than what Bergstein was permitted to offer. Jordache does not point to any pleading deficiencies with regard to Bergstein's cause of action based on breach of an express contract. Defendant's bold contention that an at-will employee is unable to assert a breach of contract claim obviously lacks merit with respect to Bergstein's claim that Jordache breached the parties' express contract prior to his termination. See Booth v. McDonnell Douglas Truck Servs., 401 Pa. Super. 234, 585 A.2d 24, 28 (1991) (at-will employee may assert breach of contract claim based on the employer's failure to pay commissions pursuant to contract). Accordingly, Jordache's motion to dismiss Bergstein's breach of express contract claim is denied. Fed.R.Civ.P. 12(b)(6).

IV. Intentional Interference with Contract

In count three of his complaint, Bergstein asserts a claim for intentional interference with contract. Bergstein alleges that Jordache interfered with his business relationship with his accounts by offering his customers lower prices to persuade them to place their orders directly with Jordache. Jordache, however, argues that Bergstein's claim should fail because (1) Pennsylvania does not recognize an intentional interference with contract claim where one party to the contract asserts the cause of action against the other and (2) alternatively, Jordache had the right to interfere with relationships formed between Bergstein and Jordache's customers.

It is clear that "Pennsylvania law does not permit a terminated employee to assert against his or her employer a claim for intentional interference with his employment relationship; it is not a claim which can be made by the parties to a `contract' against each other." Wells v. Thomas, 569 F. Supp. 426, 435 (E.D.Pa. 1983). Jordache, however, misstates Bergstein's claim. Bergstein alleges that Jordache intentionally interfered with Bergstein's relationship with his accounts, not the relationship between Jordache and Bergstein.

The tort of intentional interference with contract includes the tort of
intentional interference with a prospective contract or business relation
of third parties with a plaintiff. See Glenn v. Point Park College,
441 Pa. 474, 272 A.2d 895, 897 (1971); Yaindl v. Intersoll-Rand Co.,

281 Pa. Super. 560, 422 A.2d 611, 621 (Super.Ct. 1985). Under
Pennsylvania law, the following four elements are required to establish a
cause of action for intentional interference with a prospective
contractual relation:

(1) a prospective contractual relation,

  (2) the purpose or intent to harm the plaintiff by
  preventing the relation from occurring,

  (3) the absence of privilege or justification
  on the part of the defendant, and

  (4) the occasioning of actual damage resulting
  from defendant's conduct.

Glenn, 272 A.2d at 898-99. Bergstein's complaint alleges each of these elements. First, he alleges that Jordache interfered with his prospective business relationship with retailers by inducing certain customers to deal directly with Jordache, rather than plaintiff. See Complaint, at ¶ 59(a). To adequately plead this element, plaintiff must show that there was a reasonable likelihood or possibility that plaintiff would enter into the contract or business relationship. See Glenn, 272 A.2d at 898. Since Bergstein alleges that Jordache interfered with his established accounts, there was a strong likelihood that Bergstein would have continued to obtain orders from these customers. Bergstein also alleges that Jordache acted with the purpose of harming Bergstein by intending to deprive him of commissions he would have earned on the sales. See Complaint, at ¶¶ 61-62. There is no privilege or justification for Jordache's action since its aim was to keep all profits from the sales for itself. See id. at ¶ 63. Finally, the damages flowing from Jordache's interference is clearly stated in that Bergstein lost his commissions and suffered other related injuries. See id. at ¶ 64.

Jordache's second contention is that plaintiff fails to state a
cognizable intentional interference with contract claim because the
retailers are Jordache's customers. This argument is made without any
authority and is flatly contradicted by Pennsylvania case law. Contrary
to defendant's assertion, a claim for intentional interference with
contract may be stated where a broker for a seller alleges that the
seller dealt directly with a buyer, to deprive the broker of his
commission. See, e.g.,


Sherman v. Prudential-Bache Secs., Inc.,  732 F. Supp. 541, 549-50
(E.D.Pa. 1989); Glenn, 272 A.2d at 898; Jeannette Paper Co. v. Longview
Fibre Co., 378 Pa. Super. 148,  548 A.2d 319, 326 (Super.Ct.), cert.
denied,___ U.S.___, 110 S.Ct. 78, 107 L.Ed.2d 44 (1989). There is plainly
no basis for Jordache's contention that a broker cannot maintain an
action for intentional interference with contract against his principal.
Accordingly, Jordache's motion to dismiss Bergstein's intentional
interference with contract claim is denied. Fed.R.Civ.P. 12(b)(6).

V. Pennsylvania Commissioned Sales Representatives Act

Finally, in count six of his complaint, Bergstein asserts a claim under Pennsylvania's Sales Representative Act, which establishes a cause of action for sales representatives against principals who fail to comply with the statute's requirements. See 43 Pa.Cons.Stat.Ann. § 1475 (Purdon 1991).

In his complaint, Bergstein alleges that Jordache violated section 1472 of the Sales Represeistative Act, requiring principals to provide their sales representatives with a contract stating the commission rate and geographical territory or accounts. The Sales Representative Act expressly excludes employees from the definition of sales representatives. See id. § 1471(3). Jordache contends that it was not required to comply with the Sales Representatives Act because according to Bergstein's claims, Bergstein was an employee and, therefore, not a "sales representative" within the meaning of the Sales Representative Act.

As plaintiff points out, however, his complaint alleges that Jordache did "employ and/or contract" with plaintiff to act as its sales person. See Complaint, at ¶ 5. Rule 8(e)(2) of the Federal Rules of Civil Procedure permits a party to plead in the alternative and plaintiff may "make effective use of alternative or hypothetical pleading in presenting the factual background or legal theories supporting his claim for relief." 5 C. Wright & A. Miller, Federal Practice and Procedure § 1282 (1969). Accordingly, defendant's motion to dismiss count four is denied. Fed.R.Civ.P. 12(b)(6).

CONCLUSION

Defendant's motion to dismiss plaintiff's complaint is granted in part and denied in part. Fed.R.Civ.P. 12(b)(6). Count one and alternative count one are dismissed with prejudice. The motion is denied with respect to counts two, three and four.

Defendant shall serve its answer within ten (10) days of the filing of this Memorandum and Order.

SO ORDERED.

19910624

© 1992-2003 VersusLaw Inc.



Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.