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June 22, 2000


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


In this diversity action, originally removed from the Superior Court of Puerto Rico to the District Court of Puerto Rico and later transferred to this Court, plaintiff Carribean Wholesales and Service Corporation ("CWS") seeks relief against defendant U.S. JVC Corporation ("JVC") under Puerto Rico's Dealer's Contracts Act, P.R. Laws Ann. tit. 10, § 278 et seq., commonly known as Law 75. Before the Court are JVC's renewed motion for summary judgment, pursuant to Fed.R.Civ.P. 56(b), and CWS's cross-motion for sanctions, pursuant to Fed.R.Civ.P. 11(c). For the reasons stated below, JVC's motion is granted and CWS's motion is denied.


The substantive facts and procedural history of this case have been set forth in greater detail in this Court's May 12, 1997 Opinion and Order, Caribbean Wholesales & Serv. Corp. v. U.S. JVC Corp., 963 F. Supp. 1342, 1345-49 (S.D.N.Y. 1997), with which general familiarity is presumed. In that decision, the Court denied JVC's motion for summary judgment with respect to CWS's claim of impairment by direct sales, see id. at 1352-53, but granted the motion in all other respects, see id. at 1360. Consequently, the sole remaining basis for CWS's cause of action is its allegation that JVC sold audio products directly to a former CWS customer, BWAC International ("BWAC"), in violation of Law 75. See Am. Compl. ¶ 13(a).

CWS and JVC enjoyed an amicable and prosperous relationship for nearly a decade. In September 1981, the parties entered into a distributorship agreement (with its annual renewal agreements, collectively, the "Agreement"), whereby CWS was appointed a non-exclusive wholesale distributor of JVC's products — including audio and video electronics equipment — in Puerto Rico. See Caribbean, 963 F. Supp. at 1345. The parties renewed the Agreement annually until 1993, when JVC formally terminated CWS's distributorship. See id. at 1345.

BWAC began buying JVC products through CWS in 1987, and soon grew to become CWS's most important account. See id. However, when Gabriel Villani became BWAC's Executive Vice President on January 1, 1990, he, along with M.L. Daniel of BWAC's then-parent company Transamerica, decided to stop buying JVC products from CWS and instead join a purchasing group that would suit BWAC's specific price, product, and administrative needs. See id. at 1346 & n. 2. This Court previously determined that BWAC made its decision to end its relationship with CWS independent of any persuasion by JVC. See id. at 1352.*fn1 Absent new evidentiary material raising some dubiety to the contrary, that finding may not be disturbed, for it is the law of the case. See Catanzano v. Wing, 103 F.3d 223, 230 n. 5 (2d Cir. 1996).

By March 1990, CWS's sales of JVC merchandise to BWAC had declined significantly. See Caribbean, 963 F. Supp. at 1346. Soon after, BWAC began buying video equipment through MARTA Cooperative of America, Inc. ("MARTA"), a mainland purchasing group, and so informed CWS in or around June of 1990. See id. Yet, because JVC audio products*fn2 were not available through MARTA, in the summer of 1990,*fn3 BWAC arranged to purchase audio equipment directly from JVC. While it was originally CWS's contention that JVC offered BWAC lower prices than it charged CWS for the same products, BWAC actually paid substantially higher prices than did CWS. See Caribbean, 963 F. Supp. at 1346. Still, CWS almost certainly added a mark-up to cover overhead and profit, which would have increased the price CWS charged BWAC to an amount higher than what BWAC paid directly to JVC. See id. at 1353 n. 24. In fact, Villani confirms that JVC's prices were lower than CWS's. See id. (citing Faber Aff., Exh. 16, at 66).

CWS's sole remaining claim under Law 75 alleges that JVC impaired the parties' established distribution relationship by selling audio equipment directly to BWAC, thereby bypassing CWS entirely. In its earlier summary judgment opinion, the Court found "evidence in the record that could reasonably lead a jury to infer that JVC performed acts that directly or indirectly caused BWAC to decide not to resume purchasing from CWS once it learned that JVC audio products could not be obtained from MARTA." Id. at 1352. It therefore concluded that JVC had failed to rebut the statutory presumption, under P.R. Laws Ann. tit. 10, § 278a-1(b)(1), that the parties' relationship was impaired by its "establish[ment of] facilities in Puerto Rico for the direct distribution of merchandise." Caribbean, 963 F. Supp. at 1352-53.

JVC now effectively challenges the Court's prior ruling that "a jury could conclude that JVC's participation in such negotiations constituted an action directly or indirectly contributing to the establishment of facilities for direct distribution in Puerto Rico." Id. at 1353. Its argument is based on two recent decisions of the United States District Court for the District of Puerto Rico, Innovation Mktg. v. Tuffcare Inc., 31 F. Supp.2d 218 (D.P.R. 1998), and Caribe Indus. Sys., Inc. v. National Starch & Chem. Co., 36 F. Supp.2d 448 (D.P.R. 1999), aff'd, 212 F.3d 26, 31 (1st Cir. 2000), which JVC claims compel the dismissal of CWS's claim. In response, CWS characterizes JVC's renewed motion as "an attempt to ignore or gloss-over" the Court's previous findings regarding JVC's negotiations with BWAC. See Pl. Opp. Mem. at 5 (citing Caribbean, 963 F. Supp. at 1353). CWS argues further that JVC's motion is unwarranted because this Court has previously considered all of the authority cited by JVC in its memorandum of law, with the exception of Innovation and Caribe, and has deemed it "unavailing." Caribbean, 963 F. Supp. at 1353 n. 25.


I. Summary Judgment Standard

A moving party is entitled to summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Holt v. KMI-Continental, Inc., 95 F.3d 123, 128 (2d Cir. 1996). Though they are equally applicable here, because the oft-cited standards for summary judgment have been set forth in detail in the Court's previous Opinion and Order, see Caribbean, 963 F. Supp. at 1351, they need not be repeated at this juncture.

Although a party may renew its motion for summary judgment "as long as it is supported by new material," Twin Labs., Inc. v. Weider Health & Fitness, 720 F. Supp. 31, 34 (S.D.N.Y. 1989), aff'd, 900 F.2d 566 (2d Cir. 1990); see also Whitford v. Boglino, 63 F.3d 527, 530 (7th Cir. 1995), the Court retains discretion to determine the scope of its reconsideration, see Warner Bros., Inc. v. American Broad. Cos., Inc., 720 F.2d 231, 245 (2d Cir. 1983); Corporacion de Mercadeo Agricola v. Mellon Bank Int'l, 608 F.2d 43, 48 (2d Cir. 1979). The Court may grant a revived motion "upon a showing of good cause." 10A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2717, at 299 (1998); see also id. § 2718, at 303. Nonetheless, district courts must heed the Second Circuit's direction to "balance the need for finality against the forcefulness of any new evidence and the demands of justice." Corporacion de Mercadeo, 608 F.2d at 48; see also Dictograph Prods. Co. v. Sonotone Corp., 230 F.2d 131, 137 (2d Cir. 1956) (L.Hand, J.).

The cases cited by JVC clearly reflect new developments of controlling law not previously available for the Court's consideration. Because the law is constantly evolving, "a new decision clarifying the applicable substantive law may justify reexamining a denial of summary judgment." Lavespere v. Niagara Mach. & Tool. Works, 910 F.2d 167, 185 (5th Cir.), reh'g denied, 920 F.2d 259 (5th Cir. 1990), abrogated on other grounds, Little v. Liquid Air Corp., 37 F.3d 1069, 1075 n. 14 (5th Cir. 1994) (en banc); see also Bush Dev. Corp. v. Harbour Place Assocs., 632 F. Supp. 1359, 1366 (E.D.Va. 1986). Thus, while this Court is not bound to follow an interpretation of local law enunciated by a district judge sitting in the jurisdiction, see Carolco Pictures Inc. v. Sirota, 700 F. Supp. 169, 171 (S.D.N.Y. 1988), it is undoubtedly wise to defer to the expertise of a local court.*fn4 Judges sitting in Puerto Rico — and particularly members of the United States District Court for the District of Puerto Rico — enjoy much greater familiarity and expertise than this Court with regard to such esoteric issues of Puerto Rico law. Likewise, the United States Court of Appeals for the First Circuit, which reviews the decisions of the Puerto Rico district court, necessarily has great familiarity with Law 75. Finally, it is particularly prudent for the Court to defer to local expertise in this case, given the unique nature of Puerto Rico law. See Oliveras-Salas v. Puerto Rico Highway Auth., 884 F.2d 1532, 1534-35 (1st Cir. 1989) ("When we are faced with a question involving the proper construction of Puerto Rico law, we accord respect to the district judges who are citizens of Puerto Rico and well versed in the Spanish underpinnings of ...

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