Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. P.R.: Termination of sales representative lacked just cause, (Apr 27, 2016)

By Michael Menzhuber, J.D., LL.M.

A former sales representative was entitled to a default judgment in her suit alleging a breach of her rights under the Sales Representative Act of Puerto Rico as the exclusive sales representative for a printing company, the federal district court in San Juan, Puerto Rico has ruled (Vazquez-Borges v. Nupress of Miami, April 25, 2016, Velez-Rive, C.).

In September 1998, Ileana Vazquez-Borges entered into an exclusive sales representative agreement with Nupress of Miami, Inc. to sell its commercial printing products. The sales agreement provided for a base salary, reimbursement of business and office expenses, and paid vacation leave of 15 days per year.

Vazquez increased her sales after the first year by 350 percent. As a result, she was promised an additional payment to her salary equivalent to two percent commission on sales. However, no commissions were paid and, the following year, she was unilaterally notified by Nupress that no further commissions at the two percent rate were going to be paid.

In May 2007, Nupress closed its Puerto Rico office. Although this required Vazquez to work from home, Nupress did not reimburse her for her home office expenses. In July 2008, despite Vazquez’s strong sales record, Nupress terminated the sales relationship. Nupress than began contracting and doing business directly with the clients that Vazquez had obtained and established a business relationship with. At the time her employment was terminated, Vazquez was owed unpaid commission expenses, vacation leave that she never received, and reimbursement of unpaid business expenses.

Vazquez brought an action against Nupress for breach of her rights as an exclusive sales representative. Subsequently, counsel for Nupress requested leave to withdraw. Nupress was given 30 days to appear with new counsel but failed to do so. Vazquez filed a motion requesting default and, later, a default judgment.

The court first determined that Vazquez’s sales representative agreement with Nupress was regulated by the Sales Representative Act of Puerto Rico and such a relationship cannot be terminated by the principal except for just cause. Next, Nupress lacked just cause to terminate its relationship with Vazquez because she greatly increased the company’s business in Puerto Rico and also saved it money. Instead, Nupress gradually and unilaterally eroded Vazquez’s benefits and contractual terms until it finally terminated her. Furthermore, despite Vazquez’s strong sales record, no reason was given for her termination except that the relationship was not cost-effective. Finally, Nupress continued to do business with Vazquez’s previous clients, in open violation of Puerto Rico law.

Consequently, Vazquez was entitled to statutory damages, her unpaid commissions, the value of unused paid time off, and expense reimbursements, the court concluded.

The case is No. 13-1717 (CVR).

Attorneys: Antonio E. Valiente for Ileana Vazquez-Borges.

Companies: Nupress of Miami, Inc.

Cases: FranchisingDistribution PuertoRicoNews