New York Wiping & Industrial Product Company, Inc. v. Rocky Brands, Inc. et al, No. 3:2009cv01237 - Document 22 (D.P.R. 2009)

Court Description: OPINION AND ORDER DENYING 11 MOTION to dismiss and/or TO TRANSFER VENUE filed by Rocky Brands Wholesale, LLC, Rocky Brands Retail, LLC, Rocky Brands, Inc. We DENY transfer of this case to the Southern District of Ohio. We DECLINE to consider Defend ants' motion to dismiss for forum non conveniens and under Rule 12(b)(6). On our own motion, we DISMISS for lack of jurisdiction Plaintiff's abuse of process claim (Docket No. [3)] WITH PREJUDICE. Signed by Chief Judge Jose A Fuste on 8/31/09.(mrj)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO NEW YORK WIPING & INDUSTRIAL PRODUCT COMPANY, INC., 7 8 9 10 Civil No. 09-1237 (JAF) Plaintiff, v. ROCKY BRANDS, INC., et al., Defendants. OPINION AND ORDER 11 12 Plaintiff, New York Wiping & Industrial Product Company, Inc., 13 brings this action in diversity against Defendants, Rocky Brands, 14 Inc., Rocky Brands Wholesale, LLC, and Rocky Brands Retail, LLC, 15 alleging impairment of, and interference with, contract under Puerto 16 Rico law, 10 L.P.R.A §§ 278-278d (2004), and abuse of process, 17 presumably under the broad banner of 31 L.P.R.A § 5141 (1990). 18 (Docket No. 3 at 9-13.) Defendants move to dismiss or transfer 19 Plaintiff s action pursuant to 28 U.S.C. § 1404. (Docket No. 11.) In 20 addition, Defendants move to dismiss Plaintiff s abuse of process 21 claim 22 Plaintiffs oppose (Docket No. 16), and Defendants reply (Docket 23 No. 19). under Federal Rule of Civil Procedure 12(b)(6). (Id.) Civil No. 09-1237 (JAF) -2- 1 I. 2 Factual and Procedural Synopsis 3 We derive the following factual summary from Plaintiff s amended 4 complaint. (Docket No. 3.) In ruling on a motion to dismiss, we 5 assume all of Plaintiff s allegations to be true and make all 6 reasonable inferences in its favor. See Gagliardi v. Sullivan, 513 7 F.3d 301, 305 (1st Cir. 2008). 8 Plaintiff, incorporated in Puerto Rico, is a distributor of 9 industrial safety products and operates a chain of retail outlets 10 under the Safety Zone brand. Defendant Rocky Brands, Inc. is an 11 Ohio corporation that designs, manufactures, and markets footwear and 12 accessories. Defendant Rocky Brands Wholesale, LLC is a Delaware 13 company that acts as Rocky Brands, Inc. s wholesale distribution arm. 14 Rocky Brands Retail, LLC, also incorporated under Delaware law, 15 operates retail stores throughout the nation under the Lehigh 16 Outfitters brand, including stores and shoe mobiles in Puerto 17 Rico. Nelsonville, Ohio, is the principal place of business for all 18 three defendants. 19 In 1990, Morris Rothenberg & Sons, Inc. contracted with Georgia 20 Boot, Inc. for exclusive distributorship of Georgia Boot products in 21 Puerto Rico and throughout the Caribbean. (Docket No. 3-1.) In 1996, 22 Plaintiff acquired Morris Rothenberg & Sons and assumed Morris 23 Rothenberg & Sons rights under the 1990 contract with Georgia Boot. 24 In 2001, Georgia Boot acquired exclusive rights to distribute Dickies Civil No. 09-1237 (JAF) -3- 1 brand footwear in Puerto Rico. Georgia Boot, in turn, granted this 2 right to Plaintiff by a communication dated July 31, 2001. (Docket 3 No. 3-2.) In January 2005, Georgia Boot s parent company merged with 4 Rocky Brands, Inc. Further mergers in that same month resulted in the 5 creation of Rocky Brands Retail, LLC and Rocky Brands Wholesale, LLC. 6 In 2007, Plaintiff discovered that Defendants were selling both 7 Georgia Boot and Dickies brand products in its retail stores and 8 shoe 9 contractual violation to Defendants attention as early as October mobiles throughout Puerto Rico. Plaintiff brought this 10 2007. Plaintiff s president attempted communication with Defendants 11 through May 2008 concerning the breach, but received no satisfactory 12 response. 13 On May 16, 2008, Rocky Brands senior vice president for sales, 14 Gary Markham, e-mailed Morris Rothenberg, Plaintiff s president. The 15 e-mail informed Rothenberg that Defendants would cease carrying 16 Georgia Brands in its Puerto Rico stores but that Defendants could no 17 longer honor an exclusive distribution agreement for Dickies brand. 18 Despite its assurance to respect Plaintiff s exclusive right to 19 distribute Georgia Boots in Puerto Rico, Defendants continued to sell 20 both Georgia Boot and Dickies brands in its Puerto Rico outlets. At 21 some point in 2008, Plaintiff entered into an agreement with another 22 manufacturer to produce boots for Plaintiff s own Safety Zone brand 23 to mitigate the damages caused by Defendants. (Docket No. 3 at 8.) Civil No. 09-1237 (JAF) 1 -4- On March 10, 2009, Plaintiff commenced this action in diversity 2 in federal district court. (Docket No. 1.) The following day, 3 Defendants provided Plaintiff with thirty days notice of termination 4 of their 1990 contract. (Docket No. 3-6.) Defendants filed an action 5 for trade dress infringement and unfair trade practices in an Ohio 6 state court on March 16, 2009. (Docket No. 11-2.) That case was later 7 removed to the Southern District of Ohio. 8 Plaintiff filed an amended complaint on March 18, 2009. (Docket 9 No. 3.) Defendants moved for dismissal or transfer on May 14, 2009. 10 (Docket No. 11.) Plaintiff opposed Defendants motion on June 1, 11 2009. (Docket No. 16.) Defendants replied on June 15, 2009. (Docket 12 No. 19.) 13 II. 14 Analysis 15 Defendants argue that this case should be either transferred to 16 the Southern District of Ohio exception to the on the basis 17 circumstances 18 entirely. (Docket No. 11 at 19 dismiss Plaintiff s abuse of process claim. (Docket No. 11 at 10.) 20 A. first-filed of rule a or special dismissed 1, 5.) Furthermore, Defendants move to Motion to Transfer Venue 21 As Defendants present no argument to support dismissal for forum 22 non conveniens, we decline to consider this motion. Defendants also 23 move to transfer. (Docket No. 11 at 5-7). Motions to transfer civil 24 actions to another district court are generally governed by 28 U.S.C. Civil No. 09-1237 (JAF) -5- 1 § 1404(a).1 Under § 1404(a), a case may be transferred for the 2 convenience of the parties and witnesses in the interest of justice. 3 The 4 possibility of consolidation; and the order in which the district 5 court obtained jurisdiction. Coady v. Ashcraft & Gerel, 223 F.3d 1, 6 10 (1st Cir. 2000) (internal citations omitted). court may also consider the availability of documents; 7 Where the parties have filed two actions in separate districts, 8 however, and the actions are nearly identical, the first-filed 9 action is generally preferred in a choice of venue decision. Id. 10 The Second Circuit has found a narrow exception to this rule that has 11 since been adopted by the First Circuit. Mattel, Inc. v. Louis Marx 12 & Co., 353 F.2d 421, 424 n.4 (2d Cir. 1965) (recognizing exceptions 13 where choice of venue of first suit was motivated entirely by forum 14 shopping, or where first suit was against a customer of a copyright 15 infringer and second suit was against actual infringer; accord Codex 16 Corp. v. Milgo Elec. Corp., 553 F.2d 735 (1st Cir. 1977) (finding an 17 exception to the first-filed rule in a patent case where the earlier 18 action is . . . against a mere customer and the later suit is a 19 declaratory judgment action brought by the manufacturer of the 20 accused devices ). 1 We note that Defendants motion to transfer failed to explicitly state a legal basis for the motion. (Docket No. 11). In the future, Defendants would do well to differentiate between §§ 1404, 1406, and forum non conveniens as bases for transfer or dismissal. Civil No. 09-1237 (JAF) -6- 1 Since Codex, the exception has grown to include actions in which 2 one party, whether through deceit or some other act of bad faith, 3 wins a race to the courthouse. 4 Phlo Corp., 124 F. Supp. 2d 16 (D. Mass. 2000) (recognizing a pattern 5 in case law where a first-filing party [misled] his opponent into 6 staying his hand in anticipation of negotiation ). Defendants cite 7 this court s decision in Gemco LatinoAmerica, Inc. v. Seiko Time 8 Corp., 623 F. Supp. 912 (D.P.R. 1985), for the proposition that a 9 first-filed action should be stayed or transferred where special 10 See, e.g., Veryfine Prods., Inc. v. circumstances exist. (Docket No. 11 at 6). 11 Yet, where the overlap between two suits is less than complete, 12 the judgment is made case by case, . . . based on such factors as the 13 extent of the overlap, the likelihood of conflict, the comparative 14 advantage and the interest of each forum in resolving the dispute. 15 TPM Holdings, Inc. v. Intra-Gold Indus., Inc., 91 F.3d 1, 4 (1st Cir. 16 1996). 17 A strong presumption exists in favor of the plaintiff s choice 18 of forum when a court rules on a motion to transfer. Coady, 223 F.3d 19 at 11 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)). 20 Therefore, the defendant must prove either the convenience of the 21 second forum or the existence of the factors in TPM Holdings. 91 F.3d 22 1, 4 (1st Cir. 1996). 23 Foregoing any argument as to convenience, Defendants instead 24 hitch their wagon entirely to the special circumstances exception Civil No. 09-1237 (JAF) -7- 1 to the first-filed motion rule. (Docket No. 11 at 5-7.) While the 2 exception Defendants cite appears to exist in the First Circuit, they 3 have neglected to prove an essential element: Namely, that the first- 4 filed and second-filed claims are identical. See, e.g., Veryfine, 124 5 F. Supp. 2d 16 (separate suits filed over same breach of contract 6 claim); Holmes Group, Inc. v. Hamilton Beach/Proctor Silex, Inc., 249 7 F. Supp. 2d. 12 (D. Mass. 2002) (first-filed claim for declaratory 8 judgment; second-filed claim for damages based on same issue). 9 The case before us, however, is easily distinguishable from the 10 pending case in the Southern District of Ohio. The other pending case 11 makes claims of trade dress infringement, deceptive trade practices, 12 and unjust enrichment at Ohio law. (Docket No. 11-2.) Furthermore, 13 these claims are all independent of the 1990 distributorship contract 14 at issue. (Id.) The instant case, by contrast, arises solely from a 15 breach of the 1990 exclusive distributorship contract and is premised 16 upon the Dealers Contracts Act under Puerto Rico law, with no 17 mention of trade dress infringement. (Docket No. 3.) Therefore, these 18 distinct claims do not reach the level of similarity that would 19 trigger the first-filed rule, much less an exception to said rule. 20 Veryfine, 124 F. Supp. 2d at 21-23. 21 As Plaintiff fails to demonstrate the similarity of the cases, 22 our decision is guided by the First Circuit s analysis set forth in 23 TPM Holdings. See 91 F.3d at 4. As demonstrated above, there is 24 minimal overlap between the claims. Given that the claims are Civil No. 09-1237 (JAF) -8- 1 unrelated, there is a low likelihood of conflict between this court 2 and our sister court in Ohio. 3 a distinct Puerto Rico statute. Finally, we note that Defendants 4 ownership and operation of retail businesses within Puerto Rico 5 precludes 6 Defendants have, therefore, not met their burden. See TPM Holdings, 7 91 F.3d at 4. 8 B. the possibility of Also, Plaintiff s claims are based on inconvenience in litigating here. Sua-Sponte Dismissal under Rule 12(b)(1) 9 Defendants move to dismiss the abuse of process claim in 10 Plaintiff s amended complaint. (Docket No. 3 at 12.) Instead, we 11 dismiss the claim sua sponte as unripe and, therefore, need not reach 12 the merits of Defendants defenses under Rule 12(b)(6). 13 Pursuant to Federal Rule of Civil Procedure 12(b)(1), a federal 14 district court has an independent obligation to review its subject- 15 matter 16 challenge from any party. 17 (2006); see Fed. R. Civ. P. 12(h)(3). We take the plaintiff s 18 jurisdictionally-significant facts as true and assess whether the 19 plaintiff 20 jurisdiction. Valentin v. Hosp. Bella Vista, 254 F.3d 358, 363; see 21 Pejepscot Indus. Park, Inc. v. Maine Cent. R.R. Co., 215 F.3d 195, 22 197 (1st Cir. 2000). jurisdiction has over propounded all cases even in the absence of a Arbaugh v. Y & H Corp., 546 U.S. 500, 514 an adequate basis for subject-matter 23 We may order dismissal sua sponte if it is evident that we lack 24 power to decide a case. See Arbaugh, 546 U.S. at 514. While prior Civil No. 09-1237 (JAF) 1 notice 2 plaintiff to correct her error, no notice is necessary [i]f it is 3 crystal clear that the plaintiff cannot prevail and that amending the 4 complaint would be futile. González-González v. United States, 257 5 F.3d 31, 37 (1st Cir. 2001). 6 to the -9- plaintiff is ordinarily required to permit the Rule 12(b)(1) is a large umbrella, overspreading a variety of 7 different 8 including ripeness, mootness, sovereign immunity, and the existence 9 of a federal question or diversity, and sovereign immunity. Valentin 10 v. Hosp. Bella Vista, 254 F.3d 358, 362-63 (1st Cir. 2001). The 11 doctrine of ripeness is drawn from both limitations on judicial power 12 under Article III of the Constitution and prudential concerns. 13 types of challenges to subject-matter jurisdiction, The purpose of the ripeness doctrine is to prevent the courts, 14 through avoidance of 15 themselves in abstract disagreements. Abbot Labs. v. Gardner, 387 16 U.S. 136, 148 (1967); accord City of Fall River, Mass. v. F.E.R.C., 17 507 F.3d 1, 6 (1st Cir. 2007). The court determines ripeness through 18 a two-pronged test: Fitness of the issues for judicial decision; and 19 degree of hardship that the parties would experience if the court 20 withholds consideration of the issues. Abbot, 387 U.S. at 149. A case 21 must satisfy both prongs to be ripe for review, although a very 22 powerful 23 questionable 24 Depositors Econ. Prot. Corp., 45 F.3d 530, 535 (1st Cir. 1995). exhibition fitness premature of . immediate . . or adjudication, hardship vice from might versa. entangling compensate Ernst & Young for v. Civil No. 09-1237 (JAF) -10- 1 Under the fitness prong, the court considers whether the 2 matter involves uncertain events which may not happen at all, and 3 whether the issues involved are based on legal questions or factual 4 ones. Fall River, 507 F.3d at 6 (internal citation omitted). A 5 claim is not ripe for adjudication if it rests upon contingent 6 future events that may not occur as anticipated, or indeed may not 7 occur at all. Texas v. United States, 523 U.S. 296, 300 (1998) 8 (quoting Thomas v. Union Carbide Agric. Prod. Co., 473 U.S. 568, 580- 9 81 (1985)). The hardship prong typically turns upon whether the 10 challenged action creates a direct and immediate dilemma for the 11 parties. 12 (quoting Abbot, 387 U.S. at 152-153). This inquiry also considers 13 whether 14 contemplated event. McInnes-Misenor v. Me. Med. Ctr., 319 F.3d 63,70 15 (1st Cir. 2003). a W.R. Grace & Co. v. EPA, 959 F.2d 360, 364 (1st Cir. 1992) plaintiff suffers any present injury from a future 16 As an initial matter, the Puerto Rico Civil Code does not 17 specifically provide a claim for abuse of process. Such a claim may 18 exist, however, under article 1802 of the Civil Code, which provides 19 for 20 Boschette v. Bach, this court produced a detailed history of the 21 abuse of process claim in Puerto Rico. 916 F. Supp. 91, 97-100 22 (D.P.R. 1996). The court concluded, From the cases it would appear 23 that while the Civil Code is moving in the direction of recognizing general tort liability. See 31 L.P.R.A § 5141 (1990). In Civil No. 09-1237 (JAF) -11- 1 a general cause of action analogous to the common law s abuse of 2 process, the law is still somewhat unsettled. Id. at 99. 3 In 2005, the First Circuit recognized an abuse of process claim 4 under Puerto Rico law, stating [t]he two basic elements of abuse of 5 process are a bad motive, and the use of a legal process for an 6 improper, collateral objective. 2 González Rucci v. INS, 405 F.3d 45, 7 49 (1st Cir. 2005) (citing Microsoft Corp. v. Computer Warehouse, 83 8 F. Supp. 2d 256, 261 (D.P.R. 2000)). 9 In its amended complaint, Plaintiff sets forth two bases for its 10 abuse of process claim. It first asserts a claim where Defendants 11 may conceivably allege that the acts performed by them to the 12 detriment of [Plaintiff] are performed under the protection of 13 applicable law. (Docket No. 3 at 12) (emphasis added). Second, 14 Plaintiff asserts that Defendants may conceivably allege that any 15 acts performed by [Plaintiff] were in violation of any law. Id. 16 (emphasis added). 17 In essence, Plaintiff is making a prophylactic claim of damages 18 for an abuse of process that has not happened and might never happen. 19 The claim is so conjectural that it would be impossible for us to 2 We note that the Microsoft opinion, which the First Circuit cited in announcing an abuse of process claim under Puerto Rico law, was itself uncertain as to whether the claim actually existed. 83 F. Supp. 2d at 261. It is not altogether clear whether article 1802 of the Civil Code of Puerto Rico supports a general cause of action for abuse of process in its common-law sense . . . . Notwithstanding, assuming that article 1802 does support a cause of action for abuse of process, some judges in this district have applied the general requisite elements for such a claim under common law in testing the sufficiency of a claimant s allegations. Id. Civil No. 09-1237 (JAF) -12- 1 evaluate the bad motive and collateral objective elements of an 2 abuse of process claim.3 3 prong of ripeness review. See Fall River, 507 F.3d at 6. We also find 4 no hardship to the parties in declining judgment on the merits. 5 Plaintiff has alleged no present injury from an anticipated abuse of 6 process and we cannot conceive of any harm to Plaintiff being 7 suffered. 8 abuse of process is, therefore, unripe for judgment. Plaintiff, therefore, fails the fitness McInnes-Misenor, 319 F.3d 63, 70. 9 IV. 10 Plaintiff s claim for Conclusion 11 For the reasons stated herein, we hereby DENY Defendants motion 12 to dismiss and/or to transfer venue. (Docket No. 11.) We DENY 13 transfer of this case to the Southern District of Ohio. We DECLINE to 14 consider Defendants motion to dismiss for forum non conveniens and 15 under Rule 12(b)(6). On our own motion, we DISMISS for lack of 16 jurisdiction Plaintiff s abuse of process claim (Docket No. 3) WITH 17 PREJUDICE. 18 IT IS SO ORDERED. 19 San Juan, Puerto Rico, this 31st day of August, 2009. 20 21 22 23 s/José Antonio Fusté JOSE ANTONIO FUSTE Chief U. S. District Judge 3 In fact, Plaintiff has failed to make any factual allegation from which a common law abuse of process claim could plausibly arise and, therefore, its claim would not likely have survived Defendants motion under Rule 12(b)(6).

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