McV's Distribution & Franchising Practice Team scored a victory when on October 1, 2018, the Court of First Instance, San Juan Part, granted a motion to dismiss filed by Kmart Operations, LLC’s (“Kmart) in a lawsuit under the Puerto Rico Dealers Act, Law 75-1964 as amended. The complaint alleged that Kmart and others had interfered with the distribution agreement between plaintiff and the main defendant.
Kmart’s successful motion to dismiss relied on a clause in the distribution agreement which required that disputes between the plaintiff and the main defendant be litigated in a state or federal court located in Wisconsin. This type of contractual provision is known as a choice of forum clause.
The Court agreed with K-Mart’s arguments in support of enforcing the choice of forum clause. It also agreed with the position that the remaining co-defendants should not face the expense and inconvenience of litigation while plaintiff and the main defendant litigated in Wisconsin.
After an argumentative hearing and post-hearing briefs, the Court stayed all discovery and held that the choice of forum clause was valid and dismissed the case with prejudice.
The result is significant because Law 75-1964 contains a provision prohibiting choice of forum clauses requiring local dealers or distributors to litigate outside Puerto Rico.
The content of this McV Alert has been prepared for information purposes only. It is not intended as, and does not constitute, either legal advice or solicitation of any prospective client. An attorney-client relationship with McConnell Valdés LLC cannot be formed by reading or responding to this McV Alert. Such a relationship may be formed only by express agreement with McConnell Valdés LLC.