Ross-Simons v. Baccarat, Inc.

217 F.3d 8
CourtCourt of Appeals for the First Circuit
DecidedDecember 13, 1996
Docket96-1619
StatusPublished
Cited by2 cases

This text of 217 F.3d 8 (Ross-Simons v. Baccarat, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ross-Simons v. Baccarat, Inc., 217 F.3d 8 (1st Cir. 1996).

Opinion

102 F.3d 12

31 UCC Rep.Serv.2d 327

ROSS-SIMONS OF WARWICK, INC., et al., Plaintiffs, Appellees,
v.
BACCARAT, INC., Defendant, Appellant.

No. 96-1619.

United States Court of Appeals,
First Circuit.

Heard Nov. 4, 1996.
Dec. 13, 1996.

Jeffrey A. Oppenheim, with whom Kane Kessler, P.C., John H. Blish, Joseph V. Cavanagh, Jr., Michael W. Carroll, Blish & Cavanagh were on brief, New York City, for appellant.

Steven E. Snow, with whom Thomas R. Noel and Partridge, Snow & Hahn were on brief, Providence, RI, for appellees.

Before SELYA, CYR and LYNCH, Circuit Judges.

SELYA, Circuit Judge.

Defendant-appellant Baccarat, Inc. (Baccarat) implores us to dismantle a preliminary injunction that compels it to continue selling its wares to the plaintiffs.1 Discerning neither error of law nor abuse of discretion, we affirm.I. BACKGROUND

We divide our account of the relevant background material into four segments.

A. The Commercial Climate.

Baccarat is a subsidiary of Compagnie des Cristalleries de Baccarat, a prestigious French lead crystal manufacturer. It is the exclusive distributor in the United States of this aristocratic product line.

Ross-Simons sells jewelry, tableware, crystal, and sundry other merchandise from retail stores located in several states. Roughly eighty-five percent of its business, however, is generated through catalog and telemarketing sales. It distributes 45,000,000 catalogs annually and maintains a bustling distribution center in Cranston, Rhode Island. A bridal gift registry comprises an integral part of Ross-Simons' business.2 The firm acquires approximately 15,000 new registrants annually and has about 30,000 active registrations at any given time. In 1995 Ross-Simons grossed $150,000,000 from all its operations, including $1,000,000 attributable to Baccarat crystal (mostly from catalog sales).

Ross-Simons carved its niche as a discount or "off-price" retailer, frequently advertising prices as much as fifty percent below suggested retail prices. Baccarat comes from a different school, having steadfastly resisted discounting and discounters. For many years Baccarat refused to sell its crystal to Ross-Simons. Moreover, when Baccarat became the exclusive American distributor of Haviland Limoges porcelain dinnerware (not a product that Baccarat manufactured), it terminated Ross-Simons as an authorized dealer for that line.

Rather than turning the other cheek, Ross-Simons responded by filing an antitrust suit. Its complaint alleged inter alia that Baccarat refused to deal with Ross-Simons due to the latter's proclivity for discount pricing. In November of 1992, the parties entered into a written accord (the 1992 Agreement) that settled their differences.3 Pursuant to that agreement, the federal district court dismissed the antitrust suit without prejudice.

B. The 1992 Agreement.

An understanding of the 1992 Agreement is critical to reasoned consideration of the issues on appeal. Baccarat and Ross-Simons styled the pact as an "Agreement of Compromise and Settlement" and stipulated that it would be governed by Rhode Island law. They memorialized it "as a compromise between the parties for the settlement of their claims, differences and causes of action." However, they did not ask the district court either to approve the settlement terms or to enter a decree embodying those terms.

By virtue of the 1992 Agreement, Baccarat appointed Ross-Simons as an authorized dealer "entitled to purchase and resell [Baccarat crystal] products at such prices and upon such terms as are available to other authorized dealers." In addition Baccarat agreed "not [to] terminate Ross-Simons' status as an authorized dealer, nor otherwise discriminate against Ross-Simons in any manner, [for its refusal] to adhere to suggested resale prices or due to Ross-Simons' marketing through direct-mail catalogs." The 1992 Agreement contains no durational term, but it specifically provides that its covenants and conditions are not terminable on the basis of changed facts.

C. The Proposed Agreement.

Ross-Simons sold Baccarat products for three years, without incident, until a series of events shattered the increasingly fragile business relationship. A new management regime took control of Baccarat in 1994 and Jean-Luc Negre became the firm's chief executive officer. Early on, Negre made known his view that it was inappropriate for retailers to discount luxury items. He then reshaped Baccarat's marketing strategy in an attempt, as he put it, to improve the "overall image and prestige ... of [Baccarat's] world-renowned name." Under the revised plan, Baccarat limited the number of retailers to whom it would sell its products and simultaneously introduced a new "Authorized Dealer Program." To retain authorized dealership status in 1996 and beyond, a retailer had to sign a particular form of dealer agreement (the Proposed Agreement) no later than December 15, 1995.

Although Baccarat invited Ross-Simons (along with 379 other retailers) to participate in this neoteric program, there was a rub; by its terms the Proposed Agreement prohibits the advertising of Baccarat products in any catalog or other printed medium that promotes at off-prices more than twenty-five percent of the items advertised. In addition, Baccarat reserved the right to determine in its sole discretion "whether an advertising or promotional practice is damaging to the image, prestige and goodwill" of its products. If Baccarat found any such practice offensive, it could terminate the dealership forthwith. Because Ross-Simons (alone among Baccarat's invitees) devotes most of its catalog to discounted items, and because Negre previously had proclaimed that off-pricing was inconsistent with prestige, Ross-Simons viewed the proposal as a "suicide note," asserted that it violated the terms of the 1992 Agreement, and refused to sign. Presumably in anticipation that Baccarat would follow through on its threat of termination, Ross-Simons stockpiled Baccarat products in late 1995. The precaution proved justified, as Baccarat refused to fill Ross-Simons' orders (including 1995 orders previously received but theretofore unfilled) from and after January 1, 1996.

D. The Proceedings Below.

Ross-Simons sued Baccarat in a Rhode Island state court, claiming breach of contract, breach of an implied covenant of good faith and fair dealing, and tortious interference with advantageous business relationships. Baccarat removed the case to the federal district court. See 28 U.S.C. §§ 1332(a) (diversity jurisdiction), 1441 (permitting removal of cases in which diversity jurisdiction exists). In short order, the district court conducted an evidentiary hearing and granted Ross-Simons' motion to compel Baccarat, pendente lite, to continue to sell products in pursuance of the 1992 Agreement.

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Bluebook (online)
217 F.3d 8, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ross-simons-v-baccarat-inc-ca1-1996.