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Wells v. JPC Equestrian, Inc.

United States District Court, M.D. Pennsylvania

March 24, 2014

JOE PETE WELLS, and LES KRUTOFF, Plaintiffs,
v.
JPC EQUESTRIAN, INC., and VARUN SHARMA, Defendants.

MEMORANDUM

MARTIN C. CARLSON, Magistrate Judge.

I. INTRODUCTION

In this action, Joe Pete Wells and Les Krustoff have brought claims against JPC Equestrian, Inc. and its Chief Executive Officer, Varun Sharma, alleging breach of contract and tortious interference with contract. The plaintiffs allege that they had contracts with JPC to market and sell equine-related products for the company in respective four-state sales territories. The plaintiffs claim that JPC breached the terms of their sales representation agreements in a variety of ways, and that Sharma directly interfered with the plaintiffs' contracts by engaging in his own sales of goods to retail customers in the plaintiffs' sales territories without paying the plaintiffs' commissions.[1]

The defendants have moved to dismiss the complaint, arguing that the plaintiffs have failed to plead sufficient facts to support their claims, or that the plaintiffs' allegations conclusively demonstrate that they are not entitled to relief. The motion is fully briefed and is ripe for disposition. Because we find that the plaintiffs have adequately stated their claims for relief, and because we do not agree with the defendants' that these claims can be disposed of on the basis of the allegations in the complaint, the motion to dismiss will be denied with the exception to the plaintiffs' claim for age discrimination, which they have conceded should be dismissed.

II. STATEMENT OF FACTS[2]

Plaintiff Joe Pete Wells is a resident of Virginia, and Plaintiff Les Krutoff is a resident of New Jersey. Both of the plaintiffs are experienced sales representatives in the equine and horse tack line of business. (Compl., ¶¶ 1, 2, 9.) JPC is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal office and primary place of business located in Drums, Pennsylvania. ( Id., ¶ 3.) Varum Sharma is a resident of Florida and is JPC's Chief Executive Officer. ( Id., ¶¶ 4, 15.) In addition to acting as CEO, Sharma also acts as an independent wholesaler of merchandise to certain accounts in the United States, apparently acting outside of his role as the head of JPC. ( Id., ¶ 15.)

On or about May, 2002, Wells and JPC entered into a sales representation agreement that provided that Wells was to act as the marketing representative for the various equine-related products JPC sold in the defined territory of Maryland, Virginia, North Carolina, and South Carolina. ( Id., ¶ 10.) Under the terms of a separate sales agreement, Krutoff was to act as a marketing representative in the defined territory of Pennsylvania, New York, New Jersey, and Delaware. (Id.) The plaintiffs have attached a copy of Wells's alleged sales representation agreement to the complaint signed only by JPC, but have not attached a copy of the alleged agreement between JPC and Krutoff, and have not attached fully executed copies of either agreement. The plaintiffs allege that the terms of their sales agreements with JPC are substantially the same, and provided that the plaintiffs were engaged as independent contractors rather than as employees, and that the plaintiffs were to receive a 10% commission on all net payable invoices for the goods they sold in their respective sales territories. ( Id., ¶¶ 11-12.) According to the plaintiffs, they performed ably under the terms of their agreements, the greatly expanded JPC's sales in the assigned territories, and they met JPC's reasonable expectations. ( Id., ¶ 13.)

The plaintiffs claim that at some point, JPC began breaching the terms of the sales agreements by, among other things:

• declaring certain accounts to be "house accounts" for which no sales commissions would be paid to Wells or Krutoff;
• unilaterally reducing the plaintiffs' commissions on certain accounts to 5% rather than 10% as provided by the agreements;
• selling goods within the plaintiffs' sales territories without paying commissions; and
• charging the plaintiffs for their sales samples, rather than providing them at no charge as JPC was contractually obligated to do.

( Id., ¶ 14.) In addition, the plaintiffs claim that Sharma from time to time would bypass JPC entirely, and sell goods of the same type as those JPC sold to retail customers, within the plaintiffs' sales territories, and including to customers that Wells and Krutoff had developed for JPC, without paying any commissions to Wells or Krutoff. ( Id., ¶ 16.)

In April 2010, Sharma, acting on behalf of JPC, informed Krutoff that the company had "decided to go in a different direction, " and thereafter on April 9, 2010, JPC terminated the Krutoff's sales agreement. At this time, Krutoff was 65 years old with 35 years of experience in the industry; JPC elected to replace him with a 21 year old woman with no experience. Similarly, on May 5, 2010, Sharma, acting on behalf of JPC, terminated Wells's sales agreement. At that time, Wells was 64 years old, with more than 30 years of experience. He was replaced by a 29 year-old woman. Sharma allegedly told another ...


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