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A Montgomery County, Pa., Court of Common Pleas jury has awarded $1.1 million to a small postage machine dealer for wrongful termination based on an oral agreement with a manufacturer/distributor that the dealer could only be terminated for cause. In Gemini Business Machines v. Ascom Hasler Mailing Systems, a 10-member jury found repeated assurances by Ascom Hasler that the plaintiff would only be terminated for cause, and statements to the plaintiff indicating he was building equity and an annuity in his business, sufficient to create an oral contract, said Steven Kapustin of Blue Bell, Pa.’s Flamm, Boroff & Bacine, one of the plaintiff’s attorneys. “The jury saw that he was hurt … and the jury compensated him for it,” Kapustin said. The jury deliberated for one day before deciding the plaintiff should receive $1.1 million for the defendant’s breach of the oral contract. According to Kapustin, the defense argued the parties did not agree that termination could only be for cause. In its trial brief, the defendant claimed the relationship between Ascom Hasler and Gemini Business Machines was terminable at will on 30 days’ notice. The jury, however, decided differently. Kapustin speculated it was the defendant’s proffered reason for terminating Gemini, as compared with the defendant’s actions, that swayed the jury. While Ascom Hasler said in court documents that it terminated Gemini in order to replace Gemini with a larger dealer as part of its new STAR dealership program, one of the dealers that signed on with Ascom Hasler was not, in fact, a member of that program, Kapustin said. “That was very important in the jury’s mind that [Ascom Hasler] ended up giving [Gemini's] territory to a distributor that wasn’t part of the program,” Kapustin said. “They claimed that [they] terminated [Gemini] to do a new style of business. … One of the [replacements] wasn’t one of these big dealers. … Not only did they not terminate him for cause, they were doing something completely different from what they said they were going to do,” Kapustin said. Stephen Metcalfe, owner of Gemini, joined forces with Ascom Hasler, a Swiss company, in 1984. Prior to incorporating Gemini Business Machines in 1981, Metcalfe served in the Marine Corps, then worked for Pitney Bowes, the market leader in mailing machine manufacturing and sales. According to Michael J. McCaney Jr., also of Flamm Boroff & Bacine and an attorney for the plaintiff, when Metcalfe signed on with Ascom Hasler, the distributor had seven postage meters that it leased and serviced in Gemini’s territory. By the time Gemini was terminated in 1993, McCaney said, Ascom Hasler had 650 meters in that territory. By then, Gemini was earning $6,000 to $8,000 each month in postage meter rental commissions, and 80 percent of Gemini’s business was Ascom Hasler or Ascom Hasler-related, Kapustin said. Early in his relationship with Ascom Hasler, Metcalfe sought assurances that Gemini would only be terminated for cause because he was concerned about building up just such a customer base, the plaintiff’s attorneys said. According to Kapustin and McCaney, the nature of the postage meter business makes dealers like Gemini particularly vulnerable to losing their customer bases. The U.S. Postal Service requires end users to rent rather than purchase postage meters. Postage meter manufacturers, according to court documents, are required to retain title to their machines, which may only be installed, inspected and replaced by the manufacturers’ authorized representatives. Thus, dealers like Gemini must provide their manufacturer/distributors with information regarding the end users of the postage meters. Upon the termination of Gemini, Gemini’s customer lists were provided to Ascom Hasler’s new dealers, court documents said. This prompted the plaintiff to claim conversion on the part of Ascom Hasler. Other claims in the plaintiff’s trial brief included negligent misrepresentation, breach of a duty of good faith and fair dealing, breach of contract and breach of implied contract. Only the breach of contract claim went to the jury. According to Gemini’s attorneys, there were no settlement offers before trial, which lasted for four days. The plaintiff also filed a prejudgment motion to add interest. The interest would tack approximately $300,000 onto the lump sum award, bringing it to just under $1.45 million, Kapustin said. Robert W. Delventhal of Dillon, Bitar & Luther in Morristown N.J., represented Ascom Hasler. He declined to comment.

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