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A new trial has been granted in a wrongful termination case where a jury awarded $1.1 million to a small postage machine dealer that alleged its dealership could only be terminated for cause based on an oral agreement with a manufacturer/distributor. Montgomery County Court of Common Pleas Judge Arthur R. Tilson in Pennsylvania granted the new trial in Gemini Business Machines v. Ascom Hasler Mailing Systems last week. He did not issue a written opinion or provide reasons from the bench for doing so, said Robert W. Delventhal of Dillon, Bitar & Luther in Morristown, N.J., who represented Ascom Hasler. According to Michael J. McCaney Jr. of Flamm, Boroff & Bacine in Blue Bell, Pa., an attorney for Gemini, the plaintiff has already filed notice of appeal. In a June interview with The Legal Intelligencer, Steven Kapustin of Flamm, Boroff & Bacine, who also represented the plaintiff, said the 10-member jury that made the large award found repeated assurances by Ascom Hasler to the plaintiff that he would only be terminated for cause as well as statements indicating that the plaintiff was building equity and an annuity in his business sufficient to create an oral contract. In its trial brief, however, the defendant claimed its relationship with Gemini was terminable at will on 30 days’ notice. In the June interview, Kapustin speculated that Ascom Hasler’s proffered reason for terminating Gemini, as compared with the defendant’s actions, swayed the jury in Gemini’s favor. In court documents, the defendant claimed Gemini was terminated as part of efforts to build a new program, the STAR dealership program. But Kapustin said the distributor that later received Gemini’s territory was not in fact part of the STAR program. Gemini had joined forces with Ascom Hasler in 1984. According to Kapustin, Gemini’s owner sought assurances that the company would only be terminated for cause early in his relationship with the defendant. In post-trial motions, the defendant reiterated its claim that it maintained an at-will relationship with Gemini. “It is well-settled law in Pennsylvania that oral agreements without a specific time limit are terminable at will by either party with or without notice as a matter of law,” the defendant said. According to court documents, the trial court had charged the jury as follows: “In Pennsylvania, the general rule is that when a contract provides that one party shall render service to another … but does not specify a definite time or prescribe conditions which shall determine the duration of the relation, the contract may be terminated by either party at will. However, it is true that such a result does not follow in every instance, because it is the intention of the parties which is the ultimate guide, and, in order to ascertain that intention, you must take into consideration the surrounding circumstances.” In its motion for post-trial relief, Ascom Hasler relied on Slonaker v. P.G. Publishing Co., a 1940 state supreme court decision, for the proposition that typically when a contract does not specify a definite time or prescribe conditions that will determine the duration of the relationship, the contract may be terminated by either party at will. In Slonaker, the defendant wrote, the plaintiff purchased a news agency, which had an exclusive distributorship of a prominent newspaper. When the plaintiff attempted to sell the business six years later, the newspaper terminated its relationship with the agency. In its suit, the plaintiff claimed that an oral contract bound the newspaper to remain with the agency permanently if the agency so desired. The Pennsylvania Supreme Court in that case held that “in most cases, if a contract does not specify, a definite time or prescribe conditions which shall determine the duration of the relation, the contract may be terminated by either party at will.” Ascom Hasler then turned to King of Prussia Equipment Corp. v. Powers Curbers Inc., a 2001 Eastern District of Pennsylvania decision, to support its position that “generally speaking, a contract which does not specify a definite term or otherwise indicate its duration is terminable by either party at will, unless the attendant circumstances at the time the contract was formed clearly indicate that the parties intended that it last for a reasonable time or some particular period.” “If the relationship of the parties … was not terminable at will,” the defendant said, “then Gemini would have had to establish by clear and precise evidence that the parties intended for it to last for a reasonable time or for some other duration, and further, that the nine years that it in fact lasted was not a reasonable time. The jury should have been charged in this manner.” In response, Gemini contended in its brief in opposition to the defendant’s motion that, unlike the situation in Slonaker, an express contractual provision that Gemini could only be terminated for cause existed between the parties. “Furthermore, in Slonaker, the court noted that the rule regarding termination is a general rule and that decisions in cases involving indefinite agreements are ‘like precedents in will cases … the language used in each instance is different, and so are the circumstances,’” the plaintiff wrote. Gemini seized on language in the Slonaker opinion that was similar to the trial court’s charge to the jury: “‘It is true that such a result does not follow in every instance, because it is the intention of the parties which is the ultimate guide, and, in order to ascertain that intention, the court may take into consideration the surrounding circumstances.’” The surrounding circumstances in Gemini, the plaintiff argued, indicated that Gemini’s owner was enticed to work with Ascom Hasler based on the company’s promise of termination for cause and an equity interest in meter rentals. Gemini further claimed that its burden of proof on whether the relationship was terminable at will was that of a preponderance of the evidence, as opposed to proof by clear and precise evidence. John A. Gallagher of High, Swartz, Roberts & Seidel served as local counsel for Ascom Hasler.

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