`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF PUERTO RICO
`
`JOSÉ SANTIAGO, INC.
`
`CIVIL NO.: 22-1239
`
`Plaintiff,
`
`v.
`
`SMITHFIELD FOODS, INC.; ABC
`INSURANCE COMPANY
`
`Defendants
`
`JURY TRIAL IS DEMANDED
`
`PUERTO RICO DEALER’S ACT (ACT
`75); PRELIMINARY INJUNCTION;
`BREACH OF CONTRACT; DAMAGES
`
`TO THE HONORABLE COURT:
`
`VERIFIED COMPLAINT
`
`COMES NOW Plaintiff, José Santiago, Inc. (“José Santiago”), through the undersigned
`
`attorneys, and respectfully states, alleges and prays as follows:
`
`PARTIES
`
`1.
`
`José Santiago is a corporation organized and existing under the laws of the
`
`Commonwealth of Puerto Rico, having its principal place of business in Urbanización Industrial
`
`Luchetti, Carr. #5, Km. 4.4 Bayamón, Puerto Rico 00959.
`
`2.
`
`Smithfield Foods, Inc. (“Smithfield”) is corporation organized in a state of the
`
`United States of America, and not in Puerto Rico, with headquarters located in 200 Commerce
`
`St, Smithfield, Virginia 23430. Smithfield is a wholly owned subsidiary of Hong Kong-based
`
`WH Group Limited, a publicly traded company. Smithfield owns the following brands:
`
`Smithfield, Eckrich, Nathan’s, Farmer John, Farmland, Armour, Carando, Cook’s, Curly’s,
`
`Gwaltney, Healthy Ones, John Morrell, Kretschmar, Margherita and Smithfield Culinary.
`
`Smithfield’s Registered Agent is the C T Corporation System with address in 4701 Cox Rd. Ste.
`
`285, Glen Allen, VA 23060-6808.
`
`
`
`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 2 of 18
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`
`
`3.
`
`ABC Insurance Company is the insurance carrier of Smithfield and whose
`
`identity is unknown at this time but who is liable to José Santiago for the facts alleged and the
`
`damages claimed in this Complaint.
`
`JURISDICTION AND VENUE
`
`4.
`
`This Honorable Court has subject matter jurisdiction pursuant to 28 U.S.C. §1332,
`
`because the citizenship of José Santiago and of Smithfield are completely diverse and the matter
`
`in controversy exceeds, exclusive of interests and costs, the sum of seventy-five thousand dollars
`
`($75,000.00).
`
`5.
`
`Venue is proper in this Court pursuant to 28 U.S.C. §1391 (a) and (c) because
`
`José Santiago resides in this district and a substantial part of the events that give rise to the
`
`instant complaint occurred in this judicial district.
`
`STATEMENT OF FACTS
`
`6.
`
`José Santiago is the oldest, largest, and most advanced full-line foodservice
`
`distributor in Puerto Rico and the Caribbean, supplying meats, poultry, seafood, frozen foods,
`
`dairy products, fresh produce, groceries, beverages, equipment dispensing programs, sanitation
`
`supplies, and paper and disposables to thousands of hotels, restaurants, fast food chains, and
`
`public and private institutions.
`
`7.
`
`As a foodservice distributor, José Santiago receives foodservice products directly
`
`from the world’s leading manufacturers and producers and delivers them to foodservice
`
`operations through its own fleet of trucks. José Santiago offers the greatest variety of
`
`foodservice products, the most competitive prices and complete, diligent, and punctual service to
`
`its foodservice customers.
`
`
`
`
`2
`
`
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 3 of 18
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`
`
`8.
`
`On October 10, 1995, José Santiago became the exclusive foodservice distributor
`
`of Farmland Foods, Inc.’s (“Farmland”) products in Puerto Rico and did so with great success
`
`and uninterruptedly for decades, creating a market in Puerto Rico for said products.
`
`9.
`
`In 2003 Smithfield acquired the Farmland brands distributed exclusively in Puerto
`
`Rico by José Santiago. After the acquisition of the Farmland brands by Smithfield in 2003, José
`
`Santiago continued to serve Smithfield as the Farmland brand’s exclusive foodservice distributor
`
`in Puerto Rico. Since 2003, José Santiago has successfully distributed to its foodservice clients
`
`in Puerto Rico more than $100 million in Farmland and Smithfield branded products.
`
`10.
`
`In 2013, Smithfield was acquired by the Hong-Kong based WH Group, Ltd.
`
`(formerly known as Shuanghui Group). Notwithstanding the acquisition, José Santiago
`
`continued to serve as Smithfield’s exclusive foodservice distributor in Puerto Rico for Farmland
`
`brand products.
`
`11.
`
`José Santiago has consistently excelled in its duties as Smithfield’s foodservice
`
`distributor in Puerto Rico, reaching more than $11 million in annual sales of Smithfield products
`
`in the year 2021.
`
`12.
`
`On October 29, 2019, representatives of José Santiago met with representatives of
`
`Smithfield who assured them that, despite a proposed brand consolidation process to be
`
`undertaken by Smithfield, the company had decided to maintain the Farmland brand for all
`
`processed foodservice products sold in Puerto Rico by José Santiago. Also, recognizing the
`
`stellar performance of José Santiago, Smithfield representatives represented to José Santiago
`
`that, in the event the Farmland brand was ever converted into any other Smithfield brand as part
`
`of the brand consolidation process, José Santiago would remain the exclusive distributor of any
`
`resulting Smithfield brand sold in Puerto Rico.
`
`
`
`
`3
`
`
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 4 of 18
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`
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`13.
`
`Despite repeated assurances, on May 18, 2020, José Santiago received notice
`
`from Smithfield that during the following six months it would streamline its brand offerings and
`
`that most of its core branded products, including Farmland, would become Smithfield products.
`
`14.
`
`Additionally, Smithfield informed José Santiago that certain dry sausage and
`
`specialty Italian meat items would be consolidated under the Margherita brand.
`
`15.
`
`Smithfield further notified that, effective January 2021, it would consolidate the
`
`Farmland brand, as well as the Eckrich, Armour, Curly’s, John Morrell, Patrick Cudahy, Ember
`
`Farms, Farmer John, and Healthy Ones brands, into the Smithfield brand.
`
`16.
`
`Immediately upon receipt of such communication, José Santiago reminded
`
`Smithfield of its assurances that in this eventuality José Santiago would remain as the exclusive
`
`foodservice distributor for the resulting Smithfield products, the same for which it had created a
`
`market.
`
`17.
`
`On June 8, 2020, Smithfield’s Vice President of Foodservice Distributive Sales,
`
`Mr. Art Michaels, further represented to José Santiago that Smithfield was committed to
`
`preserving José Santiago as its distributor. To that effect he stated that he wanted to convey
`
`Smithfield’s “sincere gratitude for the many years of partnership our companies have enjoyed”
`
`and express “Smithfield’s excitement about the opportunities that this new strategy would create
`
`in Puerto Rico for both Smithfield and José Santiago.” Mr. Michaels also expressed in
`
`unequivocal terms to José Santiago to “rest assured that we [Smithfield] desire strongly to
`
`continue doing business with José Santiago, Inc. as a foodservice distributor.”
`
`18. Mr. Michaels also reiterated that effective January 2021 Smithfield’s strategy
`
`would be to reduce the number of brands sold by Smithfield from more than twelve to only two
`
`and that, as a result of this strategy, the Farmland brand distributed by José Santiago would no
`
`
`
`
`4
`
`
`
`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 5 of 18
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`
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`longer be sold in any market, including Puerto Rico, as “everything will be marketed under
`
`either the ‘Smithfield’ or the ‘Margherita’ brand”.
`
`19. Mr. Michaels then requested a meeting with José Santiago’s representatives to
`
`“work through the details of this promising new arrangement.”
`
`20.
`
`On June 15, 2020, representatives from Smithfield and José Santiago discussed
`
`the brand transition and consolidation process.
`
`21.
`
`Smithfield’s representatives explained that, while José Santiago was the exclusive
`
`distributor of the Farmland brand in Puerto Rico, and Ballester Hermanos, Inc. was the
`
`distributor for the Margherita brand in the island, there was no “Smithfield” brand foodservice
`
`distributor in Puerto Rico. Smithfield explained that it was backtracking from its agreements
`
`with José Santiago and intended both companies to distribute the Smithfield-branded products in
`
`Puerto Rico.
`
`22.
`
`Representatives of José Santiago contended that it had created the market for the
`
`Farmland products that would now be repackaged as Smithfield products in Puerto Rico and that
`
`it had been repeatedly reassured by Smithfield that it would remain as the exclusive foodservice
`
`distributor of the Farmland products repackaged under the Smithfield brand.
`
`23.
`
`In violation of its agreement with José Santiago, Smithfield decided that it would
`
`not recognize an exclusive distributorship of Smithfield products in Puerto Rico and that now
`
`both distributors would have to offer the products to the Puerto Rico market.
`
`24.
`
`On June 22, 2020, José Santiago, once again, objected to Smithfield’s decision to
`
`breach the exclusive distribution agreement it held with Smithfield and requested that Smithfield
`
`cease and desist from the sale of Smithfield and Farmland products to foodservice clients in
`
`Puerto Rico through distributors other than José Santiago.
`
`
`
`
`5
`
`
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 6 of 18
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`
`
`25.
`
`In the same communication, José Santiago informed Smithfield that it had already
`
`started to receive dual labelled products with the Farmland and the Smithfield brand and stated
`
`that these were the same products sold in the same packaging that it had been selling for decades
`
`under the Farmland brand. José Santiago objected Smithfield’s decision to allow its competing
`
`distributor, Ballester Hermanos, Inc., to sell Smithfield products.
`
`26.
`
`José Santiago made an express claim to Smithfield that its actions constituted an
`
`impairment of its rights as Smithfield’s exclusive foodservice distributor in Puerto Rico and also
`
`highlighted that Smithfield was granting the competing distributor, Ballester Hermanos, Inc., an
`
`unfair advantage as it would now be allowed to sell Smithfield products for which José Santiago
`
`created a market in Puerto Rico.
`
`27.
`
`José Santiago also claimed in the same communication that the Rocky Mountain
`
`brand, which had not been consolidated into the Smithfield brand, and that for decades had been
`
`exclusively distributed in Puerto Rico by José Santiago, was made available by Smithfield to
`
`other foodservice distributors in Puerto Rico who were now selling the product.
`
`28.
`
`In response, on July 29, 2020, Smithfield reiterated that José Santiago would
`
`remain as Farmland’s brand exclusive foodservice distributor in Puerto Rico and acknowledged
`
`that the Farmland products were the same products being repackaged under the Smithfield brand,
`
`but at the same time, contended that José Santiago was not a Smithfield distributor protected by
`
`Puerto Rico Act No. 75, infra. Smithfield also accepted that allowing the sale of the Rocky
`
`Mountain products through another distributor was an “oversight” and that it had decided “to
`
`discontinue any future sales of the ‘Rocky Mountain’ brand products to other distributors in
`
`Puerto Rico.”
`
`
`
`
`6
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`
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 7 of 18
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`29.
`
`As the parties continued to sort out their differences, throughout this brand
`
`consolidation process, Smithfield continued to sell Smithfield and Farmland brand products to
`
`José Santiago and the latter continued distributing the products to its foodservice clients in
`
`Puerto Rico.
`
`30.
`
`José Santiago continued to uninterruptedly distribute Smithfield’s brand products
`
`to foodservice clients in Puerto Rico in a non-exclusive basis and of Smithfield’s Farmland brand
`
`products as its exclusive distributor in Puerto Rico.
`
`31.
`
`32.
`
`José Santiago is a distributor under the Puerto Rico Dealer’s Act, Act 75, infra.
`
`Throughout the time in which José Santiago has distributed Smithfield products in
`
`Puerto Rico, through its sales efforts, expertise, and credibility, it created a market and goodwill
`
`for the Smithfield brands it has distributed in Puerto Rico.
`
`33.
`
`On December 22, 2020, Smithfield provided notice to José Santiago that it would
`
`terminate its exclusive distribution agreement for the Farmland brand products effective on
`
`February 1, 2021, as it had decided to no longer sell products in Puerto Rico under the Farmland
`
`brand.
`
`34.
`
`Nonetheless, after
`
`the
`
`termination of Smithfield’s exclusive distribution
`
`agreement with José Santiago for the Farmland branded products and up to the filing of this
`
`action, without waiving its rights to seek specific performance of the exclusive distribution
`
`rights, José Santiago has continued to serve Smithfield as a non-exclusive foodservice distributor
`
`of Smithfield products in Puerto Rico uninterruptedly. Ballester Hermanos, Inc. also continues
`
`to distribute Smithfield products in Puerto Rico, including the products which José Santiago
`
`previously distributed under the Farmland brand on an exclusive basis.
`
`
`
`
`7
`
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 8 of 18
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`
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`35. Much to José Santiago’s surprise, on May 4, 2022, Smithfield notified José
`
`Santiago that after May 31, 2022, it had decided not to make available for distribution in Puerto
`
`Rico certain Smithfield products to José Santiago unless José Santiago would agree to a written
`
`distribution agreement significantly limiting the products it would be allowed to distribute. In
`
`other words, Smithfield presented José Santiago with two alternatives, both of which constitute a
`
`violation of Act 75, infra, as there existed no just cause to terminate the exclusive agreement.
`
`36.
`
`José Santiago would have to either accept an impairment to the existing
`
`distribution agreement or face its termination. Afterwards, the deadline for José Santiago to
`
`decide which of the two illegal options it would select was extended to June 15, 2022.
`
`37.
`
`On May 20, 2022, Smithfield sent José Santiago a draft of its proposed non-
`
`exclusive distribution agreement. The proposed non-exclusive distribution agreement limits José
`
`Santiago’s distribution of Smithfield’s product to only seven (7) products.
`
`FIRST CAUSE OF ACTION – ACT 75 CLAIM
`
`All preceding paragraphs of this Complaint are realleged herein.
`
`Puerto Rico Act No. 75 of June 24, 1964 (“Act 75”) defines a “dealer or
`
`38.
`
`39.
`
`distributor” as the “[p]erson actually interested in a dealer's contract because of his having
`
`effectively in his charge in Puerto Rico the distribution, agency, concession, or representation of
`
`a given merchandise or service.” 10 L.P.R.A. § 278.
`
`40.
`
`Act 75 also defines a “distribution agreement” as the “[r]elationship established
`
`between a dealer and a principal or grantor whereby and irrespectively of the manner in which
`
`the parties may call, characterize or execute such relationship, the former actually and effectively
`
`takes charge of the distribution of a merchandise, or of the rendering of a service, by concession
`
`or franchise, on the market of Puerto Rico.” 10 L.P.R.A. § 278(b).
`
`
`
`
`8
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 9 of 18
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`
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`41.
`
`Act 75 prohibits the termination of a distribution agreement without “just cause”
`
`and defines “just cause” as the “[n]onperformance of any of the essential obligations of the
`
`dealer's contract, on the part of the dealer, or any act or omission on his part that adversely and
`
`substantially affects the interests of the principal or grantor in promoting the marketing or
`
`distribution of the merchandise or service.” 10 L.P.R.A. § 278(d).
`
`42.
`
`Act 75 also provides that “notwithstanding the existence in a dealer's contract of a
`
`clause reserving to the parties the unilateral right to terminate the existing relationship, no
`
`principal or grantor may directly or indirectly perform any act detrimental to the established
`
`relationship or refuse to renew said contract on its normal expiration, except for just cause.” 10
`
`L.P.R.A. § 278a.
`
`43.
`
`Act 75 also establishes a presumption that a principal or grantor impairs an
`
`existing relationship with a distributor in the following instances:
`
`“(1) when the principal or grantor establishes facilities in Puerto Rico for the
`
`direct distribution of merchandise or the rendering of services which were
`
`previously in the charge of the dealer;
`
`(2) when the principal or grantor establishes a distribution relationship with one or
`
`more additional dealers for the area of Puerto Rico or any part of said area in
`
`conflict with the contract existing between the parties;
`
`(3) when the principal or grantor unjustifiably refuses or fails to fill the order for
`
`merchandise sent to him by the dealer in reasonable amounts and within a
`
`reasonable time;
`
`(4) when the principal or grantor unilaterally and in an unreasonable manner
`
`varies the shipping methods or the manner, conditions, or terms of payment for
`
`the merchandise ordered, to the prejudice of the dealer.”
`
`10 L.P.R.A. § 278a-1.
`
`
`
`
`
`
`9
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 10 of 18
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`44.
`
`José Santiago is the non-exclusive foodservice distributor for Smithfield products
`
`in Puerto Rico and, as such, places purchase orders for products, imports them into Puerto Rico,
`
`keeps inventory of the products in its own warehouses, extends credit to customers and markets,
`
`creates and maintains goodwill, sells, and distributes the Smithfield brand products to its
`
`foodservice clients in Puerto Rico.
`
`45.
`
`José Santiago currently distributes the following Smithfield products in Puerto
`
`Rico:
`
`Products
`
`Pack
`
`Dist Item # Mfq. Product Code
`
`ROCKY MTN.PRIDE LAYOUT BACON
`
`PORK LIGHT SPARE RIBS
`
`HOT DOG 5 - 1
`
`FARMLAND BACON LAYOUT
`
`APPLE SMOKED BACON 10/14 CT
`
`1:/15 LB
`
`6:/5.5 LBS
`
`1:/10 LB
`
`1:/15 LB
`
`1:/15 LB
`
`CUSHION MEAT PORK
`
`1:/30 LBS APROX
`
`BACON CHIPS PRECKD DICED
`
`BBQ RIB BITS COOKED
`
`HEAT N EAT SLICED BACON
`
`FARMLAND PORK SAUS. LINK 1 OZ
`
`COOKED LINKS SKIN-ON .8 OZ
`
`COOKED HAM 4 X 4
`
`2:/5 LB
`
`2:/5 LB
`
`2:/150
`
`1:/10 LB
`
`1:/10 LB
`
`5:/10 LB
`
`0115050
`
`0115016
`
`0140040
`
`0115052
`
`0115056
`
`0115044
`
`0115051
`
`0115013
`
`0115053
`
`0140032
`
`0140036
`
`0130013
`
`70247125507
`
`90070800222035
`
`70247814241
`
`70247158253
`
`70247171962
`
`00070247142931
`
`10070247172874
`
`10070247201468
`
`10070247172331
`
`70247131096
`
`70247137616
`
`10070247290141
`
`ST. LOUIS RIBS RAW
`
`11:/2.75 LBS APROX
`
`0115029
`
`90070247201518
`
`BNLS CENTER CUT PORK LOINS
`
`12:/3.75 LBS. APROX.
`
`0115006
`
`90070800708508
`
`BLACK ANGUS HAMBURGER 8 OZ
`
`HOT DOG ALL MEAT 4 - 1
`
`PORK RIB BRISKET BONES
`
`20:/8 OZ
`
`1:/10 LB
`
`1:/30 LBS
`
`CARVIN PIT BOLO HAM
`
`2:/11-12 LBS
`
`APPLEWOOD BACON 6-8CT
`
`DICED HAM
`
`2:/10 LBS
`
`1:/10 LB
`
`FLAT MENU PRIDE HAM
`
`2:/9-11 LB APROX
`
`BONELESS PORKLOIN RIBEYE
`
`5:/5 LBS. APROX.
`
`BOLO HAM
`
`1:/11-12 LBS.
`
`UNSAUCD RIBBITS CKD SEASOND
`
`POLISH SAUSAGE
`
`2:/5 LB
`
`1:/10 LB
`
`BNL PORK LOIN SIRLOIN
`
`4:/1-2 LBS APROX
`
`BNLS CNTR CUT PORK LOIN
`
`6:/8.5 LBS APROX
`
`0123008
`
`0140039
`
`0115023
`
`0130034
`
`0115061
`
`0130014
`
`0130015
`
`2899702
`
`0130027
`
`0115014
`
`0140060
`
`0115030
`
`0115032
`
`70247404145
`
`00070247810984
`
`70247161802
`
`90070247127535
`
`10070247175059
`
`10070247141610
`
`90070247190454
`
`90070247165421
`
`90070247192380
`
`10070247201529
`
`70247135285
`
`90070247746217
`
`90070800646565
`
`
`
`
`10
`
`
`
`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 11 of 18
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`HOT DOG ALL MEAT 8 - 1
`
`COOKED HAM 4 X 6
`
`1:/10 LB
`
`2:/13 LBS
`
`0140041
`
`0130010
`
`70247812544
`
`10070247193817
`
`BLACK FOREST HAM
`
`2:/9-10 LBS APROX.
`
`0130040
`
`90070247290345
`
`HOT DOG 10 - 1
`
`HOT DOG ALL BEEF 2-1
`
`MILD ITALIAN PORK SAUSAGE
`
`1:/10 LB
`
`1:/10 LB
`
`40:/4 OZ
`
`CANADIAN BACON
`
`4:/4 LB APROX
`
`PORK LOIN BACK RIB PORTIONS
`
`1:/10 LBS
`
`HONEY & BROWN SUGAR HAM
`
`2:/16 APROX.
`
`AMERICAN HEARTLAND HAM
`
`2:/8-9 LBS APROX.
`
`PORK WILD WINGS
`
`3:/12 PC
`
`PORK LOIN BACK RIBS 2/DOWN
`
`1:/30# APROX
`
`BOLOGNA ENTERA CKN & PORK
`
`1:/10 LB
`
`0140042
`
`2890460
`
`0142014
`
`0115002
`
`0115033
`
`0130025
`
`0130039
`
`0115067
`
`0115015
`
`0140001
`
`70247812551
`
`70247813558
`
`70247175168
`
`90070247127054
`
`00070247204080
`
`90070247126415
`
`90070247191727
`
`10070247192124
`
`90070247210039
`
`10070247821079
`
`
`
`
`
`46.
`
`Smithfield’s unilateral decision to terminate the non-exclusive distribution
`
`agreement with José Santiago for Smithfield products without just cause, constitutes a violation
`
`of Act 75.
`
`47.
`
`By deciding not to make available to José Santiago Smithfield products for
`
`distribution in Puerto Rico after June 15, 2022, unless it chooses from illegal options presented,
`
`Smithfield is effectively terminating José Santiago as the distributor of Smithfield brand products
`
`in Puerto Rico.
`
`48.
`
`Act 75 provides that “[i]f no just cause exists for the termination of the dealer's
`
`contract for detriment to the established relationship, or for the refusal to renew same, the
`
`principal shall have executed a tortious act against the dealer and shall indemnify it to the extent
`
`of the damages caused, the amount of such indemnity to be fixed on the basis of the following
`
`factors:
`
`“(a) The actual value of the amount expended by the dealer in the acquisition and fitting
`of premises, equipment, installations, furniture, and utensils, to the extent that these are
`not easily and reasonably useful to any other activity in which the dealer is normally
`engaged.
`
`
`
`
`
`11
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 12 of 18
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`
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`(b) The cost of the goods, parts, pieces, accessories, and utensils that the dealer may have
`in stock, and from whose sale or exploitation he is unable to benefit.
`
`(c) The goodwill of the business, or such part thereof attributable to the distribution of the
`merchandise or to the rendering of the pertinent services, said goodwill to be determined
`by taking into consideration the following factors:
`
`
`(1) Number of years the dealer has had charge of the distribution;
`(2) actual volume of the distribution of the merchandise or the rendering of the
`pertinent services and the proportion it represents in the dealer's business;
`(3) proportion of the Puerto Rican market said volume represents;
`(4) any other factor that may help establish equitably the amount of said goodwill.
`
`(d) The amount of the profit obtained in the distribution of the merchandise or in the
`rendering of the services, as the case may be, during the last five (5) years, or if less than
`five (5), five (5) times the average of the annual profit obtained during the last years,
`whatever they may be.”
`10 L.P.R.A. § 278b.
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`49.
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`Smithfield’s decision not to make available Smithfield products to José Santiago
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`for sale to its customers in Puerto Rico will effectively constitute an unjust termination of the
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`distribution agreement between the parties. Smithfield’s decision to effectively terminate
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`without just cause the non-exclusive distribution agreement with José Santiago is also in
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`violation of Act 75.
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`50.
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`Act 75 provides the parameters for the compensation of damages in case of an
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`unjust termination of a distribution agreement.
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`51.
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`Also, by purportedly granting another distributor the exclusive right to distribute
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`in Puerto Rico certain Smithfield products and intending to prohibit José Santiago from selling
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`the very same products covered under the existing non-exclusive distribution agreement with
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`José Santiago, Smithfield will impair the distribution agreement between the parties in violation
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`of Act 75.
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`52.
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`To wit, Smithfield’s decision to effectively terminate the existing relationship
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`with José Santiago is in violation of Act 75, and by entering into an agreement with another
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`distributor, one of José Santiago’s competitors, it impaired (“menoscabó”) the contractual
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`relationship between the parties.
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`53.
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`The damages José Santiago stands to suffer (if the Court does not enter a
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`preliminary injunction preventing Smithfield’s decision from becoming effective) as a direct
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`result of Smithfield’s decision to terminate the distribution agreement in violation of Act. 75 are
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`not easily calculable at this time but would exceed the sum of $30,000,000.00.
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`54.
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`The damages José Santiago stands to suffer (if the Court does not enter a
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`preliminary injunction preventing Smithfield’s decision from becoming effective) as a direct
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`result of Smithfield’s decision to impair the existing distribution agreement in violation of Act.
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`75 are not easily calculable at this time but would exceed the sum of $30,000,000.00.
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`SECOND CAUSE OF ACTION – INJUNCTIVE RELIEF
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`All preceding paragraphs of this Verified Complaint are realleged herein.
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`Act 75 also provides that “in any litigation in which there is directly or indirectly
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`55.
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`56.
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`involved the termination of a dealer's contract or any act in prejudice of the relation established
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`between the principal or grantor and the dealer, the court may grant, during the time the litigation
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`is pending solution, any provisional remedy or measure of an interdictory nature to do or to
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`desist from doing, ordering any of the parties, or both, to continue, in all its terms, the relation
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`established by the dealer's contract, and/r to abstain from performing any act or any omission in
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`prejudice thereof. In case in which the provisional remedy herein provided is requested, the
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`court shall consider the interests of all parties concerned and the purposes of the public policy
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`contained in this chapter.” 10 L.P.R.A. § 278b-1
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`57.
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`Under the provisions of Act 75 and as a matter of public policy, José Santiago is
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`entitled to the entry of a preliminary injunction preserving the contractual relationship between
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`the parties until the case is decided on the merits.
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`58.
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`José Santiago requests the entry of a preliminary injunction ordering Smithfield
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`not to terminate the distributorship agreement with José Santiago for the territory of Puerto Rico
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`and to supply the orders placed by José Santiago of the Smithfield products under the same terms
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`and conditions under which they have, and at the present have, agreed to.
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`THIRD CAUSE OF ACTION-BREACH OF CONTRACT
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`AND SPECIFIC PERFORMANCE
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`All preceding paragraphs of this Verified Complaint are realleged herein.
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`In the alternative that the Court determines that José Santiago’s is not a distributor
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`59.
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`60.
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`protected by Act 75, José Santiago alleges that Smithfield breached its duty of fair dealing and
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`good faith by negligently breaching its contractual obligations with José Santiago and by
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`deciding to terminate the contractual relationship between the parties without cause.
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`61.
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`Smithfield, incurring in negligence, dolous conduct and bad faith, breached the
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`contractual relationship of many years with José Santiago and is responsible for all damages that
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`such conduct has caused, and will cause, José Santiago, including but not limited to those
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`damages foreseeable at the time that the parties entered into the contractual relationship.
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`62.
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`Smithfield’s bad faith and negligent, intentional and dolous conduct has caused
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`José Santiago economic losses and damages exceeding the sum of $30,000,000.00.
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`63.
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`José Santiago also seeks the specific performance (“cumplimiento específico”) of
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`the existing agreement between the parties, a coexisting remedy also available under the Puerto
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`Rico Civil Code.
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`64.
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`65.
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`FOURTH CAUSE OF ACTION-NEGLIGENCE
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`All preceding paragraphs of this Verified Complaint are realleged herein.
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`Article 1536 of the Puerto Rico Civil Code provides that any person who through
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`fault or negligence causes damages to another is obligated to compensate for such damages. 31
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`L.P.R.A. § 10801.
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`66.
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`In the event that the Court determines that there exists no contract between José
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`Santiago and Smithfield, then José Santiago claims that Smithfield incurred in negligent acts or
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`omissions and deceitful conduct in total disregard to the rights and property of José Santiago and
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`that resulted in damages and economic losses suffered, and that will be suffered, by José
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`Santiago.
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`67.
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`Pursuant to article 1538 of the Puerto Rico Civil Code, José Santiago requests an
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`award of punitive damages against Smithfield.
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`68.
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`José Santiago seeks an award of damages in a sum exceeding the sum of
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`$30,000,000.00 and an equal amount exceeding the sum of $30,000,000.00 in punitive damages
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`against Smithfield as provided under the Puerto Rico Civil Code.
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`69.
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`José Santiago demands a jury trial.
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`WHEREFORE, José Santiago, respectfully requests, that this Court grant the present
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`Complaint and, as a result thereof, enter judgment in its favor and:
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`(i)
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`pursuant to Act 75 enter a preliminary injunction preventing Smithfield from
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`terminating the existing contractual relationship with José Santiago during the
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`pendency of this litigation;
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`(ii)
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`declare that Smithfield’s decision to terminate its contract with José Santiago
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`without just cause violated the provisions of Act 75;
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 16 of 18
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`(iii)
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`order Smithfield to compensate José Santiago damages for the unjust termination
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`of the distribution agreement between the parties in a sum exceeding
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`$30,000,000;
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`(iv)
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`order Smithfield to compensate José Santiago damages for the impairment of the
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`distribution agreement between the parties in a sum exceeding $30,000,000;
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`(v)
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`alternatively, declare that Smithfield breached its contractual obligation with José
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`Santiago acting with negligence, dolous conduct and bad faith and order the
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`payment to José Santiago of damages exceeding the sum of $30,000,000.00 and
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`order the strict compliance of the contract between the parties;
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`(vi)
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`in the event that the Court determines that there exists no contract between the
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`parties, award José Santiago damages in the sum of $30,000,000 resulting from
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`the negligent acts or omissions of Smithfield;
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`(vii)
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`award José Santiago $30,000,000 in punitive damages as a result of the deceitful
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`conduct and acts or omissions of Smithfield in total disregard of the rights and
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`property of José Santiago;
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`(viii) award José Santiago a reasonable amount for attorneys’ fees and litigation
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`expenses as provided in Act 75;
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`(ix)
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`award José Santiago pre-judgment and post-judgment interests; and
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`(x)
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`grant such other and further relief as the Court deems just and proper.
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`RESPECTFULLY SUBMITTED.
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`In San Juan, Puerto Rico, this 25th day of May, 2022.
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 17 of 18
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`DELGADO & FERNÁNDEZ, LLC
`Attorneys for José Santiago, Inc.
`PO Box 11750
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`Fernández Juncos Station
`San Juan, PR 00910-1750
`Tel. (787) 274-1414
`Fax: (787) 764-8241
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`
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`s/Alfredo Fernández Martínez
`ALFREDO FERNÁNDEZ MARTÍNEZ
`USDC-PR #210511
`afernandez@delgadofernandez.com
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`
`
`s/ Carlos R. Baralt Suárez
`CARLOS R. BARALT SUÁREZ
`USDC-PR No. 301510
`cbaralt@delgadofernandez.com
`
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`Case 3:22-cv-01239-SCC Document 1 Filed 05/25/22 Page 18 of 18
`Case 3:22-cv-01239-SCC Document1 Filed 05/25/22 Page 18 of 18
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`UNSWORN STATEMENT UNDER PENALTY OF PERJURY
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`I, José Santiago Gonzalez, of legal age, married, executive, and resident of San Juan,
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`Puerto Rico, hereby state under penalty of perjury, under 28 U.S.C. § 1746, and pursuant to the
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`Laws of the United States of America, that I have read the foregoing Verified Complaint and
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`that, to the best of my knowledge and belief and/or pursuant to the information and documents in
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`possession of Plaintiff, to which I have access in my capacity as President of José Santiago, Inc.,
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`the averments stated herein are true and correct.
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`I execute this declaration under penalty of
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`perjury to protect the rights of José Santiago, Inc. and for any legal purposes.
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`In San Juan, Puerto Rico, this 25th day of May, 2022.
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`i J
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`osé Santiago Gonzalez.
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`