Reeves v. Alyeska Pipeline Service Co.

• Decision Date: 22 November 1996
• Docket Number: No. S-6527,S-6527
• Parties: John REEVES, Appellant, v. ALYESKA PIPELINE SERVICE COMPANY, Appellee.
• Court: Alaska Supreme Court

Page 1130

926 P.2d 1130

41 U.S.P.Q.2d 1720

John REEVES, Appellant, v. ALYESKA PIPELINE SERVICE COMPANY, Appellee.

No. S-6527.

Supreme Court of Alaska.

Nov. 22, 1996.

Thomas V. Van Flein, Law Office of Thomas V. Van Flein, Beverly Hills, California, and David H. Call, Call, Barrett & Burbank, Fairbanks, for Appellant.

Lawrence R. Trotter and Mindy R. Kornberg, Alyeska Pipeline Service Company, and Sally J. Kucko, Groh, Eggers & Price, Anchorage, for Appellee.

Before RABINOWITZ, MATTHEWS and COMPTON, JJ.

OPINION

PER CURIAM.

I. INTRODUCTION

This case raises issues concerning the protection of ideas. It arises out of John Reeves' claims that in 1991 Alyeska Pipeline Service Company (Alyeska) appropriated his idea for a visitor center at a popular turnout overlooking the Trans-Alaska Pipeline. The superior court granted summary judgment to Alyeska. We reverse in part and remand for further proceedings.

II. FACTS AND PROCEEDINGS

In 1985 Alyeska created a visitor turnout at Mile 9 of the Steese Highway between Fox and Fairbanks. ¹ The turnout had informational signs and provided visitors a view of the Trans-Alaska Pipeline. Before Alyeska constructed the turnout, visitors gained access to the pipeline by a nearby road and trespassed on the Trans-Alaska Pipeline right-of-way.

John Reeves, owner of Gold Dredge No. 8, a tourist attraction outside Fairbanks and near the turnout, contacted Alyeska in January 1991 to discuss a tourism idea he had. He spoke with Keith Burke, Alyeska's Fairbanks Manager. After receiving Burke's assurance that the tourism idea was "between us," Reeves orally disclosed his idea to build a visitor center at the turnout. He proposed that Alyeska lease him the land and he build the center, sell Alyeska merchandise, and display a "pig" ² and a cross-section of pipe.

Burke told him the idea "look[ed] good" and asked Reeves to submit a written proposal, which Reeves did two days later. The proposal explained Reeves' idea of operating a visitor center on land leased to him by Alyeska. The proposal included plans to provide small tours, display a "pig," pipe valve, and section of pipe, sell refreshments and pipeline memorabilia, and plant corn and cabbage.

After submitting the proposal, Reeves met with Burke once again. At this meeting Burke told Reeves the proposal looked good and was exactly what he wanted. In Reeves' words, Burke told him, "We're going to do this deal, and I'm going to have my Anchorage lawyers draw it." Reeves claimed he and Burke envisioned that the visitor center would be operating by the 1991 summer tourist season.

Reeves alleges that Alyeska agreed during this meeting (1) to grant access to the turnout for twenty years; (2) to allow Reeves to construct and operate an information center; and (3) to allow Reeves to sell merchandise and charge a $2.00 admission fee. Reeves stated that, in exchange, he agreed to pay Alyeska ten percent of gross receipts.

Over the next several months, Burke allegedly told Reeves that the deal was "looking good" and not to worry because it takes time for a large corporation to move. However, in spring 1991, Burke told Reeves that the visitor center was such a good idea that Alyeska was going to implement it without Reeves. By August 1991 Alyeska had installed a portable building at the turnout to serve as a visitor center; it built a permanent log cabin structure in 1992.

The members of the Alyeska Pipeline Club North (APCN) operated the visitor center and sold T-shirts, hats, and other items. ³ APCN does not charge admission. A section of pipeline and a "pig" are on display. APCN employees provide information and answer visitors' questions. Members of APCN had suggested in 1987 that Alyeska create a visitor center at the turnout. However, Alyeska had rejected the idea at that time. Before meeting with Reeves, Burke did not know that APCN's visitor center idea had been raised and rejected by Alyeska in 1987.

Approximately 100,000 people visited the visitor center each summer in 1992 and 1993. It grossed over $50,000 in sales each year. The net profit for 1993 was calculated to be $5,000-$15,000. APCN received all the profit.

Reeves filed suit in May 1993. By amended complaint, he alleged a variety of tort and contract claims. Judge Charles R. Pengilly granted Alyeska's motion for summary judgment on all claims; Reeves appeals. Reeves also appeals the superior court's denial of Reeves' motion to compel production of Burke's daily calendar.

III. DISCUSSION

We will review a grant of summary judgment de novo and will adopt the rule of law that is most persuasive in light of precedent, reason, and policy. Department of Health and Social Serv. v. Alaska State Hosp. and Nursing Home Ass'n, 856 P.2d 755, 759-60 (Alaska 1993); Guin v. Ha, 591 P.2d 1281, 1284 (Alaska 1979). We are not bound by the trial court's reasoning and may affirm a grant of summary judgment on any alternative ground appearing in the record. Far North Sanitation, Inc. v. Alaska Pub. Util. Comm'n, 825 P.2d 867, 869 n. 2 (Alaska 1992). To succeed on summary judgment a movant must show that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985). In determining whether there is a genuine issue of material fact, all "reasonable inferences of fact from proffered materials must be drawn against the moving party ... and in favor of the non moving party." Kiester v. Humana Hosp. Alaska, Inc., 843 P.2d 1219, 1222 (Alaska 1992) (quoting Sea Lion Corp. v. Air Logistics of Alaska, 787 P.2d 109, 116 (Alaska 1990)).

Reeves sued Alyeska on claims of breach of oral contract, promissory estoppel, breach of implied contract, quasi-contract (unjust enrichment and quantum meruit), breach of the covenant of good faith and fair dealing, breach of license and/or lease agreement, and various torts related to the contractual relationships alleged.

This case presents several questions of first impression concerning the protection of business ideas. Reeves claims that Alyeska contracted for both the disclosure and use of his idea. Alyeska maintains that Reeves' "idea" was not novel or original and that an Alyeska employee had proposed an identical idea in 1987. Therefore, Alyeska argues that most of Reeves' claims fail because his idea was not novel or original. Alyeska also argues that Reeves' claims are barred by the statute of frauds. Before reaching the merits of Reeves' claims we must first briefly discuss the law relating to the protection of ideas and the roles of novelty and originality.

A. Protection of Ideas

The law pertaining to the protection of ideas must reconcile the public's interest in access to new ideas with the perceived injustice of permitting some to exploit commercially the ideas of others. See 3 David Nimmer, Nimmer on Copyright § 16.01, at 16-2 to 16-3 (1994). Federal law addresses the protection of new inventions and the expression of ideas. Federal patent law protects inventors of novel, nonobvious, and useful inventions by excluding others from "making, using, or selling the invention" for a period of seventeen years. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150, 109 S.Ct. 971, 977, 103 L.Ed.2d 118 (1989). Federal copyright law protects an individual's tangible expression of an idea, but not the intangible idea itself. 17 U.S.C. § 102(b) (1988). Copyright law creates a monopoly for the author that allows him or her to benefit economically from the author's creative efforts. It does not create a monopoly on the idea from which the expression originates; the idea remains available for all to use. Nimmer, supra, § 16.01, at 16-2 to 16-3. Reeves' claims do not fall under these federal protections because his idea is not a new invention, nor is it expressed in a copyrighted work. Nevertheless, federal law is not the only protection available to individuals and their ideas.

Creating a middle ground between no protection and the legal monopolies created by patent and copyright law, courts have protected ideas under a variety of contract and contract-like theories. See Nimmer, supra, §§ 16.02-16.06 (discussing and compiling cases that have applied or rejected theories of property, express contract, implied contract, quasi-contract, and confidential relationships to protect ideas). These theories protect individuals who spend their time and energy developing ideas that may benefit others. It would be inequitable to prevent these individuals from obtaining legally enforceable compensation from those who voluntarily choose to benefit from the services of the "idea-person." See Nimmer, supra, § 16.01, at 16-3. The California Supreme Court expressed this concept in the following manner:

Generally speaking, ideas are as free as the air and as speech and the senses, and as potent or weak, interesting or drab, as the experiences, philosophies, vocabularies, and other variables of the speaker and listener may combine to produce, to portray, or to comprehend. But there can be circumstances when neither air nor ideas may be acquired without cost. The diver who goes deep in the sea, even as the pilot who ascends high in the troposphere, knows full well that for life itself he, or someone on his behalf, must arrange for air (or its respiration-essential element, oxygen) to be specifically provided at the time and place of need. The theatrical producer likewise may be dependent for his business life on the procurement of ideas from other persons as well as the dressing up and portrayal of his self-conceptions; he may not find his own sufficient for survival.

Desny v. Wilder, 46 Cal.2d 715, 299 P.2d 257, 265 (1956). The scope of idea protection, although primarily raised in the entertainment field, is not limited to that industry; it may also apply to business and scientific ideas. See Nimmer, supra § 16.01 n. 7.

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