United Air Lines, Inc. v. Hewins Travel Consultants, Inc.

• Decision Date: 31 March 1993
• Citation: 622 A.2d 1163
• Parties: UNITED AIR LINES, INC., et al. v. HEWINS TRAVEL CONSULTANTS, INC.
• Court: Maine Supreme Court

Page 1163

622 A.2d 1163

UNITED AIR LINES, INC., et al. v. HEWINS TRAVEL CONSULTANTS, INC.

Supreme Judicial Court of Maine.

Argued Nov. 4, 1992.

Decided March 31, 1993.

Roy S. McCandless (orally), James G. Goggin, Verrill & Dana, Portland, for plaintiffs.

James C. Hunt (orally), Robinson, Kriger, McCallum & Greene, Lynn Spann Bowditch, Cope and Cope, Portland, for defendants.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, COLLINS and RUDMAN, JJ.

COLLINS, Justice.

Hewins Travel Consultants, Inc. appeals from the summary judgments entered in favor of United Air Lines, Inc. and Covia Partnership in the Superior Court (Cumberland County, Wernick, A.R.J.) in an action against Hewins for breach of contract. Hewins asserts that: 1) the contracts are unenforceable because their minimum use provisions violate federal Department of Transportation (DOT) regulations; 2) the computer records relied on by United and Covia to establish breach are inadmissible hearsay; 3) the contract terms were ambiguous; and 4) the liquidated damages clause is an unenforceable penalty. United and Covia cross-appeal the court's denial of their post-judgment motion for attachment and attachment by a trustee process. We affirm the summary judgments and remand for consideration of the plaintiffs' motion for post-judgment attachment but not attachment by a trustee process.

In 1985, United entered into three contracts with Gordon Clapp Travel Services, Inc. (Clapp). Pursuant to these contracts United leased to Clapp a computer reservation system (the "Apollo" system) for a term of five years. The Apollo system consists primarily of a network of display terminals (CRTs) linked to a central data base containing travel information. Computer reservation systems such as Apollo are used by travel agencies to obtain information on the available flights, hotel rooms, car rentals, and other travel-related services, and to make, change, or cancel reservations.

United charged Clapp a fixed fee for installing and leasing the equipment as well as for subscription fees for the various services used. United also received "booking fees" from other vendors for reservations made by the agency. Under the Apollo leases, Clapp agreed to meet a monthly minimum usage requirement defined in the Apollo leases as:

fifty percent (50%) of the monthly per CRT mean average of Apollo Transactions processed by the Subscriber ... during the first six (6) months of the Agreement.

In the spring of 1987, Hewins purchased Clapp and assumed the Apollo lease agreements. At about the same time, Hewins began to negotiate with Delta to convert its computer reservation system from "Apollo" to "DeltaStar." As part of the agreement, Delta agreed to either pay Hewins $250,000 for "expenses associated with the termination of United Airlines Apollo Systems" or to indemnify Hewins on the Apollo contract. Hewins chose the cash option. Once DeltaStar was installed, Hewins kept the Apollo CRTs on its agents' desks for information services but dramatically reduced its use of the Apollo system for making reservations.

In the spring of 1988, United assigned its interest in the Apollo leases to Covia, at that time a wholly-owned subsidiary of United. Shortly thereafter, in May 1988, Covia notified Hewins that Hewins was in breach of the Apollo contracts for failing to meet the minimum usage requirement for "some time." In June 1988, Covia notified Hewins that it terminated the contracts "due to [Hewins's] failure to cure [its] breach" and that Hewins would be liable for liquidated damages under the terms of the contracts. ¹

United and Covia filed a complaint for a breach of the contracts in June 1989. Although the Superior Court (Cumberland County, Wernick, J.) denied United and Covia's first motion for summary judgments, it granted their second motion after discovery eliminated the factual ambiguities in the case. The court directed its order be entered as a final judgment pursuant to M.R.Civ.P. 54(b). United and Covia moved for a post-judgment ex parte attachment and attachment by a trustee process which the court denied.

I. The Minimum Use Provisions and DOT Regulations

When reviewing the grant of a summary judgment, we review the evidence in a light most favorable to the party against whom the judgment has been granted and review the trial court's decision for error of law. Estate of Althenn v. Althenn, 609 A.2d 711, 714 (Me.1992). Hewins argues that the minimum use requirement in the contracts violates DOT regulation, 14 C.F.R. § 255.6(b), which reads: "No system vendor shall directly or indirectly prohibit a subscriber from obtaining or using any other system." 14 C.F.R. § 255.6(b) (1992) (emphasis added). Hewins asserts that the minimum use clause indirectly prohibits it from obtaining or using another system.

Hewins first raised this issue in a motion for dismissal which was denied by the Superior Court (Cumberland County, Cole, J.). Hewins renewed this defense in its answer. On a motion by United and Covia, the Superior Court (Cumberland County, Perkins, J.) struck the defense under the law of the case doctrine. Hewins argues, as a preliminary matter, that this was error because the law of the case cannot be established on a motion to dismiss.

The law of the case doctrine is based on "the sound policy that in the interests of finality and intra-court comity a Superior Court justice should not, in subsequent proceedings involving the same case, overrule or reconsider the decision of another justice." Grant v. City of Saco, 436 A.2d 403, 405 (Me.1981). Although the rule does not act as a complete bar to reconsideration, we have held that a judge may decline to review an issue already determined on a motion for dismissal. Id. The court's decision to strike an issue already decided by a previous justice on a motion to dismiss provides Hewins no grounds for relief. See id.

United and Covia also raise preliminary matters. First, they maintain that Hewins did not properly preserve the DOT regulation issue because they did not raise this argument in opposition to the plaintiffs' second motion for a summary judgment. This contention is meritless; Hewins is not required to continue to raise an issue struck from the case. United and Covia further argue that Hewins cannot use the violation of a DOT regulation as a defense to the contract action because the regulation provides no private cause of action. We need not reach this issue, however, because regardless of whether a private right of action exists, the minimum use clause does not violate section 255.6(b). Cf. In re "Apollo" Air Passenger Computer Reservation System (CRS), 720 F.Supp. 1061, 1065 (S.D.N.Y.1989) (in similar suit by United, identical minimum use provision held not to violate section 255.6(b)). The minimum use clause "merely sets a benchmark for use equal to one half of the average use during the first six months of a contract." Id. Clapp was free to control its own use of the Apollo system during the first six months of the contract to establish the minimum usage requirement and Hewins assumed Clapp's liability under the contract. ²

Hewins points out that since In re "Apollo" was decided, the DOT has amended its rules to expressly prohibit minimum use provisions. See 57 Fed.Reg. 43,836 (1992) (to be codified at 14 C.F.R. § 255.8). Hewins asserts that this DOT action clarified that section 255.6(b) was intended to prohibit minimum use clauses. We reject this contention. In discussing its amendments, the DOT stated that the current regulations were inadequate to prevent minimum use clauses. The fact that section 255.6(b) failed to accomplish its goals is not reason to interpret it differently than it was written and interpreted by both the DOT and the courts.

II. Computer Printouts

To establish the number of Apollo transactions occurring during the first six months of the contract, Covia introduced three affidavits of Philip Tarrant, its Manager of Legal Services. ³ Tarrant attached to his third affidavit computer printouts showing the total Clapp/Hewins bookings for each month during the life of the contract.

Tarrant described the data collection process as follows: First, whenever Clapp or Hewins employees made an Apollo booking, a record of that booking was automatically sent to the Apollo central computer in Denver, Colorado. In Denver, the data were stored until after the travel took place. Shortly after the travel was concluded, the records were stripped of identifying information, such as the passenger name and travel destination, and then "downloaded to tape" for storage. After sending Hewins a notice of the breach, Covia used the stored information to generate reports reflecting the total monthly bookings at each Clapp/Hewins location. Covia used the first six months' usage to calculate the monthly minimum usage requirement and the subsequent months' usage to establish a breach of that minimum usage term.

Hewins argues the computer records are inadmissible summaries because Covia failed to supply the originals as required by M.R.Evid. 1006. ⁴ Contrary to Hewins's contention, the computer records in question are printouts of the usage data stored on computer tape and are therefore themselves originals pursuant to M.R.Evid. 1001(3) which reads in pertinent part:

If data are stored in a computer or similar device, any printout or other output readable by sight, shown to reflect the data accurately, is an "original."

Id. Although Hewins contends that M.R.Evid. 1001(3) does not apply because the records were not "shown to reflect the data accurately," Covia provided an adequate foundation for the trial court to find that the printout was an accurate reflection of the data stored in the Apollo central computer. Covia's computer records, therefore, are not barred by Rule 1006.

Hewins further argues that the computer records are hearsay not admissible under the business records exception. See ...