Trilegiant Corp. v. Orbitz, LLC - 2014 NY Slip Op 24230, 45 Misc. 3d 348, 993 N.Y.S.2d 462 (Sup. Ct.)

Rule:

In a public policy context, because a promisor should not be permitted to renege on a promise either because that specific promise lacks textually designated consideration or because the promisor wants to avoid performance of multiple obligations when the promisee has already performed and has no further obligations concurrent with the promisor's performance.

Facts:

Orbitz, LLC and Trip Network, Inc. (collectively Orbitz) offer online travel services, including but not limited to providing discounted hotel, flight and rental car rates. Trilegiant Corporation is also in the business of online travel services, however, their services are primarily subscription-based where they offer future travel discount programs. In October of 2005, Trilegiant and Orbitz entered into a business agreement by executing the Master Services Agreement (MSA) which provided "for marketing services between Trilegiant and Orbitz from the date of the MSA's execution through December 31, 2010". These marketing services, known as DataPass, involved Orbitz's marketing of Trilegiant's services to Orbitz's customers at the conclusion of their travel booking on Orbitz's website. The marketing arrangement between the parties was arranged so that when a customer enrolled in Trilegiant's services, Orbitz would then transfer the customer's billing and credit card information to Trilegiant, and thereafter Trilegiant would charge the customer and pay Orbitz a designated commission per customer. As a result of DataPass, customers were charged for Trilegiant's services without affirmatively providing their credit card information to Trilegiant, though arguably they had agreed to be charged when purchasing travel arrangements on Orbitz's site. Eventually, customers of Orbitz complained that their credit cards were being charged without their knowledge. In June 2007, Orbitz informed Trilegiant that it would be terminating the MSA, effective December 31, 2007. MSA allowed for early termination provided that Orbitz pay a series of 35 quarterly termination payments totaling $18,453,000 beginning in 2008, with the final payment due September 30, 2016. In 2010 Trilegiant ceased DataPass activities, as did many other marketers using the practice. Congress undertook an investigation into DataPass and enacted the Restore Online Shoppers' Confidence Act (15 USC § 8401 et seq.) (ROSCA) on December 29, 2010, two days before the MSA was originally set to expire. Orbitz stopped making all termination payments after its payment on March 30, 2010, claiming that the termination payment provision was purportedly designed to compensate Trilegiant for revenue it would have lost as a result of Orbitz's cancellation and, since Trilegiant was no longer involved in DataPass after 2010, Orbitz was not required to make termination payments. Trilegiant then brought this action against Orbitz for breach of contract.

Issue:

Was Trilegiant entitled to summary judgment with regard to Orbitz’ affirmative defenses?

Answer:

Yes.

Conclusion:

The court held that Trilegiant was entitled to summary judgment with regard to Orbitz’ affirmative defenses because the existence of consideration for the MSA, whether consisting of either a benefit to the promisor or a detriment to the promisee, was not a disputed material fact in the case, there were no allegations that the MSA was fraudulently agreed upon or that it was unconscionable, Trilegiant did not have to show that it was "ready, willing and able" to perform in order for the MSA to be enforceable against Orbitz, and Orbitz failed to establish the existence of material issues of fact regarding, inter alia, a warranty breach that required a trial.