Southwest persuades court to shut down boarding pass company’s operations

Southwest Airlines Co. v. BoardFirst, L.L.C. (N.D. Tex. Sept. 12, 2007).  BoardFirst went into business in 2005 to assist Southwest passengers in obtaining the coveted “A” group boarding passes.  “A” boarding passes are obtained by the first 45 passengers to check in, and “A” passengers are the first to board the aircraft.  A BoardFirst customer authorizes the company to act as the customer’s agent.  When the customer’s boarding pass becomes available, a BoardFirst employee uses the customer’s personal information to log onto southwest.com and attempt to obtain an “A” boarding pass for the customer.  BoardFirst notifies its customer if it was successful; if so, BoardFirst collects a $5 fee from the customer, who prints the boarding pass via southwest.com or at an airport kiosk.

Southwest sent BoardFirst cease and desist letters, but BoardFirst continued to operate.  So Southwest sued BoardFirst, alleging causes of action for breach of contract, violation of the federal Computer Fraud and Abuse Act and for violation of a Texas statute prohibiting harmful access to a computer.  Southwest sought damages as well as a permanent injunction against BoardFirst’s operations.  Southwest moved for partial summary judgment on its causes of action and on BoardFirst’s counterclaims for tortious interference with contractual relations.

The court granted Southwest’s motion as to its breach of contract cause of action, holding that BoardFirst had breached the parties’ “browsewrap” agreement.  A browsewrap agreement is entered into between a web site owner and a user of the site when the user accesses the site after having received actual or constructive knowledge that such access constitutes acceptance of the site’s terms and conditions.

Southwest.com’s home page displayed a notice stating that use of the site constitutes acceptance of Southwest’s terms and conditions, one of which was that site use was only permitted for “personal, non-commercial purposes.”  The court held that BoardFirst had actual knowledge of the prohibition against commercial use of the site since at least the time it received Southwest’s first cease and desist letter.  BoardFirst argued that it did not breach the contract because its use of the site was authorized by its customers.  The court rejected this argument, holding that BoardFirst’s authorization to act for its customers “does not make its conduct any less of a violation of the Terms.”

The court then considered whether Southwest had suffered damages due to BoardFirst’s conduct.  Southwest argued that it had incurred damages because BoardFirst’s activities had decreased traffic on its site, thereby depriving Southwest of selling and advertising opportunities, and because BoardFirst’s activities had interfered with Southwest’s effort to build an “egalitarian” image by creating a “de facto first class” for its flights.

The court held that Southwest was entitled to damages but that its damages were impossible to quantify, thus making the remedy of a permanent injunction “particularly suitable.”  The court permanently enjoined BoardFirst “from using southwest.com in a way that breaches the Terms posted on the site.”  The court denied Southwest’s motion as to its federal and state computer-related causes of action and as to BoardFirst’s tortious interference counterclaims.

Note:  This opinion is significant because many web site owners, such as Ticketmaster in its lawsuit against Tickets.com, have failed to persuade courts to enforce their sites’ terms and conditions.  The opinion provides an effective road map for airlines that wish to make sure that users of their sites comply with the sites’ rules.

Canadian company files lawsuit against 1st-Air.Net

On May 9, 2007, Ticketmaster Canada Ltd. filed a lawsuit against 1st-Air.Net, Inc. and another defendant in the Supreme Court of British Columbia seeking damages of US$91,315.  According to its Statement of Claim, Ticketmaster had entered into an agreement allowing the defendants to use Ticketmaster’s system to process credit card transactions and defendants breached such agreement by failing to pay for credit card chargebacks totaling the amount of damages sought.  Ticketmaster alleges that both 1st-Air.Net and the other defendant, MAR-RAM Associates, Inc., do business in Canada under the name “Livingston Travel” and that 1st-Air.Net’s principal office in the U.S. is located in Rochester, New York.

Court continues to trim airline lawsuit against Internet service vendor

Deutsche Lufthansa AG v. The Boeing Company (S.D.N.Y. Feb. 2, 2007).  In 2003, Lufthansa and Boeing entered into a contract in which Boeing agreed to provide high-speed Internet service for passengers on long-haul Lufthansa flights.  In 2006, after Lufthansa had spent substantial sums in developing the service, Boeing notified Lufthansa that it had decided to discontinue its Internet service business, in its entirety, at the end of the year.

In response to Boeing’s notice, Lufthansa filed a lawsuit seeking specific performance and damages.  As reported earlier, in October 2006 the court dismissed the portion of Lufthansa’s complaint seeking specific performance because the parties had agreed in their contract to limit their remedies against each other to damages.

Boeing had also moved to dismiss the portion of Lufthansa’s complaint seeking damages in excess of the $1,000,000 damages limit in the parties’ contract, but the court did not rule on that issue in its October decision.  Earlier this month, the court upheld the damages limit.  The court reasoned that “the conduct alleged by Lufthansa falls well below the levels required by the New York courts to invalidate a mutually agreed upon limitation of liability” because Boeing had acted rationally, and without malice toward Lufthansa, in discontinung its Internet service business.

Court sorts out liability in aircraft ground incident case

North American Airlines, Inc. v. Virgin Atlantic Airways, Ltd. (E.D.N.Y. Dec. 22, 2006).  During towing by a tug driver from a hardstand to a terminal departure gate, a wing tip of a Virgin A340 aircraft collided with the tail of a parked North American Airlines aircraft.

NAA sued Virgin, which filed third-party complaints against ASI, which had provided the tug driver and the “wing walker,” and Mach II, which had provided the cockpit-based “brake rider.”  ASI and Mach II filed cross-claims against each other.  NAA moved for summary judgment against Virgin, Virgin moved for summary judgment against ASI, and Mach II moved for summary judgment against ASI.

The court held that Virgin is not liable to NAA under New York Business Law sec. 251 because the phrase ”use or operation” in that statute (which was intended to make aircraft owners liable to crash victims) does not cover situations involving aircraft being towed.  The court ruled that Virgin is not liable to NAA under the principle of vicarious liability because a jury could conclude that ASI and Mach II were Virgin’s independent contractors, not its agents.  The court held that ASI is liable to Virgin for the actual damages to its aircraft because “ASI’s employee clearly operated the tug in a negligent manner.”  Finally, the court declined to grant Mach II’s summary judgment motion against ASI because questions of fact exist as to whether Mach II was partially responsible for the collision.

Vendor permitted to discontinue Internet service to airline

Deutsche Lufthansa AG v. The Boeing Company (S.D.N.Y. Oct. 30, 2006).  In 2003, Lufthansa and Boeing entered into a 70-page contract in which Boeing agreed to provide high-speed Internet service for passengers on long-haul Lufthansa flights.  In August 2006, Boeing notified Lufthansa that it had decided to discontinue its Internet service business, in its entirety, at the end of the year.  In response, Lufthansa filed a lawsuit against Boeing.

According to the court, Lufthansa’s lawsuit sought “to have the Court order Boeing to maintain in operation a service which Boeing has chosen to shut down completely.”  Lufthansa claimed that it had spent over $120 million developing and marketing the Internet service, that 90,000 booked customers would be “adversely affected” by the termination of the service and that the parties’ contract permitted it to use the remedy of specific performance to force Boeing to continue providing the service.

Boeing moved to dismiss the portion of Lufthansa’s complaint seeking specific performance.  In its decision granting the motion, the court held that the parties had agreed in their contract to limit their remedies against each other to money damages, thus rendering specific performance unavailable as a remedy for Lufthansa.  The court also noted the impracticality of what Lufthansa was essentially seeking — “an order compelling Boeing to indefinitely keep in operation a service employing over 300 people for the benefit of one customer under the supervision of the Court.”

Note:  In February 2007, the court issued a related opinion in this case.