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Peter Pan Bus Lines, Inc. v. Greyhound Lines, Inc.

United States District Court, D. Massachusetts

May 17, 2016

PETER PAN BUS LINES, INC., Plaintiff,
v.
GREYHOUND LINES, INC., Defendant.

          MEMORANDUM AND ORDER REGARDING DEFENDANT’S PARTIAL MOTION TO DISMISS (Dkt. No. 12)

          MARK G. MASTROIANNI UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Plaintiff Peter Pan Bus Lines, Inc. (“Peter Pan”) brings this action against Defendant Greyhound Lines, Inc. (“Greyhound”), asserting claims for breach of contract (Count I) and promissory estoppel (Count II), and seeking a declaratory judgment (Count III). This dispute arises out of the parties’ agreements regarding the pooling of bus services and revenue. Greyhound has filed a partial motion to dismiss in which it attacks Peter Pan’s claims that Greyhound owes past and future commissions for bus tickets sold on Peter Pan’s website.[1] For the reasons discussed below, the court will grant Greyhound’s motion in part and deny it in part.

         II. Background

         The following facts come directly from Peter Pan’s complaint and documents referenced therein. See Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008) (“When . . . a complaint’s factual allegations are expressly linked to-and admittedly dependent upon-a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6).” (quoting Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16-17 (1st Cir. 1998))); Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993) (“[C]ourts have made narrow exceptions [to the general rule that materials outside of the complaint may not be considered] for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs’ claims; or for documents sufficiently referred to in the complaint.”).[2]

         Peter Pan is a privately-owned Massachusetts corporation with a principal place of business in Springfield, Massachusetts. (Dkt. No. 1, Compl. ¶ 1.) Greyhound is a privately-owned Delaware corporation with a principal place of business in Dallas, Texas. (Id. ¶ 2.)[3] In the mid-1990s, in response to a “price war” between the parties, they began negotiating a pooling arrangement on certain routes in the northeast pursuant to 49 U.S.C. § 14302. (Id. ¶ 6.) The parties entered into three written Revenue Pooling Agreements (“RPAs”) in 1997, all approved by the Surface Transportation Board, which provide for pooled bus service between (1) New York and Philadelphia, (2) New York and Boston, and (3) New York and Washington, D.C. (Id.) In essence, the RPAs assign each party a percentage of miles to operate in the Pool and allocate to each a percentage of ticket revenues from those operations. (Dkt. No. 13, Exs. 2, 3, 4, at ¶¶ 3(d) and 8.) The RPAs also require Greyhound to operate terminals in the region (with four exceptions) and to assume responsibility for the costs relating to the sale of tickets, the operation of the bus terminals, and the accounting work for the Pool. (Compl. ¶ 8.) In exchange, Greyhound is compensated through an adjustable percentage of pool sales, the “Internal Variable Station Expense” (“IVSE”), as well as an administrate fee paid by Peter Pan. (Id.) The IVSE was “designed to help offset some of Greyhound’s costs to sell, including ticket sales commissions to agents and other third-party vendors, as well as the operation of the physical terminals in those places where Greyhound maintained terminals.” (Id. ¶ 11.) The RPAs provide for a 30-year term, and Peter Pan “has based nearly all subsequent business decisions in the region on the continued assumption and reliance that the Pool will continue in operation for at least” that period of time. (Id. ¶ 9.) All three RPAs contain choice-of-law provisions, which state: “This Agreement shall be construed and enforced in accordance with the laws of Texas.” (Dkt. No. 13, Ex. 2 ¶ 24; Ex. 3, ¶ 26; Ex. 4, ¶ 26.)

         In the mid-2000s, Peter Pan began selling print-at-home tickets for its non-Pool routes from its website. (Id. ¶ 26.) In light of the success of this selling option, Peter Pan wanted to offer tickets on pooled routes for sale on its website as well. (Id. ¶ 29.) Peter Pan wanted to ensure it would be compensated for tickets sold on its website in the same manner it was for tickets sold at its terminals and call centers. (Id. ¶ 30.) Accordingly, Peter Picknelly, Peter Pan’s Chairman and CEO, proposed to Dave Leach, Greyhound’s President and CEO, at a meeting in Springfield in June of 2008 that a sales commission payable to Peter Pan be implemented for all future online Pool ticket sales from its website. (Id.) He proposed a commission rate equal to the IVSE rate, and “Mr. Leach gladly agreed to do so and memorialized this agreement in his notes from the meeting.”[4] (Id.) In particular, handwritten “Notes for PPBL/GLI Meeting June 23/24, 2008, ” attached to Peter Pan’s opposition, state: “update commission rate to 11.7% for sale of pool tickets [through] PPBL website.” (Dkt. No. 19, Ex. 4.) Moreover, a typed copy of those notes, which has a handwritten notation at the top stating “Sent to Peter, Brian & Ted-for file, ” also includes the same language. (Dkt. No. 19, Ex. 5.) “Greyhound began paying the commission to Peter Pan for web sales as soon as Peter Pan began selling Pool tickets on its website on September 11, 2008 and paid a commission for all such sales until Greyhound unilaterally stopped in 2013.” (Compl. ¶ 31.)

         In May of 2011, the parties entered into another agreement: a Memorandum of Understanding (“MOU”). (Id. ¶ 48.) “The MOU was designed to resolve several outstanding issues between the parties relating to the operation of the Pool and the implementation of Express service on Pooled routes, including the implementation and use of capacity management within the pool.” (Id.) Instead of using the traditional first-come, first-served basis for selling bus seats, Greyhound’s Express service allowed customers to reserve seats. (Id. ¶¶ 49-51.) This “capacity management system” required tracking in real-time all the tickets sold by Greyhound and Peter Pan, so Greyhound would know exactly which seats had been sold at any given moment. (Id. ¶ 56.) “Unfortunately, due to limitations with Greyhound’s software system (TRIPS), it was unable to communicate with Peter Pan’s website and ticketing software.” (Id. ¶ 57.) Greyhound therefore requested that Peter Pan convert its website to operate on the Greyhound software system. (Id.) In the interim, Greyhound proposed that Peter Pan’s customers be redirected to Greyhound’s website for purchase of pooled tickets. (Id.) Peter Pan, however, was concerned that redirecting its customers to Greyhound’s website would deprive Peter Pan of its web sales commissions. (Id. ¶ 59.) Greyhound also claimed it could not track the sales that would have been made on Peter Pan’s website. (Id.) The parties thus agreed that Greyhound would pay Peter Pan a commission on web sales at a fixed rate of 12.7948% based on the assumption that the division of web sales would remain the same as it had in the previous six months. (Id. ¶ 60.) Essentially, the parties were estimating, for purposes of allocating commissions, the web sales that would have occurred through Peter Pan’s website until the software allowed the commissions to be based on the actual sales. (Id. ¶ 61.) The MOU provided that Greyhound would pay web commissions to Peter Pan at the 12.7948% rate “for up to a year, or until Greyhound provides Peter Pan with the capability to do so on their website, whichever is sooner.” (Dkt. No. 13, Ex. 5 ¶ 3.) The MOU also stated: “This MOU shall be governed by and construed in accordance with the laws of the State of Texas.” (Id. ¶ 12.) “Greyhound began making web commission payments under the MOU to Peter Pan in June 2011 and continued to make payment of the web commissions until February 2013.” (Compl. ¶ 62 (emphasis added).)

         The parties experienced significant technical difficulties in trying to integrate their computer systems. (Id. ¶ 86.) On April 3, 2012, the parties executed a Web Services Agreement (“WSA”) that “provided more detail regarding the services to be provided by Greyhound and the commissions to be paid to Peter Pan.” (Id. ¶ 87.) The WSA “provided that, once Peter Pan was able to sell tickets through TRIPS via Greyhound’s software, Greyhound would pay Peter Pan a commission on the resulting web sales, less expenses owed by Peter Pan to Greyhound.” (Id. ¶ 88.) The commission rate set out in the WSA “was approximately 12.7%-exactly the same as the existing IVSE rate at the time the [WSA] was negotiated.” (Id. ¶ 89.) The WSA provided that “the commissions . . . shall be applicable only for the first six months of the Initial Term of the Agreement commencing on the Effective Date. The Parties agree to negotiate in good faith the commissions to be paid by [Peter Pan] for the remainder of the Initial Term.’” (Dkt. No. 13, Ex. 6 ¶ 6.) The WSA also stated:

This Agreement and the exhibits annexed hereto together constitute the entire agreement and understanding of the Parties concerning the GLI Web Services and supersede all prior or contemporaneous proposals or agreements, oral or written, and all other prior or contemporaneous communications between the Parties regarding the subject matter of this Agreement. This Agreement may only be amended or modified in writing signed by both Parties.

(Id. ¶ 10.8.) In addition, the WSA stated: “This Agreement will be governed by the laws of the State of Texas without regard to conflict of laws principles or any other principles that would result in the application of a different body of law and all disputes regarding the Agreement shall be brought in Dallas County, Texas.” (Id. ¶ 10.4.)

         The parties attempted to launch (or, more accurately, launched and took down) the new Peter Pan web site (with the Greyhound-compatible software) on a number of occasions from June of 2012 through March of 2013. (Compl. ¶¶ 91-95.) In light of this difficulty, Peter Pan began investigating the possibility of switching to a third-party vendor for processing web sales. (Id. ¶ 97.) Greyhound, however, gave a presentation in April of 2013 in which it stated that Peter Pan would still receive a web commission if it continued to operate under the WSA, but it would not receive a commission for web sales if it switched to the third-party vendor. (Id. ¶ 101.) “Based on this information, and the ongoing promise of web commissions, Peter Pan elected not to leave Web Services for [the third-party vendor] following the April 2013 meeting.” (Id. ¶ 102.)

         In February of 2013, however, Greyhound “unilaterally stopped paying web commissions to Peter Pan under the Web Services Agreement.” (Id. ¶ 103 (emphasis added).) This discontinuation of web commissions “only became known to Peter Pan when the February Pool settlement statements were produced by Greyhound after the April 2013 meeting.” (Id.) Thereafter, Greyhound “further refused to negotiate in good faith regarding a web commission rate going forward, as required by the parties’ agreement.” (Id. ΒΆ 104.) ...


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