CruiseCompete, LLC v. Smolinski & Associates, Inc.

859 F. Supp. 2d 999, 2012 WL 1609241, 2012 U.S. Dist. LEXIS 64757
CourtDistrict Court, S.D. Iowa
DecidedMay 9, 2012
DocketNo. 4:11-cv-490
StatusPublished
Cited by5 cases

This text of 859 F. Supp. 2d 999 (CruiseCompete, LLC v. Smolinski & Associates, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CruiseCompete, LLC v. Smolinski & Associates, Inc., 859 F. Supp. 2d 999, 2012 WL 1609241, 2012 U.S. Dist. LEXIS 64757 (S.D. Iowa 2012).

Opinion

ORDER

ROBERT W. PRATT, District Judge.

Before the Court is a “Motion to Dismiss, Stay, or Transfer to the U.S. District Court for the Southern District of Florida,” filed January 10, 2012 by Smolinski & Associates Inc. d/b/a Palm Coast Travel [1003]*1003(“S & A”)1 and Lee Smolinski (“Smolinski”) (collectively “Defendants”). Clerk’s No. 24. CruiseCompete, LLC (“Plaintiff’) filed a resistance to the Motion on January 23, 2012. Clerk’s No. 30. Defendants filed a Reply on January 31, 2012. Clerk’s No. 35. Defendants filed a Supplemental Reply on February 7, 2012.2 Clerk’s No. 41. Plaintiff filed a Surreply on February 7, 2012.3 Clerk’s No. 42. The Court held a hearing on the pending motion on March 14, 2012. Clerk’s No. 50. The matter is fully submitted.4

I. FACTUAL BACKGROUND5

Plaintiff was founded on March 28, 2003 by Bob Levinstein (“Levinstein”), Eric Bu-sick (“Busick”), and Heidi Allison-Shane (“Allison-Shane”).6 Am. Compl. ¶ 14. On September 15, 2003, Plaintiff launched a website called CruiseCompete.com, which was designed to allow consumers looking for a cruise to identify a cruise they are interested in and receive competing quotes from travel agents. Id. ¶ 16. The website is designed so that travel agencies cannot directly contact consumers; rather, consumers receive a travel agency’s contact information along with its cruise quote, and the consumer can then contact the travel agency directly if she wishes to book a cruise pursuant to the quote offered. Id. ¶ 18-19. Consumers pay nothing to use the CruiseCompete.com website. Id. ¶ 21. Instead, Plaintiffs revenues are derived from advertising and from revenue shares from actual cruise bookings paid to Plaintiffs “member-agencies.”

A travel agency wishing to offer quotes to consumers through CruiseCompete.com. must first become a “member-agency” by executing the CruiseCompete Membership Agreement (“Membership Agreement”).7 Id. ¶ 20. The Membership Agreement requires that for “every cruise or cabin sold as a result of any lead generated by Agency’s use of the CruiseCompete system, Agency’s [sic] will pay CruiseCompete a revenue share equal to two percent (2.0%) of the gross commissionable amount of the cruise regardless of discounts [offered] to customer.”8 Id. ¶ 23; id. Ex. 2 at 1. The [1004]*1004Membership Agreement farther requires a prospective member-agency to certify that it has read and agrees to be bound by certain “Terms and Conditions” posted as of the date of the Agreement.9 Id. Ex. 2 at 1. These Terms and Conditions require member-agencies to honestly self-report all cruise bookings facilitated by Cruise-Compete.com through the member-agency’s account so that revenue sharing can be properly calculated. Id. ¶ 33. Consumers also have an option of reporting a booking with a particular travel agency. Id. ¶ 37. If a consumer reports a booking that has not been reported by the travel agency, the booking appears in the travel agency’s account as a “user-reported booking.” Id. The travel agency can then confirm or dispute the booking. Id. Cruise-Compete.com scores member-agencies on the accuracy of their self-reporting and reserves the right to suspend member-agents’ accounts or increase revenue shares owed to Plaintiff in the event that bookings are significantly underreported. Id. at 40. In particular, the Terms and Conditions provide that, “[i]f CruiseCompete discovers a booking has been made by Agency, and this booking was not reported to CruiseCompete by Agency by the sail date of the cruise, then Agency agrees that the Revenue Share payable to CruiseCompete shall be fifteen percent (15%) of the Gross Commissionable Amount for that cruise.” Id. Ex. 3 at 3.

To submit a quote request, a consumer using the CruiseCompete.com website must affirmatively agree that she is “not a cruise travel agent or cruise travel industry employee or doing research on their behalf’ and that she “will not forward quotes [she] receivefs] to other travel agents.” Id. ¶ 26. The CruiseCompete.com website, however, also provides a mechanism whereby travel industry personnel can submit quote requests. To submit such a quote request, “cruise travel agents and cruise travel industry employees” must check a box agreeing that, “[b]y submitting a request to this system you give your legal consent to all terms and conditions for cruise travel industry personnel to use this service for research purposes.” Id. ¶ 27. The phrase “terms and conditions” is hyperlinked to the terms and conditions governing “research requests,” i.e., quote requests submitted by travel industry personnel, and provides that for each such research request, the “person or organization which controls the e-mail account through which the request was submitted shall be separately and jointly liable to pay $10,000 per quote request submitted.” Id. ¶ 30.

According to the Amended Complaint, Smolinski contacted Plaintiff via email on November 6, 2003 and requested information on becoming a member-agency of CruiseCompete.com. Id. ¶ 41. Levinstein called Smolinski from Iowa to discuss the matter, and on April 7, 2004, Smolinski’s travel agency, S & A, operating under the alias SmartCruiser.com (“SmartCruiser”), joined CruiseCompete.com by faxing the Membership Agreement to Levinstein in Iowa via fax. Id. ¶¶ 3, 43-44. On April 30, 2008, Plaintiff and SmartCruiser entered into an Agency Membership Renewal Agreement (“AMRA”), containing the [1005]*1005same relevant terms as the original Membership Agreement, which was also transmitted by Smolinski to Levinstein in Iowa via fax. Id. ¶¶ 45-46. Smolinski personally signed the AMRA, listing his title as CEO of SmartCruiser. Id. ¶ 48.

During SmartCruiser’s first four years as a CruiseCompete.com member-agency, its use of the system was only “occasional.” Id. ¶ 53. SmartCruiser’s booking volume picked up significantly, however, in approximately March 2008. Id. During the time it was a member of CruiseCompete.com, SmartCruiser gave 177,272 quotes to consumers, reported 2,369 bookings, and reported gross commissionable cruise revenue of $4,675,607.70, with the majority of this activity occurring between March 2008 and December 2009. Id. ¶ 54-55. From approximately May 2008 to December 2009, however, Plaintiff repeatedly provided email notices to SmartCruiser that it was in breach of its reporting obligations. Id. ¶ 55. While SmartCruiser would occasionally make efforts to improve its reporting accuracy, it eventually stopped responding to Plaintiffs demands to cure the breach and stopped using the CruiseCompete.com website to offer quotes to consumers. Id. Plaintiff contends that from March to May 2009, SmartCruiser failed to report eighteen bookings, even after being sent notice and an opportunity to cure, and that Smart-Cruiser thus owes Plaintiff 15% of the gross commissionable revenue from those bookings, pursuant to the penalty Terms and Conditions of the AMRA. Id.

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859 F. Supp. 2d 999, 2012 WL 1609241, 2012 U.S. Dist. LEXIS 64757, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cruisecompete-llc-v-smolinski-associates-inc-iasd-2012.