number to Accu-Weather, holding that AMEX and Weather Channel have engaged in unfair competition against Accu-Weather and enjoining such unfair competition, holding that Weather Channel tortiously interfered with Accu-Weather's contract rights under the Agreement, and scheduling a hearing to determine that amount of any additional damages suffered by Accu-Weather.
For the following reasons, AMEX's motion is granted in part and denied in part, and Accu-Weather's motion is denied.
Accu-Weather is a Pennsylvania corporation with offices located in State College, Pennsylvania. AMEX is a New York corporation with an office in New York City. Weather Channel is a Virginia corporation with offices located in Atlanta, Georgia.
AMEX filed a complaint for a declaratory judgment in this Court on September 25, 1991. In February 1992, Accu-Weather filed an answer and counterclaims, naming Weather Channel as an additional defendant on the counterclaims. Accu-Weather also filed an action against AMEX and Weather Channel in the Court of Common Pleas in Centre County, Pennsylvania.
AMEX removed the Pennsylvania action to the United States District Court for the Middle District of Pennsylvania, and then moved to transfer it to the Southern District of New York. The District Court for the Middle District of Pennsylvania granted AMEX's motion, and the Pennsylvania action, 92 Civ. 705, is now pending in this court, where it has been consolidated with the instant action, 91 Civ. 6485.
The Present motions were heard on December 21, 1993, and were considered fully submitted as of that date.
This dispute involves the ownership and operation of an audiotext information service
(the "Audiotext Service") associated with the mark 1-900-WEATHER. Sometime in 1988, AMEX and Accu-Weather began meetings related to the formation of the Audiotext Service, which meetings eventually resulted in the signing of the Agreement, dated February 28, 1989.
In October 1988, AMEX contacted AT&T to request the telephone number 1-900-932-8437, which corresponds to 1-900-WEATHER. However, "900" numbers are assigned to various telephone carriers, such as AT&T, by a central clearinghouse. AMEX was unable to have the number 1-900-WEATHER assigned to it by AT&T until AT&T itself was assigned the block of numbers beginning with "932," which did not take place until June of 1989.
The Audiotext Service, described in the Agreement, worked in the following way. A caller to 1-900-WEATHER would hear the introductory statement: "Welcome to 1-900-WEATHER brought to you by American Express." The caller would then be given the option of hearing weather information for a particular city by pressing the area code in which the city is located (for U.S. cities) or the first three letters of the city's name (for foreign cities). The caller would then hear current time and weather conditions for that city, plus "the Accu-Weather forecast" for the city. The caller could, during the same telephone call, also access travel information for different cities, such as visa requirements and currency restrictions.
The caller was charged a set fee per minute for the call, which appeared on the caller's telephone bill. The service was available to the general public, not just to AMEX card members or purchasers of AMEX Travelers Cheques.
The travel information available on the Audiotext Service was supplied by AMEX. Pursuant to the Agreement, the weather information was supplied by Accu-Weather in computer code on an hourly basis from its computers in State College, Pennsylvania, to the AMEX computers in the AMEX Travelers Cheque Operations Center in Salt Lake City. Accu-Weather developed computer programs that would take its weather information and convert it into coded formats in such a way that weather-related phrases, such as "sunny day," would correspond to a specific code number.
The AMEX computers in Salt Lake City contained software that enabled the computer to answer incoming telephone calls with pre-recorded introductory remarks, to give initial instructions, and to respond to instructions from the customer entered on the customer's touch tone key pad by providing the appropriate pre-recorded response. The AMEX software also enabled the computer to convert into spoken words the coded weather information arriving from Accu-Weather's computer or travel information for different countries and cities supplied by AMEX. The call ended with the statement "thank you for calling 1-900-WEATHER, and remember to take along American Express Travelers Cheques when you travel."
A "pilot" or test phase of the Audiotext Service was conducted in the Chicago area in March of 1989 using the mark WORLDWIDE WEATHER LINE. The Audiotext Service was launched on a national basis in August of 1989 once the 1-900-WEATHER telephone number had been obtained.
Each month, American Express received a report from AT&T stating how many calls were placed to that number, giving the duration of the calls, the amount charged by AT&T to callers for those calls, and other information. With these statements, AT&T remitted to AMEX the amount charged to customers for these calls, less AT&T's own charges, taxes, and certain other deductions.
Pursuant to the terms of the Agreement, AMEX paid Accu-Weather a monthly fee for providing weather information and forecasts. This monthly fee would increase above a minimum amount if call volume exceeded a specified level.
AMEX employees operated its computers in Salt Lake City and administered the Audiotext Service from the headquarters of the American Express Travelers Cheque Group in New York City. AMEX addressed complaints from the public about the service, and selected, retained, and paid the professional announcer who made the recordings heard on the audiotext service.
AMEX was responsible for advertising and promoting the Audiotext Service. Both AMEX and Accu-Weather were referenced in the advertising, although references to both of these entities did not appear on all advertising.
AMEX was not pleased with the profitability of the audiotext service. In 1991, representatives of AMEX met with representatives of Weather Channel, which operates an audiotext weather service under the service mark THE WEATHER CHANNEL CONNECTION.
Weather Channel expressed an interest in obtaining the rights to the telephone number 1-900-932-8437 and the mark 1-900-WEATHER, as well as certain assets of the service. In September of 1991, AMEX concluded an agreement with Weather Channel, and on the same date, sent Accu-Weather a Notice of Termination, purportedly in compliance with P 27 of the Agreement. AMEX notified AT&T to transfer the number 1-900-932-8437 to Weather Channel's service bureau, and at some point informed Accu-Weather that it would no longer accept information "feeds" from the Accu-Weather computers.
Under its agreement with AMEX, Weather Channel pays AMEX in installments for the assets assigned to it. These installment payments can, pursuant to the contract, increase above a minimum level if the call volume to THE WEATHER CHANNEL CONNECTION exceeds a certain amount, but they cannot exceed a maximum amount. Payments to AMEX will continue until December 11, 1995.
Accu-Weather's claim to ownership of the mark 1-900-WEATHER is based on P 9 of the Agreement, which provides that:
All rights, title and interest in the weather information or products, and the ACCU-WEATHER trade name, or any other trade names, trademarks, symbols or identifiers used under this Agreement to designate the service furnished by ACCU-WEATHER, or in relationship thereto, or any instrument, device or formats used in connection with or in relation to the ACCU-WEATHER service, or any identifier embodying the prefix "ACCU," shall exclusively vest in ACCU-WEATHER.
Paragraph P 27(C) of the Agreement, under which AMEX purported to terminate the Agreement, provides that:
AMERICAN EXPRESS shall have the right, upon fifteen (15) days prior written notice to ACCU-WEATHER, to terminate this Agreement at any time after one (1) year from commencement of the Nationwide Phase of the Audiotex [sic] Service, provided that AMERICAN EXPRESS discontinues the Audiotex [sic] Service at least for the duration of the unexpired portion of the initial term or the renewal term of this Agreement in effect at the time the agreement was terminated under this provision.
Accu-Weather's first and second claims allege of breach of contract and assert that AMEX failed to terminate the Agreement properly because the 1-900-WEATHER service is allegedly beinq continued by Weather Channel, that the continued use of the Audiotext Service is occurring without the identification of Accu-Weather, that AMEX has discontinued accepting weather information from Accu-Weather, and that Accu-Weather is entitled to at least the minimum monthly payments due under the Agreement until July 31, 1993, and that AMEX has failed to provide an accounting to Accu-Weather.
Accu-Weather's third and fourth claims, entitled Breach of Contract and Trademark Infringement respectively, allege that, pursuant to P 9 of the Agreement, Accu-Weather owns the trademark, trade name, symbol, identifier, and device 1-900-WEATHER.
Accu-Weather's fifth claim asserts that the activities alleged with respect to the previous claims constituted unfair competition. Count Six alleges that Weather Channel's activities constitute tortious interference with the Agreement.
Standards Applicable to a Motion for Summary Judgment
A motion for summary judgment may be granted only when there is no genuine issue of material fact remaining for trial and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Silver v. City Univ., 947 F.2d 1021, 1022 (2d Cir. 1991). The moving party bears the burden of proving that no genuine issue of material fact exists. Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988); Pittston Warehouse Corp. v. American Motorists Ins. Co., 715 F. Supp. 1221, 1224 (S.D.N.Y. 1989), aff'd, 954 F.2d 62 (2d Cir. 1992).
The Second Circuit has repeatedly noted that "as a general rule, all ambiguities and inferences to be drawn from the underlying facts should be resolved in favor of the party opposing the motion, and all doubts as to the existence of a genuine issue for trial should be resolved against the moving party." Brady, 863 F.2d at 210; see also Cartier v. Lussier, 955 F.2d 841, 845 (2d Cir. 1992); Burtnieks v. City of New York, 716 F.2d 982, 983-84 (2d Cir. 1983); Swan Brewery Co. v. United States Trust Co., 832 F. Supp. 714, 717 (S.D.N.Y. 1993).
When the provisions of a contract are susceptible to conflicting constructions and when there is relevant extrinsic evidence of the parties' actual intent, the meaning of the contract is an issue of fact barring summary judgment. Williams & Sons Erectors, Inc. v. South Carolina Steel Corp., 983 F.2d 1176, 1183 (2d Cir. 1993); Seiden Assoc., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992); Thompson v. Gjivoje, 896 F.2d 716, 721 (2d Cir. 1990) ("Where contractual language is ambiguous and subject to varying reasonable interpretations, intent becomes an issue of fact and summary judgment is inappropriate."); Eskimo Pie Corp. v. Whitelawn Dairies, Inc., 284 F. Supp. 987, 993 (S.D.N.Y. 1968) ("The letter killeth but the spirit giveth life.") (quoting 2 Cor. 3:6).
However, if a contract is unambiguous, its proper interpretation is a question of law that may be resolved by the Court on summary judgment. Seiden, 959 F.2d at 429; In re Gas Reclamation, Inc. Sec. Litig., 741 F. Supp. 1094, 1097 (S.D.N.Y. 1990); Seven Star Shoe Co. v. Strictly Goodies, Inc., 657 F. Supp. 917 (S.D.N.Y. 1987); Leslie Fay, Inc. v. Rich, 478 F. Supp. 1109, 1113 (S.D.N.Y. 1979).
"The court should not find the language [of a contract] ambiguous on the basis of the interpretation urged by one party, where that interpretation would 'strain the contract language beyond its reasonable and ordinary meaning.'" Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990) (quoting Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 459, 161 N.Y.S.2d 90, 141 N.E.2d 590 (1957)); see also Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d 293, 306 (2d Cir. 1987) ("Courts may not create an ambiguity where none exists."), cert. denied, 484 U.S. 1042, 98 L. Ed. 2d 860, 108 S. Ct. 774 (1988). Extrinsic evidence as to the subjective intent of the parties is not admissible where a contract is unambiguous. Eskimo Pie Corp., 284 F. Supp. at 993.
The preliminary question of whether a contract is unambiguous is a question of law that must be resolved by the Court before determining whether summary judgment is appropriate. Seiden Assoc., 959 F.2d at 429. A contract term is ambiguous when, viewed objectively, more than one meaning may reasonably be ascribed to the language used. Thompson, 896 F.2d at 721. In determining whether a contract term is ambiguous, the term must be place in "the context of the entire integrated agreement." Garza v. Marine Transp. Lines, Inc., 861 F.2d 23, 27 (2d Cir. 1988). A court should "interpret a contract in a way that ascribes meaning, if possible, to all of its terms." United States Naval Inst. v. Charter Comm., Inc., 875 F.2d 1044, 1049 (2d Cir. 1989).
Ownership of the 1-900-WEATHER Mark
ACCU-WEATHER claims that 1-900-WEATHER is "used under the Agreement to designate the service furnished by ACCU-WEATHER, or in relationship thereto," or is an "instrument, device or format used in connection with or in relation to the ACCU-WEATHER service" within the terms of P 9.
The first page of the Agreement states that,
WHEREAS, ACCU-WEATHER operates a professional weather service and maintains a staff of meteorologists trained, experienced, and skilled in the forecasting and prediction of weather and the processing of weather information and data; and
WHEREAS, AMERICAN EXPRESS desires to implement an interactive telephone call-in service that will provide its customers with weather reports, information and forecasts prepared under the supervision of professional meteorologists; and