Wednesday, July 16, 2008
Court: UCC Inapplicable to Contracts for Placement of Advertising
By SHERRI M. OKAMOTO, Staff Writer
An agreement obligating a marketer to place newspaper subscription advertisements on its marketing partners’ websites and then relay the information to the newspaper was a contract for the provision of services, this district’s Court of Appeal has held.
Affirming Los Angeles Superior Court Judge James R. Dunn’s grant of summary judgment in favor of the New York Times Company in a breach of contract action the marketer brought after the Times terminated the agreement, Div. Four ruled in an opinion ordered published yesterday that the transmission of information from external sources did not constitute a “good” to which California’s version of the Uniform Commercial Code would apply.
The Times entered into an Internet marketing agreement with Click2Boost Inc. in 2002 to solicit subscribers for home delivery of the newspaper by means of “pop up ads” at certain Internet websites.
Under the agreement, the newspaper was required to pay Click2Boost a fee or commission for each home delivery subscription the marketer submitted, and the paper did, in fact, pay more than $1.5 million in subscription submission fees until terminating the agreement in September 2003.
Click2Boost’s assignee filed a breach of contract claim against the Times, which the newspaper answered with its own cross complaint for breach, and Dunn granted the Times’ motion and entered judgment in its favor. He also awarded $1,430,754.50 in attorney fees.
On appeal, Justice Nora M. Manella explained that the UCC applies to contracts only for the sale of “goods,” the sale of which the advertising placement contracts did not involve.
Instead, Manella reasoned, Click2Boost had agreed to provide a service, because the marketer had promised to transmit information, as opposed to selling the newspaper the names and addresses of persons from whom subscriptions could be solicited.
Noting that Click2Boost lacked records of the sources of the information it had forwarded to the newspaper, and refused to reveal the identities of its marketing alliance partners, Manella wrote that Click2Boost’s assignee had neither raised a triable issue of fact as to whether the marketer had obtained customer information in accordance with the agreement, nor could it reasonably obtain the evidence it would need to do so.
She further concluded that belatedly identified deposition testimony could not be considered on that issue, and opined that the fee award was proper.
Presiding Justice Norman L. Epstein and Thomas L. Willhite Jr. joined Manella in her opinion.
The case is Wall Street Network, Ltd. v. New York Times Company, B193251.
Copyright 2008, Metropolitan News Company