ShopperTrak RCT Corporation v. Barnes & Noble, Inc.

Background

ShopperTrak RCT Corporation sued Barnes & Noble, Inc. for breach of contract. The parties entered a 2008 agreement under which Barnes & Noble purchased ShopperTrak’s Orbit devices, which track people entering and leaving stores, and Systems Management Services for collecting data from and maintaining those devices.

The parties later amended the agreement. Addendum No. 2 stated that the agreement’s initial term would continue through October 31, 2019, followed by automatic one-year renewals unless either party gave timely written notice of nonrenewal. Addendum No. 3 extended the initial term through December 31, 2020 and accompanied the installation of the system at all Barnes & Noble stores.

On October 18, 2019, Barnes & Noble’s Chief Information Officer emailed ShopperTrak that a change in Barnes & Noble control meant the company would no longer use ShopperTrak’s products or services. Barnes & Noble later deactivated the Orbit devices and stated that it would no longer be contractually liable for monthly service fees. ShopperTrak alleged that it continued providing the contracted services as far as possible and continued sending invoices. It alleged that Barnes & Noble paid none of those invoices, which totaled more than $600,000 by the end of the initial term.

Legal Standard

The court applied the standard for a motion to dismiss under which the complaint must contain enough factual matter to state a plausible claim for relief. At this stage, the court accepted the complaint’s factual allegations as true and drew reasonable inferences in ShopperTrak’s favor.

Analysis

Specific contract provision. Barnes & Noble argued that ShopperTrak had not identified the specific contract term that Barnes & Noble allegedly breached. The court disagreed. ShopperTrak cited Section 3(b), which states that payments are due as provided in the Statement of Work or, if the Statement of Work does not provide otherwise, within 30 days after receipt of an invoice. The court held that this citation was specific enough for the claim to survive dismissal.

Whether the agreement had a fixed term. Barnes & Noble argued that the automatic-renewal language made the agreement indefinite and terminable at will, meaning either party could end it without the alleged contractual restrictions. The court concluded that the agreement was not indefinite and was not terminable at will because it automatically renewed while giving both parties an optional right to terminate under specified conditions.

Payment obligation. Barnes & Noble argued that the agreement did not require it to purchase SMS subscriptions for the agreement’s entire term. The court noted that the agreement required Barnes & Noble to purchase SMS/Data Services for the term provided in the Statement of Work, while the Statement of Work did not specify a term. The court nevertheless found that the agreement’s original language established a minimum service term and that Addendum No. 2 appeared to extend that term. On the allegations before the court, it could not conclude that Barnes & Noble had no obligation to pay for SMS during the agreement’s term.

Damages. Barnes & Noble argued that ShopperTrak had not alleged damages caused by the breach, had not pleaded damages in the operative complaint, and suffered no damages because Barnes & Noble deactivated the devices. The court rejected those arguments. It held that ShopperTrak adequately alleged damages because it claimed that Barnes & Noble refused to pay invoices that were due under Section 3(b). The court also stated that it was unclear how deactivation of the devices affected ShopperTrak’s damages claim.

Disposition

Judge Oetken denied Barnes & Noble’s motion to dismiss. The court did not determine the ultimate amount owed or finally resolve the parties’ factual disputes. Barnes & Noble was ordered to file an answer to the operative complaint within 21 days after the opinion and order. The Clerk of Court was directed to close the motions at Docket Numbers 12 and 21.