Opinion
Case No. 1:96CV0066K
September 25, 2003
FINDINGS OF FACT AND CONCLUSIONS OF LAW AND ORDER
This matter is before the court on (1) Plaintiffs' Motion to Enforce Settlement Agreement; (2) Comdata's Motion to Dismiss and Enjoin Further Pursuit of This Matter in Violation of the Applicable Arbitration Provision; and (3) Comdata's Motion for Summary Judgment, or, in the Alternative, Summary Denial of Plaintiffs' Motion to Enforce; (4) Comdata's Motion to Enforce Protective Order; and (5) Flying J's Motion to Compel Documents. On August 13, 2003, the court held an evidentiary hearing on Plaintiffs' Motion to Enforce Settlement and heard oral argument on all the other motions. At the hearing, the Flying J Plaintiffs were represented by Gregory J. Kerwin and Casey K. McGarvey, and Comdata was represented by J. Gordon Cooney and John Bogart. The court, having heard the testimony of witnesses, reviewed the evidence, and considered the arguments of counsel, and being fully advised now makes and enters its Findings of Fact and Conclusions of Law and Order.
At the hearing on this matter, Comdata withdrew its Motion to Dismiss and Enjoin Further Pursuit of This Matter in Violation of the Applicable Arbitration Provision
I. FLYING J PLAINTIFFS' MOTION TO ENFORCE SETTLEMENT AGREEMENT AND COMDATA'S MOTION FOR SUMMARY JUDGMENT, OR, IN THE ALTERNATIVE, SUMMARY DENIAL OF PLAINTIFFS' MOTION TO ENFORCE
The court grants Flying J Plaintiffs' Motion To Enforce May 2001 Settlement Agreement and denies Comdata's "Motion for Summary Judgment, or, in the Alternative, Summary Denial of Plaintiffs' Motion to Enforce" based on the Findings of Fact and Conclusions of Law set forth below.
FINDINGS OF FACT A. The Parties' May 2001 Settlement Agreement I. The parties entered into a Settlement Agreement and Release ("Settlement Agreement") in May 2001 by which they settled Plaintiffs' antitrust and tort claims that were set forth in a Fifth Amended Complaint filed with this court on March 13, 2001. Plaintiffs' claims included claims for monopolization and attempted monopolization under Section 2 of the Sherman Act for two product markets described in Paragraph 15 of the Complaint as the Trucker Fuel Card Market and POS Systems Market. The allegations concerning the Trucker Fuel Card Market concerned alleged monopolization and attempted monopolization by the Comdata trucker fuel card. The allegations concerning the POS Systems Market concerned alleged monopolization and attempted monopolization through Comdata's Trendar POS device located in U.S. truck stops.
Based on the findings discussed below, the court concludes that Comdata has failed to demonstrate that there is no genuine issue as to any material fact, and thus, Comdata is not entitled to summary judgment.
2. At the time of the May 2001 settlement, the court had scheduled a jury trial on the claims in this case to begin in June 2001.
3. Under the terms of the May 2001 Settlement Agreement, Comdata agreed to pay $49 million to Plaintiffs for alleged past harm, and also agreed to enter into two license agreements, which the parties called the Trendar License and Comdata License. The current dispute concerns Comdata's obligations under the Trendar License dated as of May 21, 2001.
4. In these findings, the court refers to the TCH "proprietary" card as a trucker fuel card issued by TCH to trucking companies and their drivers that affords cardholders features including data capture and purchase controls. When the data capture feature of the fuel card is activated and capable of being used at a particular point-of-sale device-like the Trendar device-that is programmed to allow it to fully function, the truck driver must enter certain data at the time he or she purchases fuel at a truck stop (e.g., such data as driver identification, odometer for the truck and trailer, etc.). Those data are relayed almost instantaneously by the truck stop point-of-sale system through TCH back to the driver's trucking company and assist that company in tracking the driver's movement and activities. When the purchase control feature is similarly activated, the trucking company enforces, through the TCH fuel card, restrictions concerning the type and quantity of goods and services that the truck driver can purchase using the fuel card. Thus, when purchase controls are functioning, the fuel card might permit the driver to purchase 150 gallons of diesel fuel each day and motor oil, but block use of the card to pay for a truck stereo or alcoholic beverages, depending on the trucking company's preferences for drivers' use of their TCH fuel cards.
5. The court refers in these findings to the "TCH MasterCard Fleet Card" as a type of TCH proprietary card that bears a MasterCard logo, whose transactions can be processed as both a TCH proprietary card (with data capture and purchase control functionality), and a MasterCard (with no data capture or purchase control functionality when processed solely through MasterCard's I-Net system).
6. Merchants who agree to accept MasterCard as a method of payment agree to "honor all" MasterCards so that a merchant who honors one type of MasterCard should honor all types of MasterCard. Hearing Exh. H: Hennessey Depo. at p. 8 In. 11-23 (January 17, 2003).
7. Based on the uncontroverted testimony of J. Phillip Adams, the court finds that the Trendar License represented an important part of the consideration that Plaintiffs reasonably expected to receive under the Settlement Agreement. See, e.g., Adams Decl. ¶¶ 13-14. According to Mr. Adams, Plaintiffs intended that the Trendar License would allow TCH to have: a) TCH proprietary card transactions cleared directly through TCH over Trendar POS terminals at truck stops that agree to accept the TCH proprietary card as a method of payment; and b) TCH MasterCard Fleet Card transactions cleared directly through TCH, as opposed to the MasterCard I-Net network, at truck stops that have Trendar terminals and do not accept the TCH proprietary card as a method of payment but do accept MasterCard as method of payment. Adams Decl. ¶¶ 21-24. Mr. Adams intended for the TCH MasterCard to be processed in a manner similar to the Comdata MasterCard Fleet Card at truck stops with the Trendar device. Adams Decl. ¶¶ 18-21. Mr. Adams saw such processing of the TCH MasterCard as a way for TCH customers to use their TCH MasterCard to purchase fuel at major truck stop chains like Pilot, Petro, and TA, with data capture and purchase control functionality for such transactions regardless of whether those truck stops accept other TCH proprietary cards. Adams Decl. ¶¶ 22-24. Mr. Adams sought such processing of the TCH MasterCard in light of the evidence then existing of Comdata's efforts to pressure such truck stops not to accept TCH's proprietary cards.
8. According to Mr. Adams' testimony, Plaintiffs intended that the Trendar License, including its provisions providing for direct clearing of TCH MasterCard transactions by TCH, would make it possible for TCH's card effectively to compete with Comdata's proprietary trucker fuel card, including the Comdata MasterCard Fleet Card. This would occur because, at any U.S. truck stop that accepts MasterCard and uses the Trendar point-of-sale device, the TCH MasterCard Fleet Card could be used as a method of payment and TCH could provide purchase control and data capture functionality to the TCH cardholder in connection with such transactions. That pro-competitive intent is also evident from the Trendar License's explicit incorporation by reference in Article I of the terms and conditions of the Federal Trade Commission Decision and Order dated April 5, 2000 in In re matter of Ceridian Corporation, Docket No. C-3933, which order is attached to the Trendar License and plainly was intended to restore competition to markets in which the FTC believed competition had been suppressed.
9. The language of the Trendar License, including Articles II, III, and IV, is consistent with Mr. Adams' expressions of Plaintiffs' intentions. Comdata did not present evidence at the hearing indicating that the parties did not intend to accomplish this result through the Trendar License. Mr. Sheridan participated in negotiation of the Trendar License but did not offer testimony specifically contradicting that explanation of the parties' intent. To the extent there is a contradiction in the testimony about the parties' intentions, the court finds that the language of the Trendar License, and particularly the definition of "TCH Cards" in Article I (p. 2) to include the TCH MasterCard products, is consistent with Mr. Adams' expressions of those intentions. Ms. Graybill admitted on cross-examination that she was not involved in negotiation of the Trendar License. Therefore she is not in a position to testify about Comdata's intention with respect to the Trendar License's provisions at the time it was negotiated. The parties have differed in how to implement this aspect of the Trendar License. Those differences are discussed below.
10. The testimony from Mr. Adams established that processing a TCH MasterCard Fleet Card solely through the MasterCard I-Net network does not allow the TCH cardholder to receive the benefits of purchase controls and data capture that the cardholder would receive when the TCH MasterCard Fleet Card is processed in the same fashion as a TCH proprietary card.
11. The court finds that enforcing the Trendar License in a way that requires TCH MasterCard Fleet Card transactions to be cleared directly through TCH, as opposed to the MasterCard I-Net network, at truck stops that do not currently accept the TCH proprietary card as a method of payment but do accept MasterCard as a method of payment, is consistent with the reasonable expectations of the parties at the time they entered into their Settlement Agreement and the Trendar License in May 2001.
12. In addition, such an interpretation of the Trendar License will promote competition, which is consistent with the pro-competitive goals of the Sherman Act. Allowing the TCH MasterCard Fleet Card to be processed in this fashion will expand the number of truck stops where TCH trucker fuel cards can be used by truck drivers with data capture and purchase control functionality and create a network of card acceptance that encompasses all truck stops that use the Trendar POS device, along with other truck stops such as Flying J stops, which already accept TCH cards. That will remove one of the barriers to TCH's ability to compete on a level playing field with the Comdata trucker fuel cards in transactions offering purchase controls and data capture — the current lack of widespread acceptance at U.S. truck stops that use the Trendar POS device.
B. Compliance with MasterCard Policies, Rules, or Regulations
13. Article 4.2 of the Trendar License states (emphasis added): All TCH Card Transactions processed through the Trendar System, including without limitation TCH Cards bearing a MasterCard or Visa brand, shall be cleared directly through TCH as opposed to any third party network, such as and without limitation the MasterCard network or Visa network, to the fullest extent permitted by the policies, rules, or regulations, as amended from time to time (including their interpretations thereof) by third party network providers. The parties will use their best reasonable efforts to obtain any consents required by the third party network providers.
14. The parties agree that the language underlined above in Article 4.2 was intended to refer, in the context of cards bearing a MasterCard logo, to MasterCard's policies, rules or regulations. The parties disagree about how the underlined language should be interpreted. The court's interpretation is discussed below in the Conclusions of Law.
15. Plaintiffs request that the court order Comdata to comply with its obligations under the Trendar License by implementing the method of processing the TCH MasterCard that is depicted in a schematic diagram referred to at the hearing as Hennessey Deposition Exhibit 5 and Hearing Exhibit B. For clarity, the court has attached a copy of that diagram "TAB Transaction Routed to Both TCH and MasterCard") to this Order.
16. Comdata complains that Plaintiffs had not provided sufficient specifications with respect to how the Trendar point-of-sale device should be programmed to allow TCH MasterCard Fleet Card transactions to be processed in accordance with the provisions of the Trendar License. But the court finds that Plaintiffs in fact did provide sufficient specifications as to how Comdata could comply with its contractual obligations, and to date more detailed specifications have not been warranted in light of Comdata's reaction to Plaintiffs' proposals, including the method suggested by Hennessey Deposition Exh. 5/Hearing Exh. B attached hereto.
17. The undisputed evidence establishes that the method of processing TCH MasterCard transactions using the Trendar device depicted on Hennessey Deposition Exhibit 5/Hearing Exh. B does not violate MasterCard policies, rules, or regulations. The MasterCard corporate representative at the Rule 30(b)(6) deposition, Joan Hennessey, confirmed this at her deposition:
Q. Would the processing of Transportation Alliance Bank transactions — Transportation Alliance Bank is the issuer bank in connection with the TCH MasterCard — would the processing of Transportation Alliance Bank transactions violate MasterCard policies, rules or regulations if the transaction were handled in the manner described in Exhibit 5?
A. This would not violate our rules, nor would our rules require this. Our rules address the MasterCard transaction which occurs in the bottom four [boxes on Exh. 5]. This arrangement is outside of the MasterCard transaction and so it would be outside of our rules. This is what our rules would address here or this would be the MasterCard transaction (indicating [bottom four boxes on Exh. 5]).
The MasterCard transaction is what's occurring in the bottom four squares here from the point of sale to the issuer and back. What's occurring on the top from the Trendar to the Comdata to TCH is — is not against — it does not violate our rules and our rules do not require that. That is a private arrangement through the Trendar Comdata TCH arrangement that would have to be addressed in those contractual arrangements and the contracts that govern those, not our rules. So, again, our rules don't require it and that is a separate contractual relationship.
Hearing Exh. H: Hennessey Deposition at p. 67 In. 5 to 68 In. 3 p. 69 In. 3 — 18 (January 17, 2003) (emphasis added).
18. In light of a letter from MasterCard dated August 11, 2003 (marked as Hearing Exh. E), Plaintiffs have requested that the court not rule on the alternative methods of TCH MasterCard processing that they proposed, which are depicted in Hennessey Deposition Exhibit 6 (Hearing Exh. B) and Hennessey Deposition Exhibit 7 (Hearing Exh. D). In light of that August 11, 2003 MasterCard letter (discussed below) and Plaintiffs' request, the court does not address those alternative card processing methods in this ruling.
C. Comdata's Obligations Under the Trendar License
19. The parties also disagree about the meaning of the verb "clear" in the following phrase in Article 4.2 of the Trendar License: "shall be cleared directly through TCH as opposed to any third party network." Relying on a definition of the word "clearing" from a MasterCard glossary (Defendant's Exh. 16), Comdata contends that the word "clear" should be limited to the function of financial settlement. Relying on dictionary definitions, Flying J contends that the word "clear" was intended to have its ordinary, broad meaning that in this context encompasses the concepts of authorization and approval, in addition to financial settlement.
20. The evidence indicates that the parties did not agree at the time they negotiated the Trendar License that the word "clear" would have only the narrow meaning that is used in the context of some banking transactions, including the MasterCard definition of "clearing" that Comdata tenders. Mr. Adams testified Plaintiffs intended the word "clear" in Article 4.2 of the Trendar License to encompass the TCH MasterCard functions of card authorization and approval (during which data capture occurs and purchase controls are applied), and financial settlement. Adams Decl. ¶ 30. Comdata did not offer evidence establishing that the parties agreed to use a narrow definition of the verb "clear" that only encompasses the function of financial settlement. The parties defined some terms in Article I of the Trendar License, but did not define the term "clear." They did not incorporate any definitions from a MasterCard glossary, and instead referred in Article 4.2 to "third-party network providers" including both VISA and MasterCard.
D. Comdata's "Impracticability" Argument
21. Relying on Article 3.1 of the Trendar License, Comdata has contended that implementation of the TCH MasterCard card processing method depicted on Hennessey Deposition Exh. 5/Hearing Exh. B is not feasible or commercially impracticable. The court's interpretation of Article 3.1's provisions is addressed in Paragraph 12 of the Conclusions of Law below.
22. The only evidence Comdata offered at the hearing in support of this argument is Paragraph 40 of Sharlean Graybill's Declaration, which states: "Comdata has advised TCH that, as a technical matter, the Trendar system is not constructed to support such a split transaction, and that the Trendar system could not be configured or programmed to do so within its current architecture and still preserve Trendar's method for processing transactions." See also Graybill Decl. at ¶ 39 (describing the necessary changes as a "major modification" to the Trendar system).
23. Ms. Graybill's testimony merely indicated that Comdata has "advised" TCH in the past of its contentions concerning the Trendar system. Ms. Graybill does not testify herself that such processing is in fact not feasible or commercially practicable and she provides no explanation of the factual basis for Comdata's past statements. There is nothing in the Trendar License that excuses Comdata from making, if necessary, what it calls "major modifications" or changes in architecture that do not "preserve Trendar's method for processing transactions," when making the initial changes Comdata agreed to make under Article II of the Trendar License. Such language appears only in Article 3.1 pertaining to future changes requested after the initial programming contemplated under the Trendar License, including the initial changes required to allow full functionality of the TCH MasterCard Fleet Card. See Conclusion of Law ¶ 12. Indeed, such justifications for nonperformance of the initial programming under the Trendar License could be used by Comdata to escape any programming changes by labeling them "major modifications" or changes to its method for processing transactions.
24. In contrast, Plaintiffs' witnesses explained why the proposed TCH MasterCard processing method depicted in Hennessey Deposition Exh. 5/Hearing Exh. B is feasible and can be achieved.
25. TCH's General Manager Ted Jones testified about how the Trendar POS device already is carrying out both elements of that processing method for TCH cards. The processing function shown on the upper leg of the diagram, by which TCH MasterCard transactions are to be directly authorized through TCH with data capture and purchase controls, currently occurs each time a TCH proprietary card transaction is processed through the Trendar device at truck stops that accept the TCH proprietary card. The processing function shown on the lower leg of the diagram, by which the financial settlement for TCH MasterCard transactions will take place through the regular MasterCard process, currently occurs each time a TCH MasterCard transaction is routed by the Trendar device to the MasterCard I — Net network at truck stops that do not currently accept the TCH proprietary card. Mr. Jones also explained how a traditional MasterCard transaction for a fuel purchase involves two separate communications with the MasterCard I-Net network: 1) the first communication occurs when the customer swipes the card and the I-Net network confirms the card is authorized so the fuel pump can be activated before the customer pumps the fuel; and 2) the second communication then effects financial settlement through I-Net after the customer has pumped the fuel and the final purchase price is known. Mr. Jones testified that there is no technical obstacle for Trendar to effect both the upper leg (communication with TCH) and the lower leg (communication with MasterCard's I-Net network) in a single card TCH MasterCard transaction as shown on Hennessey Deposition Exh. 5/Hearing Exh. B.
26. TCH's Manager of Information Technology, Kevin Farnsworth, also testified about the feasibility of programming Trendar to carry out the proposed TCH MasterCard processing method depicted in Hennessey Deposition Exh. 5/Hearing Exh. B. He explained that based on his knowledge of the Trendar device and experience with computer programming, there are no technical obstacles to programming Trendar to carry out that processing method. Mr. Farnsworth explained that Comdata had already made major modifications including to the Trendar "architecture" when it programmed Trendar to process TCH proprietary card transactions under the Trendar License, but Comdata stopped short of finishing that programming to allow full functionality for the TCH MasterCard Fleet Card.
27. In light of the testimony of Messrs. Jones and Farnsworth, and the lack of detailed information provided to support Ms. Graybill's contentions, the court does not find persuasive Comdata's argument that the proposed TCH MasterCard processing method depicted in Hennessey Deposition Exh. 5/Hearing Exh. B would not be feasible or would be commercially impracticable.
E. Comdata's Argument Concerning Truck Stop Consent To Direct Processing Of Certain MasterCard Transactions Through Trendar
28. Comdata contends that implementing the proposed TCH MasterCard processing method depicted in Hennessey Deposition Exh. 5/Hearing Exh. B would "defraud" truck stops who have not agreed to accept TCH proprietary card transactions. Comdata argues that it should not be required to implement that processing method except on Trendar devices located at truck stops that have explicitly agreed to allow TCH MasterCard transactions to be authorized directly through TCH.
29. The evidence from Plaintiffs' witnesses demonstrated that the only practical difference to a truck stop between having a TCH MasterCard processed through MasterCard's I-Net network, and having a TCH MasterCard processed in the manner shown in Hennessey Deposition Exh. 5/Hearing Exh. B is that the authorization for the card transaction will come directly from TCH to Trendar rather than be routed from TCH through the MasterCard I-Net network. TCH still must authorize the transaction, either directly or through I-Net. Comdata did not present evidence demonstrating that having the authorization come directly from TCH will have any material effect on a truck stop's operation. Having the card authorization come directly from TCH enables TCH to implement data capture and purchase control functionality. When a truck driver is required to enter data at the fuel pump card reader, or provide data to a cashier at a truck stop fuel desk, that process of entering data may add a slight amount of time to how long it takes to complete the TCH MasterCard transaction. Nevertheless, the court finds that truck stops expect to see truck drivers providing data to the trucker fuel card issuer as part of their fuel purchase transaction. For example, such data capture normally occurs with each purchase at a truck stop using a Comdata proprietary fuel card or Comdata MasterCard Fleet Card. Consequently, it does not appear that any "fraud" is being effected on a truck stop by having the TCH MasterCard enabled to provide the same data capture functionality as a Comdata proprietary fuel card or a Comdata MasterCard Fleet Card.
30. The court also rejects Comdata's argument that the TCH MasterCard processing method TCH proposes here will enable TCH to obtain confidential information about truck stops that it otherwise would not be entitled to see or know. As part of the ordinary operation of its business, TCH is entitled to see information about the TCH card transactions in which its customers engage. That information includes such things as: the identity of the TCH customer, the name and location of the truck stop where the TCH customer purchased fuel, the date and time of the transaction and quantity of fuel that the TCH customer purchased, and the cost and quantity of other items that the TCH customer purchased with the TCH card. Comdata has not presented any evidence that TCH would obtain information about a truck stop's fuel prices different than the information a truck stop disseminates to the public through posted fuel prices and internet postings. If in the future a trucking company asks TCH to administer, through the TCH MasterCard, fuel discounts that the trucking company negotiates with a particular truck stop chain, that trucking company effectively will be giving its consent to TCH learning about such fuel discounts and that trucking company can reach any contractual arrangements with TCH that it deems necessary to protect the confidentiality of information shared. The court finds that TCH is entitled to receive certain information relayed to it by TCH customers through the Trendar POS device relating to transactions at truck stops in which TCH fuel card customers use their TCH MasterCard to pay for fuel and other goods or services.
31. In connection with Comdata's arguments about the alleged confidentiality of data concerning TCH MasterCard transactions, the court also notes that in Comdata's own agreements with truck stop merchants, Comdata contends that it — not the truck stop — owns all the data concerning Comdata fuel card transactions. See Hearing Exh. G, ¶ 9(c) (Comdata form "Comchek Service Center Agreement").
32. Comdata also argues that truck stops should be free not to accept TCH proprietary card transactions if they do not want to accept a card issued by a company affiliated with their competitor, Flying J. Comdata, however, has not provided any evidence from truck stops themselves about their alleged right or desire not to accept TCH MasterCard card transactions processed directly through TCH.
33. The court also notes that no evidence was presented by Comdata that Plaintiffs ever have improperly used any data obtained by TCH, or that TCH ever shared any such data with Flying J.
34. Regardless, the evidence indicates that the proposed TCH MasterCard processing method reflected in Hennessey Deposition Exh. 5/Hearing Exh. B would only be implemented at truck stops that already accept MasterCard as a method of payment. Under MasterCard rules, such truck stops must "honor all" MasterCards. See supra ¶ 6. For purposes of financial settlement, the TCH MasterCard will still be processed just like any other MasterCard transaction, with payment to the truck stop coming through normal MasterCard channels. Therefore, there does not appear to be any additional financial risk being placed on truck stops from the TCH MasterCard processing method Plaintiffs advocate here. Such truck stops have already agreed to accept TCH MasterCard transactions as part of their overall decision to accept MasterCard transactions generally. Comdata has not shown how such truck stops will be "defrauded" through this process.
35. Finally, although Comdata has demanded that TCH have written agreements in place with truck stops specifically authorizing the direct processing method for TCH MasterCard transactions shown in Hennessey Deposition Exh. 5/Hearing Exh. B, there is no evidence that Comdata has such written authorizations in place for its own direct processing through Trendar of Comdata MasterCard Fleet Card transactions.
36. Mr. Adams' testimony indicated that Plaintiffs sought direct processing for the TCH MasterCard through Trendar that was comparable to the direct processing of the Comdata MasterCard Fleet Card that was occurring as of May 2001. Adams Decl. ¶¶ 18, 21, 24, 30.
37. MasterCard's representative confirmed that Comdata is entitled to process Comdata MasterCard Fleet Card transactions privately, outside the MasterCard I-Net network, at major U.S. truck stops, without violating MasterCard rules based on the MasterCard exception allowing such private processing for what MasterCard calls "proprietary accounts." Hearing Exh. H: Hennessey Deposition at pp. 38 In. 22 to 41 In. 7. MasterCard's witness did not know if MasterCard must give written approval to a company that seeks to engage in private processing of transactions under MasterCard's "proprietary account program." Id. at p. 42 In. 16-22.
38. Michael Sheridan confirmed on cross-examination that Comdata and its merchant bank, AmSouth, did not obtain written approval from MasterCard for Comdata's arrangement for direct processing through Trendar, outside the MasterCard I-Net network, of Comdata MasterCard Fleet card transactions. MasterCard's Rule 30(b)(6) corporate representative, Joan Hennessey, was not aware of any written approval given by MasterCard to Comdata or AmSouth for such transactions. See Hearing Exh. H: Hennessey Deposition at pp. 79 In. 17 to 81 In. 2 (January 17, 2003). MasterCard refused to tender a corporate representative for deposition with more knowledge about this subject. Id.: Hennessey Deposition at pp. 58 In. 12 to 59 In. 11 (January 17, 2003). In light of the existing evidence confirming the lack of written approval by MasterCard for Comdata's existing arrangement for direct processing through Trendar of Comdata MasterCard Fleet Card, outside the MasterCard 1-Net network, the court treats as moot Plaintiffs' motion to compel the production of documents that would confirm that fact.
39. The testimony from Mr. Sheridan, both at his deposition and on cross-examination at the hearing, confirmed that Comdata does not have written agreements in place with the major U.S. truck stops that accept its card (including Pilot, Petro, and Travel Centers of America) by which Comdata explicitly informs those truck stops that it will be privately processing Comdata MasterCard Fleet Card transactions outside the MasterCard I-Net network or explicitly obtains their permission for such private processing. Instead, the truck stop merchant agreements on which Comdata relies to argue that it has contracts for private card processing in place with truck stops, are the standard form "service center" agreements by which truck stops agree to accept Comdata products including Comdata's proprietary (non-MasterCard) card, such as Hearing Exh. G. See Hearing Exh. I: Sheridan Deposition at pp. 44 In. 3 to 47 In. 7 (December 19, 2002); see also id. at p. 38 In. 16-21; p. 41 In. 15 to p. 44 In. 2 (current agreement with TA mentions MasterCard in fee section).
CONCLUSIONS OF LAW
1. This court has subject matter jurisdiction to decide the merits of Plaintiffs' motion to enforce the settlement agreement.
a. The court had jurisdiction over the underlying lawsuit asserting federal antitrust claims and state law tort claims under 28 U.S.C. § 1331, 1332, and 1337.
b. The Settlement Agreement includes the following "Dispute Resolution" provision in Section 10 (p. 11):
The Parties agree that they will bring any dispute, controversy, or claim arising from or relating to this Settlement Agreement to the U.S. District Court for the District of Utah to be resolved. They are requesting that that Court retain jurisdiction over this case to resolve any such disputes that may arise.
c. In May 2001, the parties filed a Stipulated Motion For Dismissal of Claims with this Court. That Stipulated Motion stated: "The parties request that the Court retain jurisdiction to enforce the terms of the parties' Settlement Agreement dated May 18, 2001. See Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375 (1994)."
d. The court entered its "Order Granting Stipulated Motion For Dismissal Of Claims" on May 18, 2001. That Order states: The Court retains jurisdiction to enforce the terms of the parties' Settlement Agreement dated May 18, 2001. See Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375 (1994)."
e. Under the referenced Kokkonen case, when a federal court specifically retains jurisdiction, as occurred here, then it has authority to enforce the provisions of the parties' settlement. See, e.g., Gilbert v. Monsanto Co., 216 F.3d 695, 699 — 700 (8th Cir. 2000).
2. To the extent some of the issues raised by Plaintiffs' motion to enforce the settlement agreement might be covered by the arbitration provisions in Article XV of the Trendar License, the parties have waived that right of arbitration in connection with the issues presented at the August 13, 2003 hearing. Parties to an arbitration agreement may waive the right to arbitrate a dispute. See Reid Burton Constr. Inc. v. Carpenters Dist. Council of S. Cola., 614 F.2d 698, 702 (10th Cir.), cert. denied, 449 U.S. 824 (1980). At the August 13, 2003 hearing, Comdata withdrew its "Motion To Dismiss And Enjoin Further Pursuit Of This Matter In Violation Of The Applicable Arbitration Provision" (dated June 25, 2002), in which it had requested that the court stay proceedings on Plaintiffs' motion to enforce the settlement agreement and require arbitration.
3. Under both Utah and Tennessee law, the court must construe the Trendar License in a way that harmonizes and gives effect to all of its provisions, recognizes the context of the agreement, and carries out the parties' intentions. In addition, to the extent the court sees any ambiguity in the Trendar License provisions at issue, the court considers the extrinsic evidence of the parties' intentions at the time they negotiated the Trendar License.
4. "[A] court must attempt to construe [a] contract so as to `harmonize and give effect to all of [its] provisions." Dixon v. Pro Image Inc., 987 P.2d 48, 52 (Utah 1999) (quoting Nielsen v. O'Reilly, 848 P.2d 664, 665 (Utah 1993)); see also Williard Pease Oil Gas Co. v. Pioneer Oil Gas Co., 899 P.2d 766, 770 (Utah 1995) (every contract provision should be considered in relation to all of the others). "In interpreting a contract, the intentions of the parties are controlling." Winegar v. Froerer Corp., 813 P.2d 104, 108 (Utah 1991); see also WebBank v. American Gen. Annuity Serv. Corp., 54 P.3d 1139, 1144 (Utah 2002). The parties' intentions are determined from the plain meaning of the language of a written contract, provided that the language is not ambiguous. See Dixon, 987 P.2d at 52; see also WebBank, 54 P.3d at 1145; Winegar, 813 P.2d at 108. Contract language is ambiguous when it is "capable of more than one reasonable interpretation because of uncertain meanings of terms, missing terms, or other facial deficiencies." Winegar, 813 P.2d at 108 (quoting Faulkner v. Farnsworth, 665 P.2d 1292, 1293 (Utah 1983)). When contact language is ambiguous, a court considers extrinsic evidence to ascertain the parties' intentions. See WebBank, 54 P.3d at 1145, 1147 (holding that even though contract language was unambiguous, ambiguity existed as to nature of the transaction as a whole, such that extrinsic evidence was necessary to determine the parties' intentions); see also Dixon, 987 P.2d at 52; Williard Pease, 899 P.2d at 770.
5. Tennessee law is consistent with these basic precepts of Utah law. See, e.g., Nichols v. Transcor America, Inc., 2002 Tenn. App. LEXIS 449, at 24 (Tenn.App. 2002) (court construes unambiguous contract language; jury construes ambiguous contract language based on parol evidence); In re Estate of Espey, 729 S.W.2d 99, 101 (Tenn.App. 1986) ("The cardinal rule for interpretation of contracts is to ascertain the intention of the parties and give effect to the intention consistent with legal principles. . . . In ascertaining the intention of the parties and what was within their contemplation, the Court should consider all of the surrounding circumstances.").
6. As noted above, the parties disagree about two aspects of the language of Article 4.2 of the Trendar License: the meaning of the word "clear," and the intended effect of the reference to MasterCard policies, rules or regulations. Courts construe contract language in a way that gives effect to the ordinary meaning of words unless the evidence indicates the parties intended to adopt a special meaning. Courts also construe contract terms in light of the entire contract and in a way that effectuates the purpose of the contract.
7. Because of the lack of evidence specifically demonstrating the parties intended to use the narrow meaning of the verb "clear" in Article 4.2, the court believes the parties intended a broader meaning for "clear" that encompasses its ordinary meanings in English usage, which are set forth in the Merriam-Webster online dictionary definitions that Plaintiffs cited at p. 20 of their April 7, 2003 brief and discussed at the hearing. That definition can be found on the internet at:http://www.m-w-com/cgi-bin/dictionary. Comdata also attached a copy of it as Exhibit B to its April 24, 2003 Reply Memorandum. These meanings include the functions of authorizing and approving, in addition to financial settlement. Therefore, the court interprets the phrase in Article 4.2 of "shall be cleared directly through TCH as opposed to any third party network" as meaning that the Trendar License calls for authorization, approval, and financial settlement of the TCH MasterCard to occur directly through TCH as opposed to the MasterCard I-Net network, subject to the court's conclusion in Paragraph 8 below concerning the effect of MasterCard regulations.
8. Comdata argues that it should not be required to implement the method of TCH MasterCard processing shown in Hennessey Deposition Exh. 5/Hearing Exh. B because the Trendar License requires all aspects of processing the TCH card transaction to go "directly through TCH as opposed to any third party network." This argument fails to take account of the additional limiting clause in Article 4.2: "to the fullest extent permitted by the policies, rules, or regulations, as amended from time to time (including their interpretations thereof) by third party network providers." The court construes this clause as limiting processing "directly through TCH" to procedures or processes that are also permitted by MasterCard rules. Cf. Sheridan Decl. ¶ 6 ("Comdata and I understood that the plaintiffs goal in litigation and settlement was to have the TCH card accepted over the Trendar system and cleared directly through TCH, if permitted by MasterCard."); id. ¶ 21 ("Comdata has repeatedly offered to have Trendar clear transactions directly through TCH so long as TCH secured MasterCard's approval and the consent of the merchant."); Graybill Decl. ¶ 31 ("Comdata has repeatedly advised TCH that it would be willing to configure the Trendar system to route TCH MasterCard transactions directly through TCH, so long as TCH secured the consent of MasterCard and the merchant.").
9. Here, through its August 11, 2003 letter (Hearing Exh. E), MasterCard has, at least for the time being, indicated that the other two proposed methods of TCH MasterCard processing TCH devised would violate MasterCard's proprietary transaction rules. Comdata has not offered any alternative for TCH MasterCard processing "directly through TCH" different than TCH's proposal shown in Hennessey Deposition Exh. 5/Hearing Exh. B.
10. Therefore, the court finds that the processing method for the TCH MasterCard depicted in Hennessey Deposition Exh. 5/Hearing Exh. B complies with Article 4.2 of the Trendar License as a method of processing "directly through TCH" to "the fullest extent permitted by the policies, rules, or regulations" of MasterCard. The court rejects Comdata's argument that it is not obligated under the Trendar License to implement that processing method, having been requested to do so by Plaintiffs. That argument reflects an unreasonable interpretation of the agreement's language that is inconsistent with the parties' intentions for the Trendar License.
11. For the reasons explained in the findings of fact above, there is no credible evidence that the proposed method for processing TCH MasterCard transactions will "defraud" truck stops. Therefore, the court need not address whether there is some legal basis that would excuse Comdata from carrying out its obligations under the Trendar License based on its contention that compliance would effect some sort of "fraud" or "deception."
12. With respect to Comdata's arguments of commercial impracticability and infeasibility, the court notes that Article 3.1 of the Trendar License is part of Article III, which covers "Future Changes or Modifications Initiated by TCH," and by its terms covers changes or modifications that TCH may request "following a distribution and release contemplated by Section 2.1(c) hereof." Article 2.1(c) concerns the release of software changes following Comdata's "completion of the development work for the TCH Card." Article 2.1(a) confirms that such initial development work will involve "certain software, interface and other appropriate development and testing work [that] will be necessary to be undertaken and satisfactorily completed in order to enable the TCH Card to be used properly in the Trendar System." The definition in Article I of TCH Card includes TCH MasterCards. Therefore, the court finds as a matter of contract interpretation, that the limitations in Article 3.1 concerning changes or modifications that are "not feasible or commercially impracticable with respect to the Trendar System as it then exists," were not intended to apply to Comdata's programming work necessary to have the TCH MasterCard processed over the Trendar POS device, with transactions cleared directly through TCH to the maximum extent permitted by MasterCard rules. Consequently, the Trendar License does not excuse Comdata from making software changes to Trendar at this stage, even if Comdata deems such changes to be "commercially impracticable" or "not feasible."
13. In addition, for the reasons explained in the findings of fact above, there is no credible evidence that compliance with the proposed method for processing TCH MasterCard transactions shown in Hennessey Deposition Exh. 5/Hearing Exh. B will not be feasible or will be commercially impracticable.
14. Furthermore, neither Utah nor Tennessee law excuses Comdata from performing its contractual obligations under the Trendar License on the basis of impossibility or commercial impracticability.
15. Under Utah law, a party's seeking to be excused from performance of its contractual obligations on the ground of impossibility or commercial impracticability must demonstrate that performance can only be completed at an excessive or unreasonable cost. See Commercial Union Assocs. v. Clayton, 863 P.2d 29, 39 (Utah Ct. App. 1993). This requires proof that an unforeseen event occurred after the formation of the contract making performance of the obligations impossible or highly impracticable. See id. at 38-39.
16. Under Tennessee law, "where a person by his contract or agreement charges himself with an obligation possible to be performed, he must perform it, and he will not be excused therefrom because of unforeseen difficulties, unusual or unexpected expense, or because it is unprofitable or impracticable." Clinchfield Stone Co. v. Stone, 254 S.W.2d 8, 14 (Term. Ct. App. 1952) (cited in Gardner v. Gilreath, No. CIV.A. 174, 1990 WL 130894, at *6 (Tenn.Ct.App. 1990)). To successfully assert a defense of commercial impracticability, "the party must show that the unforeseeable event upon which excuse is predicated is due to factors beyond the party's control." Roth Steel Prods, v. Sharon Steel Corp., 705 F.2d 134, 149-50 (6th Cir. 1983). Increase in the cost of production does not, without more, support a claim of commercial impracticability. See id. at 149 n. 34.
17. Here, Comdata did not present evidence sufficient to demonstrate that it should be excused from its obligations under the Trendar License because of unforeseen, prohibitively expensive costs in complying. Indeed, Article 2.2 of the Trendar License addresses how the parties will bear the cost of additional Trendar programming. Comdata did not offer any evidence about the expected cost of additional Trendar programming necessary to implement the proposed method of TCH MasterCard processing. Therefore, Trendar's cost to comply with the Trendar License cannot be the basis for arguing commercial impracticability or infeasibility. In any event, TCH's General Manager, Ted Jones, testified that TCH will pay for any programming work that it is obligated to cover under the Trendar License.
18. Both Utah and Tennessee law recognize the duty of good faith and fair dealing in connection with an agreement like the Trendar License. See Iadanza v. Mather, 820 F. Supp. 1371, 1388 (D. Utah 1993); Resource Mgmt. Co. v. Weston Ranch Livestock Co., 706 P.2d 1028, 1037 (Utah 1985); Wallace v. National Bank of Commerce, 938 S.W.2d 684, 686 (Term. 1996). Here, that obligation of good faith and fair dealing effectively requires that Comdata find a feasible way to implement the purpose of the Trendar License with respect to clearing TCH MasterCard transactions directly through TCH. Excusing Comdata from devising any way for direct processing of TCH MasterCard transactions would defeat the purpose of the License.
19. In addition, Article 4.2 of the Trendar License states: "The parties will use their best reasonable efforts to obtain any consents required by the third party network providers." Comdata has not presented evidence demonstrating that it used best reasonable efforts to obtain consent from MasterCard for a reasonable method of direct processing of TCH MasterCard transactions. Instead, it appears from the correspondence attached to the Declaration of Barre Burgon that TCH has presented various proposals to MasterCard, and Comdata has opposed such proposals and tried to persuade MasterCard not to grant approval.
20. In light of the findings of fact and conclusions of law above, the court finds that Comdata has breached its obligations under Articles II, III, and IV, including Article 4.2, of the Trendar License by failing promptly to implement a method for direct processing of TCH MasterCard transactions directly through TCH that is acceptable to TCH and does not violate MasterCard rules.
21. Therefore, the court orders Comdata immediately to cooperate with Plaintiffs and take all steps necessary to implement the method of TCH MasterCard processing shown in Hennessey Deposition Exh. 5/Hearing Exh. B at all Trendar locations. The parties shall submit a joint report to the court within 120 days of the date of this Order providing details about how and when Comdata has implemented that method. Thereafter, Plaintiffs will notify the court when Comdata has fully implemented that method of TCH MasterCard processing at all Trendar locations.
22. The court expects that the parties will be able promptly to implement this method of card processing without further intervention by the court. Nevertheless, the court retains jurisdiction to address any failure by Comdata promptly to comply with the mandate in this Order.
23. The court notes that Plaintiffs contend that they have suffered damages as a result of Comdata's breach of the Trendar License. See, e.g., Adams Decl. ¶ 41. Until Comdata implements the TCH MasterCard processing method called for in this Order, it is premature to assess what damages Plaintiffs have suffered as a result of Comdata's breach of the Trendar License. Such a damages claim is not ripe yet. In addition, the court finds that any claim by Plaintiff for damages claim should be adjudicated in the context of a separate lawsuit or arbitration proceeding, with traditional rights of advance notice of claims and defenses, discovery, and a trial, if necessary. Therefore, without prejudice to Plaintiffs seeking damages for Comdata's breach of the Trendar License in some other court or arbitral proceeding, the court declines to address in this post-settlement context any such damages claim by Plaintiffs.
24. Section 12 of the May 2001 Settlement Agreement provides that the prevailing party in a dispute concerning that Agreement is entitled to recover its reasonable attorneys' fees "including the cost of any court enforcement, if necessary." Therefore, the court directs Plaintiffs to file a motion for attorney's fees under Fed.R.Civ.P. 54(d) and DUCivR 54 — 2, within twenty days of entry of this Order, detailing their reasonable attorneys' fees and costs associated with the proceedings since May 2002 concerning enforcement of the Settlement Agreement and Trendar License.
II. COMDATA'S MOTION TO ENFORCE PROTECTIVE ORDER
Comdata argues that the Settlement Agreement requires the parties to destroy all Confidential Materials within 45 days after the settlement. Comdata asserts that it has complied with this agreement but that Plaintiffs have not. Comdata seeks an order requiring Plaintiffs to destroy all Confidential Materials.
Plaintiffs contend that Comdata's counsel, John Chambers, and Flying J's counsel, Gregory Kerwin, reached an oral agreement on approximately June 12, 2001 and during subsequent phone calls, in which they agreed that both sides would continue to hold copies of some Confidential Materials while the Settlement Agreement was being implemented and that both parties would continue to adhere to the confidentiality obligations imposed by the Protective Order. Mr. Chambers has disputed that such an agreement was ever made.
Given the ongoing attempts to enforce the Settlement Agreement, together with the protection afforded by the confidentiality obligations imposed by the Protective Order, which remains in effect, the court declines to require Plaintiffs to destroy all Confidential Materials at this juncture. If Comdata has destroyed Confidential Materials that it now believes are necessary to obtain, it may request from Plaintiffs copies of any such Confidential Materials, and Plaintiffs shall promptly make such documents available for copying. The cost of all copying shall be divided equally between Flying J Plaintiffs and Comdata.
CONCLUSION
For the foregoing reasons and good cause appearing, IT IS HEREBY ORDERED that:
(1) Comdata's Motion to Dismiss and Enjoin Further Pursuit of This Matter in Violation of the Applicable Arbitration Provision [docket # 578] was WITHDRAWN by Comdata at the hearing on August 13, 2003;
(2) Plaintiffs' Motion to Enforce Settlement Agreement [docket # 573] is GRANTED;
(3) Comdata's Motion for Summary Judgment, or, in the Alternative, Summary Denial of Plaintiffs' Motion to Enforce [docket # 603] is DENIED;
(4) Flying J's Motion to Compel Documents [docket # 620] is MOOT; and.
(4) Comdata's Motion to Enforce Protective Order [docket # 601] is DENIED.