UNITED STATES DISTRICT COURT, DISTRICT OF COLUMBIA
February 25, 1981
NTA NATIONAL, INCORPORATED, Plaintiff,
DNC SERVICES CORPORATION, Defendant
The opinion of the court was delivered by: HART
A. The Parties
1. Plaintiff NTA National, Inc. (NTA) is a New York corporation with its principal place of business in Nanuet, New York. NTA's principal business is the providing of consulting services to commercial and political clients regarding the use of telephones and other means for direct contact with specific segments of the population. Through a subcontractor, Macro Methods, Inc., NTA has also provided its clients with lists of names, addresses and telephone numbers to be used for such direct contact.
2. Defendant DNC Services Corporation (DNC) is a District of Columbia corporation which enters into contracts on behalf of the Democratic National Committee.
B. The Negotiations
3. NTA was retained by the DNC during the 1976 Presidential campaign to design and administer telephone bank operations whose purpose was the identification of voters who supported Jimmy Carter. In support of these phone banks, NTA was to provide the DNC with lists of names, addresses and telephone numbers of registered voters in specified geographic areas.
4. In December, 1976, NTA employees Walter Weintraub and Arthur Leibowitz met with Phillip Wise, Acting Executive Director of the Democratic National Committee to discuss the possibility of a contract between the DNC and NTA. This meeting constituted the initial discussions regarding the possibility of such a contract between the parties. As envisioned by the parties, NTA would assist the DNC in providing accurate lists of voters to Democratic national, state and local campaigns and in instructing the campaigns in the use of such lists under conditions to be agreed on.
5. Further discussions regarding a possible contract between the DNC and NTA were held throughout the spring and early summer of 1977. During this time, Kenneth Curtis was the DNC Chairman. The DNC employees principally involved in these negotiations with NTA were Paul Sullivan, the DNC Executive Director, Ernie Kessler, the Executive Director's Assistant, Rich Stauffer, the Chairman's Assistant, Mary Scheckelhoff, Head of Campaign Services Division and J. D. Nelson, the DNC Administrator. The individuals principally involved in these negotiations on behalf of NTA were Walter Weintraub, Maurice Phillips and Bryant Seaman.
6. In June, 1977, NTA submitted a written proposal for what came to be known as the Data Bank program (Exhibit 1). This fourteen-page proposal (the "Proposal") described a proposed Data Bank program and outlined the kinds of direct voter contact consultation which NTA could provide to the DNC. In the Proposal, NTA stated that it "could" provide the DNC with a Data Bank which, "ultimately", "should" contain information on all registered voters. With such a Data Bank, there "would" be over fifty-four million households computerized. NTA also stated:
The Data Bank should be developed in an orderly fashion in accordance with priorities based upon candidate need, potential use and political and financial value to the DNC. Conceivably data for 1977 elections would be scheduled first, followed by data needed in key 1978 races. If we begin to move now the data bank could be 100 percent completed in time for the 1980 presidential race. (emphasis added)
There is nothing in the Proposal which specifically addresses the issue of whether the DNC or NTA was to pay the costs of data acquisition and installation for the Data Bank program. Similarly, nothing in the Proposal specifically refers to the manner in which the Data Bank was to be marketed, or who had the responsibility therefor.
7. Around the time that NTA submitted the Proposal to the DNC, the DNC requested that NTA undertake research regarding certain geographic areas in order to determine the cost, form and availability of voter information in those areas. NTA undertook this research and submitted the findings to the DNC in two reports, one dated June 27, 1977 (Exhibit 2) and the second dated July 28, 1977 (Exhibit 5). The results of these reports were used by the DNC to analyze the projected cost of the Data Bank program for the purposes of establishing prices for Data Bank sales. The reports contained a breakdown of the various costs which the DNC would incur, through NTA, in installing data into the Data Bank. The reports also demonstrated that the DNC could not charge a standard price for the data without risking a financial loss on the first sale in a given area because of the great variation in data preparation costs from geographic area to geographic area. It was therefore decided that the DNC would price the first sale in an amount equal to the cost to produce data for that particular sale. Also, because the production costs were less for a second sale of the same data, the DNC could realize a profit on multiple sales if it charged all purchasers the same price for the same data.
8. During discussion of the results of NTA's research efforts, the parties agreed that the DNC would pay NTA to undertake data acquisition, preparation and installation for Data Bank sales, and that the price would be the cost to NTA without overhead or profit, so that a first sale of data at cost to a candidate or committee would cover NTA's costs and prevent the DNC from losing money on Data Bank sales.
9. When NTA submitted the Proposal in June, 1977, it attached thereto its proposed terms and conditions for the contract with the DNC. These proposed contract terms specified that the contract period would begin immediately and continue through December 31, 1980. For performance of the contract, apart from the direct costs of Data Bank sales, NTA would receive from the DNC equal monthly payments throughout the proposed contract period.
10. The DNC did not accept these proposed NTA contract terms in their entirety; rather, the DNC asked NTA to propose new terms which specifically included two modifications. First, the DNC requested that the contract provide for a six-month probation period after which the Data Bank program could be renewed if the DNC determined it was successful. Second, the DNC stated that equal monthly payments were unworkable because of DNC cash flow problems, that it could not support the payments asked for per month in the early stages of the contract, but that a payment schedule should be devised which would provide reduced payments in the early stages of the contract to be increased as the presidential election drew nearer and the DNC would be raising more money.
11. By letter of August 11, 1977 (Exhibit 6), NTA submitted to the DNC revised terms for the proposed contract between the DNC and NTA. These August 11, 1977, NTA-proposed terms included the requested six-month trial period, with automatic contract renewal through December 31, 1980 and again through December 31, 1984, unless terminated by either party in writing. The revised proposed terms also contained a payment schedule under which payments to NTA by the DNC would be as follows:
September, October, November,
December 1977 $ 6,250 per month
January, February 1978 $ 7,500 per month
March through December 1978 $17,500 per month
January through December 1979 $25,000 per month
January through December 1980 $30,500 per month
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