AMAJOR LIST COMPANY and a former client are engaged in a lawsuit over when to calculate rental revenue for a mailing list.
Direct Media LLC sued office supplies vendor Boise (formerly known as Boise Cascade) last month, alleging that it is owed more than $60,000 on 2001 rentals of the Reliable Office Products file. At issue is whether list revenue should be recorded when it is booked or when payment is actually received. Greenwich, CT-based Direct Media is also trying to recover fees based on Boise's participation in one of its databases.
According to court papers, the 2001 management agreement signed by the firms called for Direct Media to produce minimum list revenue of $980,649 for the year, and to guarantee minimum quarterly payments. These were to start at $202,000 for the first quarter and escalate every three months to top out at $295,330 for the fourth quarter. In addition, the list firm was to make up any shortfalls.
This agreement was the same as the one for 2000 — with two differences.
One was that if Direct Media missed its assigned remittance in one quarter but surpassed it in subsequent ones, it would recoup any shortfall payments it made if the remittance exceeded the annual goal.
In addition, any 2001 income beyond $1 million was to be shared, with Boise getting 60% and Direct Media 40%, according to papers on file with the Supreme Court of the State of New York.
The complaint states that Direct Media missed its goals by a total of $270,419 during the first three quarters of 2001, and made payments to cover the difference. But by the time the fourth quarter was finished, the company had exceeded the total annual remittance due by $202,075, for a total of $1.1 million.
This meant Direct Media was due 40% of everything over $1 million, which came to $61,217, the complaint continues. However, Boise Cascade allegedly challenged that claim.
“Direct Media based its calculations on all orders placed for the list during the fourth quarter of 2001 irrespective of receipt of payment from the mailer,” the complaint states. “Boise Cascade contends…that only orders in which payment had been received by Direct Media during the period should be included in the calculation.”
Attorneys for Boise were not available for comment at deadline.
Direct Media's lawyer, Spencer L. Schneider, said that his client “preferred to resolve it amicably, but they were not able to.”
According to court papers, Direct Media managed the Reliable file starting in 1987. Reliable was purchased by Boise, ID-based Boise in 1994.
Merit Direct took over management of the master file Jan. 1. Reliable's package insert program moved to Merit Direct at the end of April when Direct Media resigned the account, according to Chris Blohm, a senior account executive at Merit Direct, Stamford, CT. There are more than 325,000 buyers on the file.
