MD company files $5M breach of contract action against Nat'l

Daily Record, The (Baltimore), Jan 27, 2005 by Peter Geier

A minority-owned Baltimore service company that processes marketing materials for large organizations has filed a $5 million breach of contract action against the National Education Association's Gaithersburg-based Member Benefits Corp.

Rapid Response Inc. claims Member Benefits caused it substantial damage and irreparable harm when it terminated their eight-year relationship suddenly and without any warning or explanation last October.

The company alleges that Member Benefits falsely led it to rely on a pattern and practice of lackadaisical contract renewal by which service continued after the expiration of one contract until the new contract was executed.

Despite the lack of an extended written contract, in accordance with the parties' past custom and dealings, business between the parties continued through early and mid October as usual with Rapid providing daily fulfillment needs for NEA MB, the complaint begins.

The company claims that it continued preparations for Member Benefit's future increased fulfillment needs, as suggested by one of its production manager's projections and discussed during numerous conversations over the preceding few months, the complaint says.

Then came the blow - NEA MB informed Rapid that it was terminating its eight-year relationship without cause and in violation of the contract recently consummated, the complaint says.

Rapid Response asserts claims for breach of contract, negligent misrepresentation and detrimental reliance, and seeks the $5 million it claims the 2004-2006 contract would have generated.

However, Deborah J. Israel, a lawyer for NEA familiar with the contract at issue, said she was surprised Rapid Response filed the complaint.

It's a garden variety breach of contract case, Israel said, over a contract that expired by its terms on September 30.

Contract negotiations ended last fall when Rapid Response walked away from them, she said.

Since its first one-year contract in 1996, Rapid Response has had a series of one or two year contracts with Member Benefits to provide what are known as fulfillment services: on orders from a client, it packages and forwards material or information to that client's members or customers.

Member Benefits, a wholly owned, for-profit subsidiary of the 2.7 million-member NEA, develops, implements and administers benefit programs and offerings related to, among other things, insurance and financial products and services.

Through the use of sophisticated and proprietary computer database software, Rapid Response can produce print and electronic marketing material customized to each recipient's individual interests, marital and family status and place of residence, the complaint says.

Rapid Response's pricing is based on the amount of marketing material it creates and distributes to Member Benefit's members - a minimum of 2 million pages a year were forecast for 2005 and 2006, with price reductions promised to secure a 4 million page minimum for the next two years, the complaint says.