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Agency wins liability case, citing glitch in ARC rules

By Fran Durbin


AIRFAX, Va. -- Pedroza Travel Agency of Los Angeles defeated ARC in a stolen-ticket-liability case -- and escaped liability of an estimated $1.8 million -- by citing an ambiguity in ARC’s ticket-security rules.

The rules allow agents to keep one spare box of tickets on the premises for each printer "maintained" in the office.
The rules do not define "maintained," nor do they say the printer must be configured and used to print tickets or even capable of printing the type of tickets used by the agency.

Pedroza had three printers and three spare boxes of automated ticket and boarding pass (ATB) coupons in the office. Only one printer was used to print ATBs; the second was used as a computer printer and the third for itineraries and invoices.

The three spare boxes were stolen in March 1997 in what arbiter William McGee called an "inordinately brazen and complicated break-in and burglary." ARC said the agency should have kept only one spare box on the premises, but because of the ambiguity in the rules, Pedroza Travel persuaded McGee that it was entitled to all three boxes.

Pedroza Travel, founded about 30 years ago by the family of the same name, is located on the second floor of an office building. McGee said the firm "took extraordinary [security] measures" by installing a burglar alarm system and "a sophisticated motion sensor alarm."
Burglars broke into an adjacent vacant office and tunneled through the wall into the agency, setting off the burglar alarm. Before the police arrived, the burglars broke into a locked filing cabinet and took off with the three boxes, each containing 1,000 coupons.
Given the industry estimate that the average stolen coupon is worth $600, Pedroza Travel was facing a potential liability of $1.8 million if all coupons were used as flight coupons. Attorney Alexander Anolik, who defended Pedroza Travel, said the agency already received about $250,000 in debit memos from airlines that honored the stolen coupons.

ARC said Pedroza Travel had exceeded its allowance of spare boxes and therefore could not be relieved of liability to pay for used stolen tickets. Pedroza Travel appealed to the arbiter, who initially decided the case on the written record and sided with ARC.
Pedroza Travel then hired Anolik, who petitioned for reconsideration and asked for a hearing. McGee agree to travel to Los Angeles for a hearing in July, making it easier for agency witnesses to testify in person.
Worldspan, which leased the printers, testified that both printers not used to print ATBs were capable of printing transitional automated tickets (TATs). One of the printers could not print all the copies of a TAT set at one time and would have required Worldspan to set up an alternate messaging system, the vendor said.

ARC insisted that each printer had to be used to print tickets before it could qualify for a spare box of ticket stock.
"While that may be ARC’s post-burglary interpretation," McGee concluded, "it is clearly not the [contract’s] expressly worded requirement." He pointed out that Pedroza Travel "had no power to control this wording."

The case rested on a 1996 precedent in which McGee, citing the vague rules, allowed an agency that used ATBs to keep a spare box of tickets for a printer