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Wholesale Telecom Corp. v. ITC Deltacom Communications, Inc.

Plaintiff Bound By Online Contract Amendment Increasing Rates

Affirming the court below, the Eleventh Circuit holds plaintiff bound by online amendments to its agreement with defendant posted to defendant's website.  As those amendments raised the rates due for defendant's services, which increased rates plaintiff refused to pay, the Eleventh Circuit affirmed the District Court's grant of summary judgment to defendant on its breach of contract claim.  The Court found support for its decision in the parties' agreement, which bound plaintiff to tariffs "as the same may exist or be modified in the future [by defendant] . . . and/or as the same may appear on [defendant's] website."

ITC Posts Rate Increase Online

Defendant ITC Deltacom Communications, Inc. ("ITC") is a provider of telecommunications services, including local and long distance voice transmission.  Plaintiff Wholesale Telecom Corporation ("WTC") is a wholesale provider of international long distance telecommunication services.  The parties entered into an agreement pursuant to which ITC agreed to transmit WTC's calls at "Horizon Level V" rates.  This rate schedule provided a flat rate for all international calls, whether they terminated to a land line or cellular phone.  Because the cost to ITC of calls that terminated to a cellular phone were significantly greater than those that terminated to a land line, ITC decided to modify its rate schedule so as to impose a surcharge on calls terminating to cellular phones.  An amended rate schedule was posted to ITC's website.  ITC thereafter informed WTC of the rate change, and offered it the opportunity to terminate the parties' agreement.  WTC refused, insisting instead that its traffic be handled at the initial flat rate schedule.  This lawsuit followed.

WTC Bound Pursuant To Parties' Contract

The District Court, finding that ITC had the right to amend its contract by posting new rates online, granted ITC summary judgment on its breach of contract counterclaim.  The Eleventh Circuit affirmed.

The parties' contract provided:

Customer hereby agrees to all the terms and conditions of this Agreement for Service ("Agreement") and the terms and conditions of the state and federal tariffs of ITC^DeltaCom, as the same exist or may be modified in the future by ITC^DeltaCom, including limitations on ITC^DeltaCom liabilities, filed with the respective regulatory bodies and/or as the same may appear on ITC^DeltaCom's website (www.itcdeltacom.com).

The Court held that, as used in this agreement, the term "tariff" included a schedule of ITC's rates.

More importantly, the Court held "that the unambiguous language of the agreement entitled ITC to raise its rates through the tariffs posted on the website."  Said the Court:

To limit the word "tariffs" to matters filed with a regulatory body would nullify the "or" clause in the service agreement.  We conclude, as did the district court, that the plain language of the service agreement contemplates "tariffs" (i) filed with a regulatory body or (ii) posted on ITC's website or (iii) both.  Because the service agreement entitled unambiguously ITC to modify the terms and conditions of its state and federal tariffs by modifying the same on its website, summary judgment was due to be denied to WTC on its breach of contract claim.

Because WTC had failed to pay the increased rates, the Court found it had breached the parties' agreement.

It should be noted the Eleventh Circuit designated this decision as not for publication.