International Business Lists, Inc. v. American Tel. & Tel. Co.

• Decision Date: 26 June 1998
• Docket Number: 97-3109,Nos. 97-2949,s. 97-2949
• Parties: INTERNATIONAL BUSINESS LISTS, INC., Plaintiff-Appellant, Cross-Appellee, v. AMERICAN TELEPHONE AND TELEGRAPH CO., Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 636

147 F.3d 636

INTERNATIONAL BUSINESS LISTS, INC., Plaintiff-Appellant Cross-Appellee, v. AMERICAN TELEPHONE AND TELEGRAPH CO., Defendant-Appellee Cross-Appellant.

Nos. 97-2949, 97-3109.

United States Court of Appeals Seventh Circuit.

Argued Feb. 18, 1998.

Decided June 26, 1998.

Michael D. Sher (argued), John W. Guarisco, Neal, Gerber & Eisenberg, Chicago, IL, for Plaintiff-Appellant in No. 97-2949.

James H. Bowhay, Figliulo & Bowhay, Chicago, IL, Michael D. Sher (argued), Neal, Gerber & Eisenberg, Chicago, IL, for Plaintiff-Appellant in No. 97-3109.

William F. DeYoung (argued), Burke, Weaver & Prell, Chicago, IL, for Defendant-Appellee.

Before POSNER, Chief Judge, and RIPPLE and KANNE, Circuit Judges.

KANNE, Circuit Judge.

In this breach of contract action, International Business Lists, Inc. and American Telephone and Telegraph Co. ("AT&T") each claim the other violated the terms of a direct marketing service agreement ("Agreement"). The district court granted summary judgment against International Business Lists for its claim and against AT&T for its counterclaim, reasoning that the Agreement's one year limitations provision barred both causes of action. We affirm.

I. H ISTORY

International Business Lists is an Illinois corporation that compiles and develops business databases and provides various computer-related marketing and informational services to its customers. AT&T is a New York corporation which sold telecommunication equipment. In June 1990, International Business Lists and AT&T entered into an Agreement in which AT&T agreed to purchase certain direct marketing services from International Business Lists. The Agreement was for a term of two years, and it is governed by and construed in accordance with Illinois law.

A.

Gary Walter, the president of International Business Lists, negotiated the terms of the Agreement with John Winters of AT&T. The Agreement states that "AT&T at its election may select the services below at the prices set forth." The Agreement then provides the services available: the construction of a prospect database, access to the North American Business Registry, the generation of leads for telephone voice systems and fax equipment, and production of mailing labels. Under the definition provided in the Agreement, "leads" are businesses that have indicated that they will definitely, probably, or maybe purchase or lease fax or telephone voice systems in the near future.

Despite the Agreement's provision allowing AT&T to select what services it wants, the Agreement provides a ramp-up schedule listing an increasing number of leads per month that International Business Lists would give AT&T. This schedule begins in May 1990 with 3,000 leads and stops in December 1990 with 11,000. The Agreement does not state whether International Business Lists must provide and AT&T must purchase 11,000 leads each month for the remaining length of the Agreement. The Agreement does contain an early termination provision which allows AT&T to cancel it by giving ninety days written notice and paying a penalty of at least $150,000 and up to $200,000 per year, depending on the remaining duration of the Agreement. Finally, it includes a limitation of actions provision which states:

No action, regardless of form, arising out of the services under this Agreement, may be brought by either party more than one (1) year after the cause of action has accrued, except tha[t] an action for nonpayment may be brought within one (1) year of the date of the last payment.

Agreement p 5.

B.

On May 23, 1991, AT&T informed International Business Lists that as of May 31, 1991 it wanted to reduce the nature and scope of the services which International Business Lists provided under the Agreement, but it did not wish to terminate its contractual relationship with International Business Lists. AT&T did not believe the reduction in services to be a termination of the contract because, in its view, the contract did not prohibit a reduction in services from time to time and does not require maintenance of prescribed levels of services or dollar amounts. AT&T specifically did not want to purchase any more leads or other market survey data, but it did want access to the North American Business Registry.

Shortly after AT&T headquarters decided to stop purchasing leads, International Business Lists began contacting AT&T's branch offices directly to sell leads to them. According to International Business Lists, Winters provided International Business Lists with a list of AT&T's branch offices that received International Business Lists' leads and permitted International Business Lists to pursue business with the branches.

On July 18, 1991, Winters sent a letter to AT&T's branch general managers, lead generation managers, and its market analysts about International Business Lists' contacts. In the letter, Winters stressed that AT&T has in place national service agreements with International Business Lists and other list vendors through June 1992 to obtain leads, records, and processing at competitive rates. Winters viewed the Agreement as precluding any need to negotiate individual local agreements. Winters reinforced that message in a letter dated August 2, 1991, which advised the branches that they should consider that AT&T has existing agreements in place for this type of work if they were to purchase leads directly from International Business Lists or any other source. Finally, on August 7, 1991, Winter encouraged the branches to use International Business Lists if a branch believed that International Business Lists could help it generate leads for its territory and that International Business Lists could do this job in a cost-effective manner.

This continuation of their business relationship caused both parties some confusion over the state of the Agreement. On August 2, 1991, Winters sent a letter to International Business Lists contending that AT&T did not terminate the Agreement but merely reduced the level of services required. AT&T believed that it did not breach the Agreement by not purchasing 11,000 leads each month because it claimed that the Agreement did not contain a minimum quantity term. The letter also claimed that although Winters permitted International Business Lists to contact the branches, Winters was not aware that International Business Lists would attempt to circumvent the Agreement and sell leads at a 50% premium. In a written response, International Business Lists stated that it believed that AT&T had breached the Agreement and that whatever lead generation business International Business Lists developed with the branches would be an offset to the cancellation fee AT&T owed International Business Lists under the Agreement. International Business Lists also explained that the price increase was the result of the branches' request of voice leads only and the higher cost of filling these orders for the smaller locations.

Finally, on December 17, 1991, International Business Lists circulated a bulletin to AT&T's branches that "voice leads only" were available through a national program. One term of this bulletin stated that the "National Agreement" contained a volume discount such that 0 to 500 leads per month would cost $25 each, 501 to 2000 would cost $24 each, 2,001 to 5,999 would cost $23 each, and over 6,000 leads would be $22 each. A response slip provided four options for the number of leads a branch may request: 200, 300, 500, and other. The bulletin also explained that participation in this program was optional, that a branch would begin receiving leads approximately five working days after it "initiated" an agreement with International Business Lists, that the program ran on a month to month basis, and that either party could cancel the program.

Between October 1991 and May 1992, International Business Lists sold AT&T approximately 3,855 voice leads for $24 per lead. In May 1992, International Business Lists stopped selling leads to AT&T's branches.

C.

On August 31, 1992, International Business Lists filed a complaint against AT&T for breach of the Agreement. After a series of motions not relevant to this appeal, AT&T filed a counterclaim for breach of the Agreement for International Business Lists' failure to produce "qualified" leads. International Business Lists then amended its complaint twice to state that AT&T did not comply with the Agreement's termination provision and breached the Agreement by not purchasing a minimum monthly quantity of leads and not purchasing other market survey data as the Agreement required.

On July 9, 1993, AT&T filed a motion to dismiss International Business Lists' complaint for failure to state a claim based on the one year limitation provision in the Agreement. According to AT&T, it last purchased services under the Agreement in July 1991 at the very latest. Since International Business Lists did not initiate its suit until August 31, 1992, AT&T claimed the suit was not brought within the limitations period. On November 5, 1993, the district court granted AT&T's motion to dismiss the second amended complaint as time barred. See International Bus. Lists, Ltd. v. American Tel. & Tel. Co., No. 92 C 5844, slip op. at 4-5, 1993 WL 462844 (N.D.Ill. Nov. 8, 1993).

International Business Lists moved for reconsideration of that decision on December 1, 1993, arguing that the second amended complaint suggested that a series of partial breaches occurred, instead of a single breach. The court granted International Business Lists' motion in part on June 16, 1994. See International Bus. Lists, Ltd. v. American Tel. & Tel. Co., No. 92 C 5844, slip op. at 9, 1997 WL 337221 (N.D.Ill. Jun. 16, 1994). The court held that International Business Lists sufficiently alleged a multiple breach theory, and it reinstated any claims which International Business Lists had from September 1, 1991 to May 31, 1992. See id. at 8-9.

On August 18, 1994, International...