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Mill-Run Tours, Inc. v. Windstream Services LLC

United States District Court, S.D. New York

July 6, 2017

MILL-RUN TOURS, INC., Plaintiff,
v.
WINDSTREAM SERVICES LLC, F/K/A WINDSTREAM CORPORATION, PAETEC COMMUNICATIONS LLC, F/K/A PAETEC CORPORATION, A WINDSTREAM CORPORATION, Defendants.

          OPINION AND ORDER

          EDGARDO RAMOS, U.S.D.J.

         Mill-Run Tours, Inc. (“Mill-Run” or “Plaintiff”) brought this action against Windstream Corporation (“Windstream”) and Paetec Communications LLC (“Paetec”), alleging breach of contract and breach of warranty and seeking damages. Before the Court is Defendants' motion to dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (Doc. 23). For the reasons stated below, Defendants' motion is GRANTED.

         I. Factual Background[1]

         Plaintiff is a consolidator of airline tickets for different airlines and supplies tickets to travel agents in the industry. Am. Compl. ¶ 3. Windstream is a provider of voice and data network communications, including cloud computing and managed services to businesses in the United States. Id. at ¶ 5. Paetec is a subsidiary of Windstream. Id. at ¶ 7.

         In 2011, Plaintiff was in the market for a new voice and data communications provider. Am. Compl. ¶ 11. After being introduced to Windstream and Paetec by a communications broker, Plaintiff explained that it was having quality problems with its current provider and could not afford to have this continue. Id. at ¶¶ 12‒13. According to Plaintiff, Windstream made it clear that its product was superior and more technologically advanced than what Plaintiff was using at the time. Id. at ¶ 14. Windstream assured Plaintiff that it understood the reputational and financial damages Plaintiff would suffer if there was an interruption of service, and that it would never happen with Windstream as the provider. Id. at ¶¶ 15‒16, 38.

         Based on these assurances, Plaintiff decided to engage Windstream as its service provider. Id. at ¶ 17. On September 15, 2011, Plaintiff and Paetec entered into a Service Agreement under which Paetec agreed to provide Plaintiff with voice and communications services at Plaintiffs main office in New York City and ten other offices in the United States. Id. at ¶ 18. Plaintiff agreed to pay a monthly fee for the service. Id.

         The Service Agreement, on its first page, expressly incorporated by reference the Standard Terms and Conditions of Service (“Standard Terms”) on Paetec's website, and provides the website address with a direct link.[2] Fellner Decl. Ex. A, at 1. The Standard Terms state that they apply to “the provisions of all telecommunications and related services . . . by PAETEC . . . to Customers under the service agreement . . . to which this schedule is a part.” Fellner Decl. Ex. B, at 1. The Standard Terms contain a “Limitation of Liability” provision that expressly bars any party from claiming “indirect, special, incidental, consequential or exemplary damages, including . . . damages for loss of revenue, loss of profits, or loss of customers, clients or goodwill . . .” for nonperformance. Id. at 3. The Standard Terms further provides that remedy for a service interruption is limited to an outage credit.[3] Id. at 4.

         Defendants were Plaintiffs voice and data communications service provider from 2012 to 2015. Am. Compl. at ¶ 19. Although there were a few glitches over those four years such as power interruptions, Plaintiff did not complain about these interruptions during this period. Id. at ¶ 20. However, On May 7, 2015, the telephone and data services at Plaintiffs office completely failed. Id. at ¶ 21. According to Plaintiff, Defendants failed to respond to its numerous calls and emails and did not provide any updates for a period of days. Defendants also gave Plaintiff the “runaround” with auto replies stating that repair tickets had been issued and that the system was running when in reality it was not functioning. Id. at ¶¶ 22‒23. The service interruption lasted for a total of six days (144 hours). Id. at ¶ 28. Plaintiff alleges that Defendants never provided an explanation regarding the cause of the service disruption. Id. at ¶ 29.

         On May 13, 2015, Plaintiff sent a letter to Windstream terminating the Service Agreement with Windstream and Paetec. Id. According to Plaintiff, as a result of the extended disruption of service, customers were unable to reach Plaintiff, and Plaintiff suffered reputational damages, loss of sales, and loss of existing and new clients calculated to be in the millions of dollars. Id. at ¶¶ 33‒36.

         II. Procedural Background

         On July 12, 2016, Plaintiff filed an action against Defendants in New York County Supreme Court, alleging breach of contract, negligence, and punitive damages. Doc. 1, Ex. A. On September 9, 2016, Defendants removed the action to this Court. Doc. 1. Plaintiff filed an Amended Complaint on December 8, 2016, alleging breach of contract and breach of warranty and seeking consequential damages. Am. Compl., Doc. 18. Defendants filed the instant motion to dismiss Plaintiff's Amended Complaint on February 3, 2017. Doc. 23.

         III. Legal Standard

         Under Rule 12(b)(6), a complaint may be dismissed for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Koch v. Christie's Int'l PLC, 699 F.3d 141, 145 (2d Cir. 2012). However, the Court is not required to credit “mere conclusory statements” or “threadbare recitals of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see also Id. at 681 (citing Twombly, 550 U.S. at 551). “To survive a motion to dismiss, a complaint must contain sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the ...


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