Georgia Dep't of Human Resources v. Citibank F.S.B.

The provider of toll-free, long distance telephone access had the right to terminate its services from pay phones when the state refused to renegotiate the service price as its contract required when the 1996 Telecommunications Act was changed.

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This case involves a complex national contract between Citibank F. S. B. and Citicorp Services, Inc. “Citibank” as performing parties and Georgia Department of Human Resources “DHR” for the electronic benefits transfer “EBT” for delivery of government benefits, state and federal, to recipients of Social Security, Temporary Aid to Needy Families, food stamps, AFDC, unemployment benefits, and other financial benefits by ATM-like means and other electronic means. Citibank had similar contracts with the U. S. Department of the Treasury and other southern states. The numerous documents comprising the Contract in its entirety provided for a “renegotiation clause” in which the parties agreed to renegotiate the Contract “if federal and/or state revisions of applicable law or regulations make changes in the contract necessary.” As part of the customer service for the benefit recipients, Citibank had to provide toll-free long distance telephone access, i.e., a 1-800 number.

However, passage of the Telecommunications Act of 1996, 47 U. S. C. § 276 “Act” after the Contract was entered into changed the fixed costs imposed on Citibank for calls made by recipients of government benefits from pay telephones as local access fees to the toll-free number. The Act caused holders of “toll-free” numbers, i.e., Citibank, to choose between a providing access to those toll-free numbers from pay telephones by paying local access fees, or b avoiding the local access fees by declining to provide access to pay telephones. The Contract only obligated Citibank to provide a “toll-free” telephone number that benefit recipients could call for customer service; this was not an obligation to pay the cost of or otherwise provide access to a pay telephone used to dial the toll-free number. DHR’s refusal to renegotiate the Contract with Citibank breached the Contract, and Citibank had the right to terminate access from pay phones.

Georgia Dep't of Human Resources v. Citibank F.S.B.

The provider of toll-free, long distance telephone access had the right to terminate its services from pay phones when the state refused to renegotiate the service price as its contract required when the 1996 Telecommunications Act was changed.

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