Pricing Typo Costs Atos $3.4M: S.D.N.Y. Holds Contract Must Be Reformed After Scrivener's Error Zeroed Out Shortfall Penalty

The dispute centers on a single phrase — "thru month 40" — buried in Section 3.2 of a 2018 pricing schedule governing AT&T's provision of long-distance voice services to Atos, a systems integrator. Under the agreement, Atos committed to a $6.2 million minimum annual revenue commitment for an optional one-year extension period running from roughly March 2021 through February 2022. When Atos incurred only $2,832,649 in eligible charges during that period, AT&T invoiced it $3,367,351 for the shortfall. Atos refused to pay, pointing to the "thru month 40" language, which — read literally — measured the shortfall penalty against Atos's spending through Month 40 of the pricing schedule, a period that had already ended years earlier and during which Atos had already exceeded $6.2 million in eligible charges. The practical effect: a penalty of zero.

United States District Judge Lewis J. Liman, writing for the Southern District of New York, held that the phrase was a scrivener's error and that clear and convincing evidence established a mutual mistake. The error originated when AT&T drafter Sharletta McKinney, converting time references throughout the agreement from years to months, changed "incurred in Year 6" to "incurred thru month 40" — a substitution that did not correspond to Year 6 at all. McKinney testified that doing so was "definitely" a mistake because Month 40 did not correspond with Year 6. AT&T's lead negotiator, Andrew Ritter, testified that the "thru month 40" language was an error in the last few days of drafting that did not reflect the parties' mutual agreement, and that a critical deal point throughout negotiations was that a missed MARC would result in a penalty equal to the full difference between the amount committed and the amount achieved in the same period.

Critically, the court concluded that Atos's own negotiator shared that understanding. When Atos's procurement team discovered the "thru month 40" language in March 2021 and asked Leok van Stekelenburg — who had negotiated the 2018 agreement for Atos — what the parties had agreed to, he responded that if Atos extended the contract it would "have to spend 6.2M USD between Mch 2021 and Feb 2022" and recommended against taking the extension option given that commitment. The court rejected Atos's argument that Stekelenburg was speaking only to the size of the MARC rather than the consequences of missing it, finding that interpretation unreasonable given that Stekelenburg was directly answering a question about how to calculate the shortfall. The court also noted that Atos negotiator Judith Fling, who participated in both the 2018 and 2021 negotiations, had herself requested in 2020 that the "thru month 40" language be corrected to reference months 65 through 77 — the very fix AT&T later sought — and that an AT&T employee internally agreed the corrected language was what one would expect.

The court further relied on the parties' course of performance, which it described as "the most persuasive evidence of the agreed intention of the parties." For years, both sides tracked Atos's spending against a $6.2 million commitment for the extension term, with a shared dashboard listing the shortfall penalty as "100% of shortfall" and flagging the extension months in red. Atos's North America CFO directed her team to accrue approximately $3 million as a liability on Atos's books for the anticipated shortfall — at a time when Atos had already exceeded $6.2 million in spending through Month 40, meaning there would have been nothing to accrue if Atos's litigation position had reflected the parties' actual understanding. An Atos employee who first spotted the favorable language in March 2021 wrote internally: "We have a massive shortfall and contract language that results in no penalty, due to an error when it was written."

Atos's primary counterargument — that it knowingly relied on the "thru month 40" language when it signed the 2021 amendment extending the contract — failed because the 2021 amendment did not modify Section 3.2 at all. The court held that a contractual amendment supplants only those provisions it expressly addresses, leaving the rest of the original agreement intact, and that the parties' original shared intent therefore carried forward. The court also rejected Atos's argument that the parties' sophistication precluded reformation, noting that the pricing schedule was negotiated on a compressed timeline alongside thirteen other agreements, contained several other acknowledged errors and typos, and that even a drafter cannot be barred from seeking reformation of language that does not reflect the parties' actual agreement. The court also denied Atos's Rule 37(e) motion for spoliation sanctions based on AT&T's failure to preserve Ritter's electronically stored information after he left the company, finding that litigation was not reasonably foreseeable when his data was deleted and that Atos's claimed prejudice was speculative.