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Sprint Nextel Corporation v. The Middle Man, Inc.

United States District Court, D. Kansas

December 9, 2014

SPRINT NEXTEL CORPORATION, Plaintiff,
v.
THE MIDDLE MAN, INC., and BRIAN K. VAZQUEZ, Defendants.

MEMORANDUM AND ORDER

J. THOMAS MARTEN, Judge.

Before the court is plaintiff Sprint Nextel Corporation's ("Sprint") Motion for Partial Summary Judgment (Dkt. 140). This case arises out of the resale of subsidized wireless phones purchased on customers' Sprint accounts. Sprint filed a thirteen count complaint against defendants The Middle Man, Inc., and Brian K. Vazquez and now moves for summary judgment on Count I, breach of contract, and Count III, tortious interference with a contract. As discussed below, the Motion is granted in part and denied in part.

I. Background

Consistent with the court's duty to view summary judgment facts in a light most favorable to the non-moving party, the following background is based on facts presented or admitted by defendants. (Dkt. 149). Sprint sells wireless phones to its customers at a net loss ("subsidy"). It then relies on monthly wireless service charges to recoup the subsidy and make profit. To ensure recovery of the subsidy, each subsidized phone sale is subject to standard Terms and Conditions ("Terms") requiring each phone to remain on the Sprint wireless network for a minimum service term of 24 months. (Dkt. 1-1). The Terms also provide an Early Termination Fee ("ETF") to be assessed if the minimum term is not fulfilled. The Terms prohibit the resale of services, which includes any subsidized phone purchased on the customer's account. (Dkt 1-1).

Defendants are in the business of selling new wireless phones acquired from Sprint, other wireless providers, and customers of wireless providers. They sell used phones acquired from wireless customers and other sources. Defendants also consult with wireless customers to provide lower monthly rates for Sprint wireless service than are available directly from Sprint.[1]

On December 7, 2011, defendants purchased five subsidized iPhones on their Sprint account. All five purchases were subject to a 24-month service contract and required defendants to electronically assent to the Terms. Defendants transferred one of the phones ("Phone 1") to "Daniel Smith" on or before December 16, 2011, and another ("Phone 2") to "Linwood Queen" on or before December 9, 2011. Phones 1 and 2 were then activated on Smith and Queen's accounts. Phone 1 remained active on the Sprint network for a total of 6.63 months; Phone 2 remained active on the Sprint network for only 3.76 months. Defendants transferred another of the phones ("Phone 3") to Heritage Tractor ("Heritage"), who was already a Sprint customer, on December 12, 2011. Phone 3 was activated on Heritage's Sprint account and remained on the Sprint network for at least 24 months. Phones 1, 2, and 3 were never activated on defendants' Sprint account and are the subject of Sprint's breach of contract claim.

On September 8, 2010, Heritage allowed defendants to purchase three Blackberry phones on Heritage's Sprint account. Sprint subsidized the phones and shipped them to defendants' address. Defendants purchased the phones from Heritage with cash or in-kind compensation. They purchased at least twenty-six other subsidized phones on Heritage's Sprint account in the same manner. These phones were never activated on Heritage's Sprint account and are the subject of Sprint's claim for tortious interference with a contract.

On February 25, 2014, the court issued an order confirming that the Terms apply to the transactions in question and prohibit the resale of a new phone purchased on a Sprint account. (Dkt. 118, at 6-7).

II. Summary Judgment Legal Standard

"A party may move for summary judgment, identifying each claim or defense- or the part of each claim or defense-on which summary judgment is sought." FED. R. CIV. P. 56(a). Summary judgment is proper if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). The court must view the evidence and all reasonable inferences in the light most favorable to the nonmoving party. LifeWise Master Funding v. Telebank, 374 F.3d 917, 927 (10th Cir. 2004). "The movant bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law." Thom v. Bristol-Myers Squibb Co., 353 F.3d 848, 851 (10th Cir. 2003) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). An issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The party resisting summary judgment may not rely upon mere allegations or denials contained in its pleadings or briefs. Id. at 256. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Id. Summary judgment may be granted if the nonmoving party's evidence is merely colorable or is not significantly probative. Id. at 249-50. Once the moving party has carried its burden under Rule 56, the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "In the language of the Rule, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial. '" Id. at 587 (quoting FED. R. CIV. P. 56(e)) (emphasis in Matsushita ).

III. Analysis

A. Breach of Contract

Sprint claims that defendants entered a contract subject to the Terms when they purchased the subsidized iPhones, then breached ...


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