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Sprint Nextel Corporation v. Middle Man, Inc.

United States District Court, D. Kansas

January 27, 2015

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

MEMORANDUM AND ORDER

THOMAS MARTEN, District Judge.

This matter is before the court for sua spontae summary judgment on plaintiff Sprint Nextel Corporation's ("Sprint") claim for Breach of Contract against defendant The Middle Man, Inc. ("Middle Man") under FED. R. CIV. P. 56(f)(3). This action arises out of the resale of phones purchased from Sprint subject to Terms and Conditions ("Terms"). As discussed below, the court grants summary judgment in favor of Sprint for breach of contract against defendant Middle Man.

I. Background

Sprint filed a thirteen-count complaint against defendants Middle Man and Brian K. Vazquez on March 14, 2012. (Dkt. 1). Sprint alleged: Breach of Contract; Common Law Unfair Competition; Tortious Interference with Prospective Advantage; Civil Conspiracy; Unjust Enrichment; Conspiracy to Induce Breach of Contract; Common Law Fraud; Fraudulent Misrepresentation; Trafficking in Computer passwords, in violation of 18 U.S.C. § 1030(a)(6); Unauthorized Access, in violation of 18 U.S.C. 1030(a)(5)(C); Unauthorized Access with Intent to Defraud, in violation of 18 U.S.C. § 1030(a)(4); Federal Common Law Trademark Infringement and False Advertising, in violation of 15 U.S.C. § 1125(a)(1)(A) and (B); and Contributory Trademark Infringement. (Dkt. 1).

Middle Man filed a five-count amended counterclaim on November 7, 2012. (Dkt. 37). The court granted Sprint's Motion to dismiss Counts II-V of the counterclaim. Count I of the counterclaim sought declaratory judgment that the Terms do not prohibit purchasers from reselling phones. (Dkt. 85). Sprint moved for judgment on the pleadings as to Count I of Middle Man's counterclaim. (Dkt. 90). On February 25, 2014, the court determined 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).

On July 30, 2014, Sprint moved for partial summary judgment on Count I against Middle Man for Breach of Contract and Count III for Tortious Interference with a Contract. (Dkt. 140). The court granted partial summary judgment on Count I, finding in favor of Sprint on liability for Breach of Contract. (Dkt. 151, at 7). The court determined that a genuine dispute of material fact remained as to the causation and certainty of Sprint's claim for $2, 864.29 in damages for the breach. ( Id., at 8). The court denied summary judgment on Count III. ( Id., at 9-11).

On December 18, 2014, Sprint moved for Entry of Final Judgment on Count I and Voluntary Dismissal of All Remaining Claims. (Dkt. 153). Sprint also asserted a waiver of substantial contract damages in favor of nominal damages. ( Id., at 2). The court granted the voluntary dismissal of all remaining claims, but denied entry of final judgment because a finding of liability on a breach of contract claim without damages is not a final judgment. (Dkt. 157). Upon Sprint's waiver of substantial contract damages, the court notified the parties that it would consider summary judgment on Count I against Middle Man sua spontae pursuant to FED. R. CIV. P. 56(f)(3). ( Id., at 5).

This case is set for trial on February 3, 2015. Sprint's claim for breach of contract against Middle Man is all that remains of this dispute. The only outstanding issue as to that claim is damages.

II. Uncontroverted Facts

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 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.

III. Legal Standard

"After giving notice and a reasonable time to respond, the court may:... (3) consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute." FED. R. CIV. P. 56(f). Summary judgment is proper if "there is no genuine dispute as to any material fact" and a party is "entitled to judgment as a matter of law." FED. R. CIV. P. 56(a); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). An issue of material fact is genuine "if the evidence is such ...


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