Court: District Court, D. Maryland; March 31, 2017; Federal District Court
Plaintiffs Sprint Nextel Corporation and Sprint Communications Company, LP (collectively, Sprint) allege that various defendants, involved in reselling mobile devices, unlawfully obtained and sold Sprint devices without authorization, causing harm to Sprint. Sprint has filed a motion for partial summary judgment against the Wireless Buybacks defendants (Wireless Buybacks LLC, Wireless Buybacks Holdings LLC, Kevin Lowe, Edward Salkeld, Brendan Skelly) and the Simple Cell defendants (Simple Cell, Inc., Christopher Metzger, Nicholas F. Skelly). Both sets of defendants have submitted responses and cross motions for summary judgment. Additionally, Wireless Buybacks, LLC seeks relief from a previously issued temporary restraining order (TRO).
The court will grant Sprint’s motion for partial summary judgment in part and deny it in part, while also denying the cross motions from both defendant groups and Wireless Buybacks, LLC's request for relief from the TRO.
The case involves Sprint Phones designed for Sprint’s service, which Sprint sells at subsidized rates, recouping costs through service sales. Sprint claims the defendants sell stolen or fraudulently obtained devices, while defendants assert they operate legitimately in the secondary market. Sprint's complaint includes sixteen legal claims, and the motion for summary judgment targets several, including breach of contract, conversion, replevin, tortious interference, unfair competition, unjust enrichment, and conspiracy against all defendants. The Wireless Buybacks defendants and Simple Cell defendants have cross-moved for summary judgment on various claims, including those not covered by Sprint's motion.
Sprint has filed responses to the motions from the Wireless Buybacks and Simple Cell defendants, identified by ECF Nos. 345 and 346. The defendants have subsequently replied in support of their cross motions for summary judgment, with relevant filings at ECF Nos. 352 and 354. Wireless Buybacks has raised an objection to new evidence presented by Sprint in its Reply/Response (ECF No. 353), to which Sprint has replied (ECF No. 356). Additionally, Wireless Buybacks has requested relief from a Temporary Restraining Order (TRO) issued on March 5, 2013 (ECF No. 292), with Sprint opposing this motion (ECF No. 295) and Wireless Buybacks providing a reply (ECF No. 296).
The legal standard for summary judgment under Federal Rule of Civil Procedure 56(a) requires that the movant demonstrates no genuine dispute of material fact exists, warranting judgment as a matter of law. A dispute is deemed genuine if a reasonable jury could rule for the nonmoving party, and a fact is material if it could influence the case's outcome according to applicable law. The presence of some factual dispute alone does not preclude summary judgment if the motion is properly supported. Courts must view evidence favorably towards the nonmoving party, drawing all reasonable inferences in their favor while also preventing unsupported claims from proceeding to trial.
Defendants challenge the admissibility of certain evidence presented by Sprint for summary judgment. The court will first address these objections before reviewing the motions for summary judgment. Sprint alleges that defendants are involved in trafficking stolen or fraudulently acquired Sprint phones, supported by purchase and sales records containing Electronic Serial Numbers (ESNs). Sprint's senior fraud manager, Clint Breithaupt, analyzed the ESNs by converting them into two formats and inputting them into Sprint databases to gather associated information, which was then compiled into spreadsheets. These spreadsheets summarize the number of phones suspected of fraudulent activity based on Sprint's assumptions, such as categorizing all lost or stolen phones together and flagging phones not activated within 30 days as acquired through "upgrade fraud."
Sprint seeks to admit these spreadsheets as "business records," but defendants argue they are inadmissible summaries since they fail to provide the original data required by Federal Rule of Evidence 1006. Sprint acknowledges that the spreadsheets wouldn't qualify under Rule 1006 but asserts they are admissible as business records under Rule 803(6). However, the court determines that the spreadsheets are more accurately classified as summaries and decides not to consider them.
A record qualifies as a "business record" under Rule 803(6) if it meets five criteria: (A) it was created at or near the time by someone knowledgeable, (B) it was kept in the regular course of business activities, (C) creating the record was a regular practice, (D) testimony from a custodian or qualified witness establishes these conditions, and (E) the opponent fails to demonstrate any issues with the source or preparation method that would undermine trustworthiness. Business records are generally considered reliable, while those created for litigation are typically viewed as unreliable. Evidence extracted from an electronic database for litigation may be admissible as a business record if the underlying dataset complies with Rule 803(6). However, the proponent must prove that the information was gathered in accordance with these requirements. Additionally, if a database is queried for litigation, the extracted records must be minimally altered; courts distinguish between simple data retrieval and selective data compilation. The two spreadsheets in question do not meet the business records standard, as they are seen as summaries rather than direct business records.
The Breithaupt testimony outlines that the spreadsheets in question aggregate data from at least three Sprint databases and have been modified to eliminate redundancies. They include analysis based on certain assumptions from Sprint, distinguishing them from mere "computer printouts." However, the court rejects the admission of these spreadsheets as "business records" due to insufficient information on how the underlying data was collected and maintained. Sprint's reliance on the First Breithaupt Declaration, which lacks an explanation of the data collection process, is inadequate. A qualified witness is required to explain the record-keeping system and confirm compliance with Rule 803(6). Although the First Breithaupt Declaration indicates that Sprint conducts regular ESN analyses for fraud investigation, this alone does not establish the reliability necessary for the spreadsheets to be considered business records.
Sprint may seek to present the spreadsheets as summaries under Rule 1006, but the court will not accept them as business records for summary judgment purposes. Additionally, Sprint argues the spreadsheets could be admissible under the residual exception in Fed. R. Evid. 807, which applies only if the evidence is more probative than other obtainable evidence. Both parties agree that the spreadsheet information can be introduced under Rule 1006 once the underlying data is made available.
The defendants seek to strike portions of the First Breithaupt Declaration citing hearsay, particularly conversations involving Sprint officials with individuals and entities like Diana LaFleur and Katy Independent School District. The Wireless Buybacks defendants also request the removal of hearsay references to conversations with Tiffany Kennedy and Breeden Mechanical, Inc. Sprint acknowledges the hearsay nature of the contested testimony but argues for exceptions that do not apply in this context.
The "statements against interest" exception requires a declarant to be "unavailable," which necessitates the proponent to demonstrate a genuine effort to obtain the witness's testimony. In this instance, Sprint fails to establish why Kennedy qualifies as an "unavailable declarant," simply noting the inability to contact LaFleur without further justification. Additionally, the "business records" exception is not applicable since Sprint does not provide the actual employee notes that are purportedly standard business practice, rendering the exception invalid. Consequently, the court will disregard parts of the First Breithaupt Declaration that reference conversations involving LaFleur, Kennedy, and others. Wireless Buybacks also seeks to strike the entirety of the First Breithaupt Declaration, citing that Breithaupt offers expert testimony on complex issues without having been disclosed as an expert or providing an expert report. Although the specific issues of contention are not detailed, it is inferred that the objections pertain to damage estimates presented in the declaration, which outline Sprint's expected revenue and associated damages from trafficked phones.
Under Fed. R. Evid. 701, lay opinion testimony must be based on the witness’s perception and not require specialized knowledge. Courts typically favor such testimony if grounded in personal knowledge and subject to cross-examination. Company officials can testify about future profits or losses based on their personal experience, as demonstrated in relevant case law. For instance, in Lord, Taylor, LLC v. White Flint, L.P., an employee was allowed to testify about damages based on his work experience, and in Wanzer, testimony regarding future profits based on personal financial knowledge was permitted. Lay opinion testimony concerning lost profits is valid if the witness has specific knowledge from their role in the company, as seen in Lightning Lube, Inc. v. Witco Corp. Here, Breithaupt, a senior fraud investigator with knowledge of Sprint Phones' fraudulent activities and their financial impacts, is permitted to testify on damages as a lay witness.
Separately, the Wireless Buybacks defendants objected to what they deemed "new evidence and arguments" in Sprint's Reply and Breithaupt's declarations submitted thereafter. Courts generally do not consider new evidence presented in reply briefs unless it rebuts specific opposition arguments. The defendants specifically objected to parts of the Second Breithaupt Declaration concerning trademark claims and CFAA violations, which were not part of Sprint’s earlier motion. Sprint clarified that those portions pertain only to the Simple Cell defendants, leading the court to deem this objection irrelevant to the summary judgment motions involving the Wireless Buybacks defendants.
The Wireless Buybacks defendants assert that Sprint's Reply introduces new conspiracy allegations involving interactions with Mr. Sergio Tijerina, specifically claiming unlawful acts like hacking into Sprint’s systems. They note that the original motion for partial summary judgment did not allege such a conspiracy involving Tijerina, only mentioning him in relation to upgrade subsidy fraud. Sprint argues it can now present evidence of Tijerina as a co-conspirator to challenge the defendants' claims about their practices in selling non-stolen phones and to support its conspiracy claim. The court will permit this evidence to counter the assertion that Wireless Buybacks rigorously checks for stolen phones but will not allow it to substantiate new conspiracy claims against Tijerina.
Additionally, the Wireless Buybacks defendants object to the Third Breithaupt Declaration submitted by Sprint four months after the initial motion, which aims to demonstrate Sprint's ownership of phones found with Wireless Buybacks by showing they were stolen from Sprint facilities. This evidence was not disclosed during discovery, and its admissibility is governed by Fed. R. Civ. P. 37(c)(1), which excludes undisclosed evidence unless the failure to disclose is justified or harmless. The parties also contest whether the new evidence qualifies as an admissible business record under the rules.
Rule 37(c)(1) allows for the exclusion of evidence in summary judgment proceedings if a party has failed to meet disclosure and supplementation obligations, thereby preventing surprise and prejudice to the opposing party. The Fourth Circuit's decision in Southern States established a five-factor test to assess whether non-disclosure is justified or harmless: (1) the surprise to the opposing party, (2) the ability to cure that surprise, (3) potential disruption to the trial, (4) the importance of the evidence, and (5) the explanation for non-disclosure. The burden rests on the non-disclosing party to prove justification or harmlessness. Courts have broad discretion in applying these factors and are not obligated to consider all of them.
In the current case, the court will not strike the evidence submitted with the Third Breithaupt Declaration, although it will not be considered for summary judgment. While Sprint's failure to disclose appears unjustified due to the prolonged duration of the case and inadequate explanation for the delay, the evidence is crucial for Sprint's claims. As there is no pending trial, the potential for surprise is manageable. Thus, the court's decision aligns with precedent that allows for non-exclusion of evidence when non-disclosure can be corrected, does not disrupt the trial, and is significant to the case.
Separately, Sprint has moved for summary judgment on its breach of contract claim against Wireless Buybacks, asserting that they breached the contract by failing to pay service charges and termination fees for 667 phones. Conversely, the Simple Cell defendants have countered with their own summary judgment motion, claiming they do not have a contractual relationship with Sprint, thus cannot be liable for breach.
In June 2011, Wireless Buybacks and Brendan Skelly initiated three Sprint accounts, ordering 667 new phones under a service contract. They failed to make payments on two accounts and only partially paid on the third, amounting to $20,000. Sprint issued invoices for the outstanding amounts and notified Skelly that the accounts would be canceled if payment was not made. Throughout August and September 2011, Sprint continued to send reminders about the non-payments. The accounts were ultimately terminated, and Sprint did not recover the phones. In 2013, Enhanced Recovery Company, LLC pursued collection efforts for the unpaid amounts.
The Wireless Buybacks defendants argue that Sprint waived its right to monetary damages by opting to cancel the contracts without demanding payment or the return of the phones at the time of cancellation. They contend that this conduct misled them into thinking they could dispose of the phones freely. However, the legal principle of waiver requires clear intent, which the defendants fail to demonstrate. Although Sprint did not initially demand payment, it later sought payment, and the contract includes a non-waiver clause asserting that Sprint retains its right to enforce provisions related to billing and payment, even after contract termination. Consequently, the defendants' claims regarding waiver and damages lack supporting evidence.
Wireless Buybacks argues that Sprint is precluded from recovering damages due to a breach of contract because Sprint did not attempt to reclaim the phones it had provided. This inaction allegedly misled Wireless Buybacks into believing it could resell the phones, which is essential for asserting an estoppel claim. Wireless Buybacks carries the burden of proof to demonstrate that it was misled and suffered a detrimental change in position; however, it has only provided a general assertion about returning the phones, which is insufficient.
Additionally, Wireless Buybacks contends that Sprint cannot recover Early Termination Fees (ETFs) because it failed to invoice for them. They claim this constitutes a waiver or estoppel, or that Sprint itself breached the contract. According to the contract terms, ETFs apply when service is terminated early, either by the customer or by Sprint for valid reasons, including non-payment. Wireless Buybacks argues that Sprint's failure to invoice them for these fees constitutes an independent breach.
The court notes that the waiver theory fails due to a non-waiver provision, and Wireless Buybacks has not shown that Sprint intended to waive its rights. The estoppel claim also fails because Wireless Buybacks has not proven that Sprint's inaction led to a prejudicial change in its conduct. Furthermore, Wireless Buybacks asserts that Sprint's lack of invoicing for ETFs is a breach of contract, but the court finds no obligation in the contract for Sprint to invoice.
Finally, Wireless Buybacks claims that the contract's liquidated damages provision limits Sprint's recovery to the specified amounts for outstanding damages and unpaid ETFs. They reference language regarding customer responsibility for charges prior to service deactivation, suggesting that this constitutes a liquidated damages provision. Sprint argues that the ETF provision serves as an alternative performance method rather than a liquidated damages provision.
A contract with alternative performance methods allows a promisor to choose between two desirable options at the time of performance. Unlike a liquidated damages provision, which is a pre-agreed remedy for breach, Wireless Buybacks had a genuine choice: to either pay monthly charges for two years or a one-time early termination fee (ETF) to avoid those charges. Consequently, the ETF is not considered a liquidated damages remedy. The court finds Wireless Buybacks liable for breach of contract but postpones ruling on the damages amount due to disputes raised by Wireless Buybacks regarding their certainty. Additionally, the court denies Sprint's request for injunctive relief.
In a separate matter, the Simple Cell defendants seek summary judgment against Sprint, claiming no contractual relationship exists between them and Sprint. Sprint counters with evidence suggesting that Simple Cell purchased phones from them and requests to amend its pleadings to seek summary judgment in its favor. The court will first consider the Simple Cell defendants' motion. They provide an affidavit stating no contracts were signed with Sprint. Sprint’s evidence, including transaction records, creates a genuine dispute of material fact, leading the court to deny Simple Cell's motion and also deny Sprint's late request for summary judgment, as its original complaint did not allege a breach of contract by the Simple Cell defendants. Lastly, Sprint alleges tortious interference based on Wireless Buybacks purchasing phone upgrades from Sprint customers.
Sprint offers customers discounted phone upgrades contingent upon their agreement to remain on Sprint’s service for an additional term. In Maryland, tortious interference can occur through the inducement to breach an existing contract or through wrongful interference with economic relationships without breach. The elements of tortious interference with contract include: (1) the existence of a contract between the plaintiff and a third party, (2) the defendant’s knowledge of that contract, (3) intentional interference by the defendant, (4) breach by the third party, and (5) resulting damages to the plaintiff.
There is no dispute regarding the existence of a contract between Sprint and its customers or that Wireless Buybacks purchases upgrades from these customers. The main contention is whether the customers breached their contracts by selling upgrades to Wireless Buybacks. The contract prohibits customers from reselling services, which includes devices on their accounts. Wireless argues that the contract's definition of "Service" is ambiguous, asserting that it contradicts ordinary consumer assumptions. However, if a contract defines terms differently than common understanding, the contract's definitions take precedence.
Wireless also claims ambiguity regarding which phones are "on [a customer’s] account," suggesting that customers might be allowed to resell phones not activated on Sprint's network. Sprint counters that the definition of "Device" encompasses both activated and non-activated phones, though this does not clarify if the resale prohibition applies solely to activated devices. The resolution of these definitions is critical to determining if a breach occurred, which would affect Wireless Buybacks' potential liability for tortious interference.
A provision in the Sprint contract explicitly states that its "rate plans, customer devices, services and features are not for resale," which Sprint interprets as prohibiting the resale of all Sprint phones. Although the term "customer devices" is undefined, the court emphasizes the need to interpret the contract as a whole, concluding that the parties intended to bar the resale of Sprint phones, regardless of activation status.
In a dispute regarding intentional interference, Wireless claims it did not encourage Sprint customers to breach their contracts and asserts that it only engaged in transactions with Ms. Kennedy, who indicated her phones were not under contract. Wireless provides email correspondence as evidence to support its position, arguing that it interacted with Kennedy only after she approached them and that she initiated the sales.
Conversely, Sprint presents evidence suggesting that Wireless knowingly purchased phones from Sprint customers in violation of their contractual agreements. This includes correspondence indicating that Wireless sought out phone upgrades from customers and acknowledging that these purchases conflicted with Sprint's requirements for activation. Testimony from Wireless officials reflects an awareness of the contractual obligations and discusses strategies to circumvent potential tracking by Sprint. Additionally, a text message from a Wireless representative seemingly encourages a customer to sell Sprint phones, despite Sprint's restrictions.
Sprint provides an affidavit from Ms. Kennedy stating that in January 2012, Brendan T. Skelly offered to purchase new iPhones from her corporate account. This evidence, along with Clint Breithaupt's declaration, indicates that Wireless was aware Sprint customers had contracts prohibiting resale to Wireless and still pursued phone upgrades, leading to customers selling their phones to Wireless Buybacks. Sprint contends that this practice damages its business by disrupting the migration of customers to newer devices necessary for effective network performance, potentially leading to customer dissatisfaction and blame towards Sprint when devices fail.
Wireless Buybacks counters by questioning the extent of harm claimed by Sprint, arguing that Sprint did not provide evidence that customers participating in the upgrade program failed to complete their contracts. Additionally, Wireless speculates that any phones sold must have been activated on Sprint's network, which would benefit Sprint. However, the court finds that these arguments do not create a genuine issue regarding the existence of harm, as speculation cannot counteract a summary judgment motion.
Regarding tortious interference with business relationships, Sprint has demonstrated interference with its contracts, making further examination of alternative claims unnecessary. In the case of Simple Cell, both Sprint and the Simple Cell defendants filed cross motions for summary judgment concerning tortious interference with contract, which the court denied due to existing material facts in dispute. Sprint alleges that Simple Cell solicited upgrades through a program that Simple Cell claims was never implemented, evidenced by a declaration from Christopher Metzger.
Sprint alleges that Simple Cell induced Diana LaFleur to breach her contract by supplying phones, but Metzger asserts that Simple Cell did not solicit her. Despite evidence of business transactions between Simple Cell and LaFleur, there is no proof of inducement by Simple Cell for the breach. Consequently, both parties' motions for summary judgment are denied.
Regarding tortious interference with business relationships, the court will deny summary judgment for Simple Cell as the plaintiff must demonstrate intentional actions aimed at damaging lawful business with malicious intent, resulting in actual loss.
In the conversion claims, the plaintiff must show that the defendant exerted ownership over another's property without right and had the intent to control it inconsistently with the plaintiff's rights. For replevin, the plaintiff must prove immediate possession rights at the time the writ is issued. Sprint's claim of conversion is based on its analysis of ESNs from purchases and sales records, asserting possession of over 50,000 "stolen" phones. Sprint's classification includes various categories like "Stolen/Burglary/Lost," but it does not differentiate between lost and stolen phones, which affects the viability of their claims. Wireless argues that Sprint relinquished its possessory interest upon sale and that the inability to distinguish types of lost property undermines Sprint's argument for summary judgment.
Wireless contends that Sprint must demonstrate that the phones in the defendants' possession were stolen from Sprint rather than sold by a Sprint customer. Sprint seems to accept that it no longer possesses a claim to phones originally sold to customers, yet it seeks to prove that certain phones were stolen directly from it. Evidence presented includes a claim that 29 phones associated with Simple Cell were stolen from Sprint and that 4,393 Sprint phones, along with 100 stolen lease phones and 707 stolen installment billing phones, were possessed by Wireless. Sprint's requests for summary judgment regarding conversion and replevin claims against the Wireless Buybacks and Simple Cell defendants are denied, as the supporting evidence is inadmissible for summary judgment due to its reliance on ESN Analyses and a declaration not disclosed during discovery. The court also denies Simple Cell's cross-motion for summary judgment to allow for further record development. Regarding unfair competition, Maryland law defines it as actions that harm another's business through deceitful means. While fraud is not strictly necessary for an unfair competition claim, the plaintiff must show that the misconduct jeopardized its business. Sprint's claims are similarly denied because they rely on the same inadmissible evidence.
Genuine disputes exist regarding whether Wireless Buybacks or Simple Cell engaged in actions to exclude Sprint from the marketplace or harm it as a competitor, as defined under unfair competition law. The court denies Simple Cell’s cross motion for summary judgment, which primarily critiques Sprint's ESN Analysis, emphasizing the need for further record development on this analysis.
In the context of unjust enrichment claims in Maryland, three elements must be satisfied: 1) a benefit conferred by the plaintiff upon the defendant, 2) the defendant's knowledge of the benefit, and 3) the inequity of the defendant retaining the benefit without payment. Unjust enrichment is viewed as a quasi-contract claim, and if an express contract governs the issue between Sprint and Wireless Buybacks, Sprint cannot pursue unjust enrichment. Sprint acknowledges its claim seeks relief only if other claims are unsuccessful. The court denies Sprint's motion for summary judgment on unjust enrichment, stating that if it is an alternative to a breach of contract claim, it is barred. Simple Cell's argument that Sprint's customer contracts preclude an unjust enrichment claim is incorrect unless a contract exists on the same subject matter.
The requirements for a civil conspiracy claim in Maryland include: 1) an agreement between two or more persons, 2) an unlawful act in furtherance of the conspiracy, and 3) actual legal damage to the plaintiff. An unlawful act can encompass torts or breaches of contract rather than strictly criminal actions.
Civil conspiracy cannot independently support a damage award without a separate tortious injury to the plaintiff, as established in *Lloyd v. Gen. Motors Corp.*. Sprint alleges three separate conspiracies: between Wireless Buybacks and John Snyder, between Wireless Buybacks and Tiffany Kennedy, and between Wireless Buybacks and Simple Cell.
1. **Wireless Buybacks and John Snyder**: Sprint claims Snyder and Brendan T. Skelly conspired to set up Wireless accounts to buy discounted Sprint upgrades for resale, despite knowing this was against their contractual obligations. However, while there may be evidence of wrongdoing, the necessary independent tortious injury for a civil conspiracy claim is not clearly established.
2. **Wireless Buybacks and Tiffany Kennedy**: The claim involves Kennedy's misuse of her corporate account to acquire and resell Sprint upgrades. Although Kennedy admits to abusing her access, there is insufficient evidence to prove a mutual agreement with Skelly on an unlawful act, as there is no clear indication that Kennedy viewed the resale of phones as unlawful, despite her actions violating employer policy.
3. **Wireless Buybacks and Simple Cell**: Sprint alleges a conspiracy involving Simple Cell defendants in unlawfully obtaining Sprint phones and profiting together. However, the evidence indicates that their interactions were primarily legitimate business dealings.
The court will deny Sprint's requests for summary judgment on all three alleged conspiracies due to genuine disputes regarding the nature of the interactions involved. Additionally, Wireless Buybacks defendants have filed cross motions for summary judgment concerning Sprint’s breach of contract claims, which will also be addressed.
Sprint asserts that Wireless Buybacks breached its contract by failing to pay for monthly service charges and early termination fees for 667 ordered phones, a claim the court supports. In Maryland, individuals can be liable for a corporation's breach of contract if they use the corporation to commit fraud. There are disputed facts regarding the intent and involvement of individuals Lowe, Salkeld, and Skelly, leading to the denial of summary judgment for these parties.
Simple Cell has filed a cross-motion for summary judgment against Sprint’s claims under the Computer Fraud and Abuse Act (CFAA), specifically 18 U.S.C. 1030(a)(6) and 1030(a)(4), which involve knowingly accessing and trafficking in computer passwords or information without authorization with intent to defraud. Sprint contends that Simple Cell engaged a third party to hack into its networks to verify the status of phones, asserting this constitutes a violation. Simple Cell counters that evidence of intent to defraud is insufficient. The court denies summary judgment on these CFAA claims, allowing for further examination of intent and other necessary elements at trial.
Additionally, Simple Cell seeks summary judgment on Sprint's claim under 18 U.S.C. 1030(a)(5)(C) for intentionally accessing a protected computer without authorization and causing damage, which the court also denies.
For trademark infringement claims under the Lanham Act, a plaintiff must demonstrate: possession of a mark, the opposing party's use of that mark, the use occurred in commerce, it was in connection with sales or advertising of goods or services, and it was likely to confuse consumers.
Simple Cell's motion for summary judgment is denied based on evidence from Sprint indicating a likelihood of confusion and the relevance of the “first sale” doctrine. Simple Cell's cross-motion for summary judgment regarding employee Shannon Skelly is also denied, as Sprint has presented sufficient evidence to dispute her claimed lack of involvement in the company's operations.
Wireless Buybacks, LLC has requested relief from a temporary restraining order (TRO) that prevents it from selling 1,114 non-refurbished iPhone 5s, raising three key issues: whether the phones may be sold if they are no longer under the TRO, if Sprint must provide additional information about the phones to maintain the TRO, and whether Sprint should be required to post a higher bond if the TRO is upheld. The TRO bars the sale of these iPhones unless Sprint confirms they are not "stolen," specifically obtained through burglary, subscription fraud, or equipment fraud.
Wireless Buybacks previously submitted a list of 692 phones to Sprint, seeking confirmation that they were not stolen. Sprint found that at least 442 of these phones were linked to theft or fraud. Although not all were classified under the TRO's specified wrongdoing, Sprint argued that retaining these phones is critical evidence in ongoing litigation. In March 2016, Wireless Buybacks requested a reevaluation of 621 ESNs due to conflicting information from a third-party database, which had indicated they were "clean." However, Sprint later informed Wireless Buybacks of a coding error in the database that had produced inaccurate results.
Wireless Buybacks' attempts to verify the status of specific phones through a third-party database, which indicates they are “stolen, lost, or blocked,” have raised concerns regarding Sprint's actions. Wireless Buybacks challenges the explanation of a “coding error” as implausible and suggests that Sprint manipulated the database to inhibit sales of these phones. The Temporary Restraining Order (TRO) stipulates that Wireless Buybacks may not sell the phones unless Sprint confirms they are not “stolen” according to the TRO’s definition. Thus, indications from the third-party database do not override the TRO's provisions.
Despite evidence that some phones may not be classified as “stolen,” the court finds no reason to alter the bond requirements or modify the TRO based on Wireless Buybacks' claims. The court suggests that Sprint could provide additional documentation to support its classification of the phones, which might address Wireless Buybacks' concerns regarding the 621 phones it believes are sellable. For the remaining 493 ESNs that Wireless Buybacks asserts are “clean,” the court mandates that Sprint furnish evidence justifying their designation as “stolen.”
Consequently, Sprint's motion for partial summary judgment is partially granted and denied, while the cross motions for summary judgment from several defendants, including Brendan T. Skelly, Kevin Lowe, and others, are denied. Wireless Buybacks' motion for relief from the TRO is also denied. Additionally, a consent motion regarding page limits for certain defendants is retroactively granted, and a motion to file under seal is approved. The document lists multiple legal claims against various defendants, although Sprint's motion does not address all parties involved.
Unpublished opinions serve as persuasive reasoning but are not binding precedent. Simple Cell has requested documentation related to Sprint’s ESN Analysis, leading a magistrate judge to order Sprint to provide documentation for 10 selected ESNs while clarifying that Sprint remains responsible for producing all underlying documents per the Federal Rules of Evidence. The court has not determined if the production of these notes suffices to invoke the business records exception. Wireless Buybacks claims the unreliability of Sprint’s ESN databases and related spreadsheets, but the court finds no need to address these claims as the spreadsheets fail to qualify as business records.
There is also a dispute regarding the admissibility of an expert report by Whitey Bluestein, which the court will not consider in parts already deemed inadmissible and due to its unsworn status. Wireless Buybacks accuses Sprint of using new evidence related to trademark claims to support its request for injunctive relief, but the court will not factor these trademark claims into its decision. Wireless Buybacks references a contract provision about Early Termination Fees (ETF) but the court finds it does not impose an obligation on Sprint to invoice Wireless Buybacks, and its relevance is questionable since Sprint initiated the termination.
Moreover, Wireless argues that summary judgment is premature as the records do not clarify which Sprint phones were active on consumer accounts at the time of acquisition by Wireless. However, it is undisputed that Sprint customers breached contracts by selling phones to Wireless, with specific examples noted, including Ms. Kennedy's sale of phones prohibited under her employer's contract with Sprint. The dispute also pertains to phones under Sprint's lease or installment billing agreements, which explicitly prohibit resale, a point Wireless appears to acknowledge.
Sprint presents a text message from Kevin Lowe to Brendan Skelly, claiming that most consumers are unaware they cannot sell their phones, suggesting Sprint prefers this information remains undisclosed. However, the submitted exhibit only includes a partial version of the message. In its reply brief, Sprint introduces new theories of civil conspiracy. The court indicates that it will not consider these arguments if they exceed those initially presented in Sprint's original motion for partial summary judgment. Furthermore, the court will not entertain any new issues raised in Sprint's motion regarding Simple Cell's cross motion for summary judgment. The document defines "subscription fraud" as the unauthorized use of another's identity to create an account, acquire phones, and sell them illegally, while "equipment fraud" involves ordering a phone charged to a legitimate customer's account.
