Sprint Nextel Corporation v. Middle Man, Inc., The et al
Filing
106
MEMORANDUM AND ORDER granting in part and denying in part 90 Sprint's Motion for Judgment on the pleadings; and granting in part and denying in part 92 Middle Man's Motion for Judgment on the pleadings. Signed by District Judge J. Thomas Marten on 10/31/2013. (mss)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
SPRINT NEXTEL CORPORATION,
Plaintiff,
v.
Case No. 12-2159-JTM
THE MIDDLE MAN, INC., AND
BRIAN K. VAZQUEZ,
Defendants.
MEMORANDUM AND ORDER
The court has before it dueling motions for judgment on the pleadings by
plaintiff/counterclaim
defendant
Sprint
Nextel
Corporation
and
defendant/
counterclaimant The Middle Man, Inc. See Dkts. 90 & 92. The parties each seek
judgment on Count I of Middle Man’s counterclaim. After reviewing the parties’
arguments, the court is prepared to rule.
I. Background
Middle Man buys and resells pre-owned wireless phones, including phones
originally programmed to operate on the Sprint network. Typically, Middle Man buys
these phones from consumers who sell them online at sites like Craigslist.com. The
phones Middle Man purchases arrive in various states of use, from being unused and in
the original packaging to showing signs of wear and tear.
Sprint filed suit in this case alleging, among other claims, that Middle Man
induces Sprint customers to resell their phones in violation of their service agreement
with Sprint. In Count I of its counterclaim, Middle Man seeks declaratory relief that the
terms and conditions agreed to by Sprint customers do not preclude them from selling
the phones they purchased from Sprint.
The terms and conditions accompanying each new Sprint phone contain several
clauses that are relevant to this issue. The contract states:
Restrictions on Using Services.
You can’t use our Services: (a) in a way that could cause damage or
adversely affect any of our other customers or our reputation, networks,
property or Services; or (b) in any way prohibited by the terms of our
Services, the Agreement, or our Policies. You cannot in any manner resell
the Services to another party.
Dkt. 1, Exh. 1 at 6. On the last page of the contract, under the heading “Other Important
Terms,” the same language is found: “You cannot in any manner resell the Services to
another party.” Id. at 12.
The contract includes a “Basic Definitions” section, which provides definitions
relevant to the issue:
“Service” means Sprint branded or Nextel branded offers, rate plans,
options, wireless services, billing services, applications, programs,
products, or Devices on your account with us.
Id. at 5.
“Device” means any phone, aircard, mobile broadband device, any other
device, accessory, or other product that we provide you, we sell to you, or
is active on your account with us; . . .”
Id. The last relevant section appears on the first page of the contract:
Nature of our Service. Our rate plans, customer devices and features are
not for resale and are intended for reasonable and non-continuous use by
a person using a device on Sprint’s networks.
Dkt. 1, Exh. 1 at 2.
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The court must determine whether the above language precludes Sprint
customers from reselling their pre-owned phones.
II. Legal Standard
Judgment on the pleadings is appropriate under Fed. R. Civ. P. 12(c) when the
undisputed facts appearing in the pleadings and any facts subject to judicial notice
entitle the moving party to judgment as a matter of law. Sanders v. Mountain Am. Fed.
Credit Union, 689 F.3d 1138, 1141 (10th Cir. 2012). A partial motion for judgment on the
pleadings may be granted pursuant to Rule 12(c) in the same way that partial summary
judgment may be granted pursuant to Rule 56. See VNA Plus, Inc. v. Apria Healthcare
Grp., Inc., 29 F. Supp. 2d 1253, 1258 (D. Kan. 1998) (“By analogy to the provisions of
Rule 56, we find that a motion for partial judgment on the pleadings is appropriate”).
Judgment on the pleadings should not be granted “unless the moving party has clearly
established that no material issue of fact remains to be resolved and the party is entitled
to judgment as a matter of law. Park Univ. Enters., Inc. v. Am. Cas. Co., 442 F.3d 1239,
1244 (10th Cir. 2006). Documents attached to the pleadings are exhibits and are to be
considered in deciding a Rule 12(c) motion. Park Univ. Enters., Inc., 442 F.3d at 1244.
III. Analysis
The parties have agreed that although there might be a hypothetical choice of
law issue, the result is the same regardless of whether the court applies Kansas or
federal contract interpretation rules. With no material discrepancies between Kansas
law and federal law as to the principles of contract interpretation applicable here, this
court need not decide the issue for the purposes of this motion. See Henser v. Kephart,
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215 F.3d 1186, 1191 (10th Cir. 2000). With no dispute on the issue, the court applies
Kansas law.
The construction of a contract is a matter of law to be resolved by the court. Hart
v. Sprint Commc’ns Co., L.P., 872 F. Supp. 848, 854 (D. Kan. 1994). In construing a written
contract, the Court’s job “is to ascertain and effectuate the parties’ intentions whenever
possible.” Payless Shoesource, Inc. v. The Travelers Companies, Inc., 585 F.3d 1366, 1369
(10th Cir. 2009). “The intent of the parties and the meaning of a contract are to be
determined from the plain, general, and common meaning of terms used.” Wood River
Pipeline Co. v. Willbros Energy Services Co., 241 Kan. 580, 586 (1987) (citations omitted).
“[L]anguage used anywhere in the instrument should be construed in harmony with all
provisions and not in isolation.” Id. (citations omitted). Unless the contract is
ambiguous, both the intention of the parties and the meaning of the contract must be
determined exclusively from the instrument itself. Park Univ. Enters., Inc., 442 F. 3d at
1244. “A written contract is not ambiguous unless two or more meanings can be
construed from the contract provisions themselves.” Hart, 872 F. Supp. at 854 (citing
Albers v. Nelson, 809 P.2d 1194, 1197 (1991)). “Where a contract is complete and
unambiguous on its face, the court must determine the parties’ intent from the four
corners of the document, without regard to extrinsic or parol evidence.” Kay-Cee
Enterprises, 45 F. Supp. 2d at 843.
The parties have each asked for judgment on the pleadings on this issue. Sprint
argues that the terms and conditions unambiguously prohibit customers from reselling
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their phones. Middle Man argues that they do not. The facts are not in dispute, so this is
a question of pure contract interpretation.
The terms and conditions signed by every Sprint customer are unambiguous,
thanks to the definition section provided in the contract. The “Restrictions on Services”
section specifically states: “You cannot in any manner resell the Services to another
party.” As defined by the terms and conditions, “Service” means “Sprint branded or
Nextel branded offers, rate plans, options, wireless services, billing services,
applications, programs, products, or Devices on your account with us.” Finally,
“Devices” includes “any phone, aircard, mobile broadband device, any other device,
accessory, or other product that we provide you, we sell to you, or is active on your
account with us; . . .”
The terms and conditions and the definitions contained therein unambiguously
restrict the resale of any phone that is active on the customer’s Sprint account. The court
must work backwards for the clearest explanation. “Devices” are categorized as those
that: (1) Sprint provides the customer, (2) Sprint sells to the customer, or (3) are active
on the customer’s Sprint account. The definition of “Services” specifically includes only
the category of devices “on your account with us,” to the exclusion of the other categories.
The contract states that the customer may not resell the Services to another party, and
these definitions make it clear that “Services” refers to only the devices that are on the
customer’s Sprint account. Any phones that are not activated on Sprint’s wireless
network are not on the customer’s Sprint account; therefore, these phones may be
resold.
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The qualifying language in the definitions section is straightforward. The terms
and conditions are not a stand-alone contract, but are, as Sprint stated in its Complaint,
“part of [the consumer’s] service agreement [with Sprint],” which is provided to the
consumer “at activation.” When a phone is activated on the Sprint network, it becomes
the instrument through which Sprint provides the consumer with wireless coverage. If
the consumer could sell the activated phone to someone else, the purchaser of the
phone would receive wireless coverage from Sprint without ever entering into an
agreement with Sprint for such coverage. This is the situation the terms and conditions
specifically prohibit.
Until activation occurs, the wireless phone provides no Sprint services to the
consumer. The phone cannot be used until it is activated on a wireless network, at
which point the consumer will have to agree to the provider’s terms. Absent an
agreement, coverage will not be provided. There is no risk that a consumer will utilize
Sprint’s network without paying for the privilege. This is also the case with wireless
phones that were previously activated on the Sprint network but are not currently
activated, either because the service agreement expired or because the consumer
purchased an upgraded device.
IV. Conclusion
The court grants Sprint’s motion for judgment on Count I of Middle Man’s
counterclaim to the extent that the resale prohibition covers phones that are activated
on the Sprint wireless network. The contract unambiguously restricts this activity. The
court also grants Middle Man’s motion for judgment on Count I to the extent that the
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contract does not prohibit the resale of phones that are not active on the customer’s
Sprint account.
IT IS THEREFORE ORDERED this 31st day of October, 2013, that Sprint’s Motion
for Judgment on the Pleadings (Dkt. 90) and Middle Man’s Motion for Judgment on the
Pleadings (Dkt. 92) are each granted in part and denied in part, to the extent set forth
herein.
s/J. Thomas Marten
J. THOMAS MARTEN, JUDGE
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