Sprint Nextel Corporation v. Middle Man, Inc., The et al
Filing
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MEMORANDUM AND ORDER denying 170 Middle Man's Motion to Alter Judgment. Signed by Chief Judge J. Thomas Marten on 4/14/15. (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
Before the court is defendant The Middle Man, Inc.’s (“Middle Man”) Motion to
Alter or Amend Judgment under Federal Rule of Civil Procedure 59(e). (Dkt. 170). This
action arises out of the resale of subsidized phones purchased from plaintiff Sprint
Nextel Corporation (“Sprint”) subject to Terms and Conditions (“Terms”). As discussed
below, the motion is denied.
I. Background
Sprint filed a thirteen-count complaint against defendants Middle Man and Brian
K. Vazquez on March 14, 2012, alleging that defendants unlawfully resold phones
purchased on a Sprint customer account in connection with 24-month service
commitments. (Dkt. 1). On November 7, 2012, Middle Man filed a five-count Amended
Counterclaim on behalf of a putative class. (Dkt. 37). The court granted Sprint’s Motion
to dismiss Counts II-V of the Amended Counterclaim; Count I sought declaratory
judgment that the Terms do not prohibit purchasers from reselling Sprint phones. (Dkt.
85). Sprint moved for judgment on the pleadings as to Count I of the Amended
Counterclaim. (Dkt. 90). On February 25, 2014, the court ruled in Sprint’s favor,
interpreting the Terms as prohibiting the resale of new phones purchased on a
customer’s 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 because Middle Man resold subsidized
Sprint phones shortly after purchasing them on its customer account. (Dkt. 151, at 7).
The court granted Sprint’s motion for voluntary dismissal of all other claims on January
13, 2015. (Dkt. 157). Sprint also waived substantial contract damages in favor of nominal
damages. Id. The court granted summary judgment in favor of Sprint on its breach of
contract claim for nominal damages on January 27, 2015, and the judgment became
final. (Dkt. 166).
Middle Man timely filed this Rule 59(e) motion on February 24, 2015. (Dkt. 170).
II. Legal Standard
A court may reconsider a judgment by altering or amending it upon motion of a
party within twenty-eight days of the entry of the judgment. FED. R. CIV. P. 59(e). “The
purpose of a Rule 59(e) motion is to correct manifest errors of law or to present newly
discovered evidence.” Monge v. FG Petro-Machinery (Group) Co. Ltd., 701 F.3d 598, 611
(10th Cir. 2012) (brackets and internal quotation and citation omitted). “Grounds
warranting a motion to reconsider include (1) an intervening change in the controlling
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law, (2) new evidence previously unavailable, and (3) the need to correct clear error or
prevent manifest injustice.” Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir.
2000). “Thus, a motion for reconsideration is appropriate where the court has
misapprehended the facts, a party’s position, or the controlling law.” Id.; accord United
States v. Christy, 739 F.3d 534, 539 (10th Cir. 2014). However, “[a] motion to reconsider
should not be used to revisit issues already addressed or advance arguments that could
have been raised earlier.” Christy, 739 F.3d at 539; see also Kipling v. State Farm Mut. Auto.
Ins. Co., 774 F.3d 1306, 1309 (10th Cir. 2014) (denying as untimely an argument raised in
a Rule 59(e) motion that Colorado law permitted a certain insurance policy provision
where defendant previously argued only Minnesota law on the issue).
III. Analysis
Middle Man argues that the court (1) should clarify the scope and legal
characterization of the resale prohibition as interpreted by the court and (2) misapplied
the law because the resale restraint is not enforceable.
A. Effectuating Efficient Review Is Not Proper Grounds for Amending a Judgment
Middle Man does not provide authority supporting its argument that the court
may reconsider its interpretation of the Terms “[t]o effectuate an efficient review by the
Tenth Circuit . . . .” (Dkt. 170, at 4). Middle Man does not argue that the court’s
interpretation of the scope of the restriction is a misapprehension of “the facts, a party’s
position, or the controlling law,” that failure to amend the interpretation will result in
manifest injustice, or that an intervening change in law or new evidence demands
reconsideration. Servants of Paraclete, 204 F.3d at 1012. Therefore, defendant fails to show
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that reconsideration of the scope of the resale restriction is warranted on its Rule 59(e)
motion.
B. Middle Man’s Enforceability Arguments Are Untimely
Middle Man argues that the court “misapplied the law by assuming the
enforceability of a resale prohibition on goods that Sprint sold.” (Dkt. 170, at 1)
(emphasis in original). Specifically, Middle Man argues that it obtained the right to
resell the phones by obtaining title thereto “free-and-clear” because the resale
prohibition is an unlawful restraint on the alienation of goods and is therefore
unenforceable. It argues that such a restraint violates common-law principles,
evidenced by: (1) UCC § 2-403(1); (2) the first sale doctrine of copyright and trademark
law; (3) section 301 of the Lanham Act; (4) sections 1 and 2 of the Sherman Act and
section 3 of the Clayton Act; (5) the doctrine of patent exhaustion; and (6) general
principles of contract and property law.
Middle Man has addressed the issue of its right to resell in relation to Sprint’s
breach of contract claim throughout this litigation. In doing so, it has consistently relied
on contract interpretation to argue that it obtained the right to resell the phones because
the resale restriction did not apply to phones. (Dkts. 37, 82, 93, 94, 108, 110, 149). Middle
Man also argued that the restriction does not apply because the offer was never
accepted. (Dkt. 120).
However, this is the first time Middle Man has argued that the restriction is an
unenforceable restraint on alienation. It did not argue enforceability in its Motion to
Dismiss Count I, (Dkt. 16), nor did it raise it as a defense in its Answer. (Dkt. 36).
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Moreover, Middle Man already challenged the court’s ruling interpreting the Terms
under Rule 59(e), relying solely on interpretation arguments. (Dkt. 120, at 3-6).
Middle Man does not argue an intervening change in controlling law or newly
discovered evidence, but only that the resale restriction is unenforceable. This argument
could have been raised earlier, but was not; it is therefore not proper for the court to
consider on Middle Man’s Rule 59(e) motion.
IT IS ACCORDINGLY ORDERED this 14th day of April, 2015, that Middle Man’s
Motion (Dkt. 170) is DENIED.
s\ J. Thomas Marten
J. THOMAS MARTEN, JUDGE
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