SPRINT NEXTEL CORPORATION; SPRINT COMMUNICATIONS COMPANY L.P., Plaintiffs - Appellees,
WIRELESS BUYBACKS HOLDINGS, LLC; WIRELESS BUYBACKS, LLC, Defendants - Appellants, and SIMPLE CELL INC.; VAUGHN SOLUTIONS, LLC; HALO BRANDED SOLUTIONS, INC.; MARSHA LAVAIGE; MELISSA LAVAIGE; KEVIN A. LOWE; CHRISTOPHER E. METZGER; KEVIN EDWARD SALKELD; BRENDAN T. SKELLY; SHANNON A. SKELLY; NICHOLAS F. SKELLY; BRETT VAUGHN, Defendants.
Argued: May 9, 2019
from the United States District Court for the District of
Maryland, at Baltimore. Catherine C. Blake, District Judge.
Charles Randolph Price, TANDEM LEGAL GROUP, LLC, Washington,
D.C., for Appellants.
Heidrick, POLSINELLI PC, Kansas City, Missouri, for
Russell S. Jones, Jr., John M. Challis, POLSINELLI PC, Kansas
City, Missouri, for Appellees.
DIAZ, FLOYD, and RICHARDSON, Circuit Judges.
RICHARDSON, CIRCUIT JUDGE
is a cell-phone service provider. Besides providing cellular
service, it also sells phones to its customers. This includes
offering "upgraded" phones at steep discounts,
typically in exchange for customers renewing their contracts.
The discounts are so steep that Sprint winds up selling the
phones for less than they can command on the second-hand
market. Several businesses across the country have sought to
profit from this price differential by engaging in arbitrage:
they buy "upgraded" phones from customers and then
resell them at higher prices.
thinks that these arbitrageurs are interfering with its
business and has brought lawsuits across the country to stop
them. This is one such case. While Sprint brought several
claims against multiple defendants, the only remaining claim
on appeal is one for tortious interference against Wireless
Buybacks, one such arbitrageur. Sprint asserts that its
written contract with customers categorically prohibits them
from reselling their phones, and that Wireless Buybacks has
wrongfully induced customers to do just that. Wireless
Buybacks argues that the contract is ambiguous at best
regarding when customers may sell their phones.
district court found that the contract unambiguously barred
resale and granted partial summary judgment for Sprint. We
disagree. We therefore vacate the relevant portion of the
district court's summary-judgment order and remand for
like other cell carriers, offers customers upgraded phones at
heavily discounted prices. For example, Sprint has offered
new iPhones to customers for as little as $199. See
J.A. 220. This is far below what Sprint pays for the phones
(much less the retail price); it claims that these price
discounts amount to over $400 per phone on average. J.A. 725.
In exchange for these discounts, Sprint requires customers to
sign up for fixed-term contracts, often lasting as long as
two years. Upgraded phones thus serve as a loss-leader:
Sprint sells them at heavily discounted prices to entice new
customers to sign up and existing customers to renew their
contracts. Sprint ultimately profits because the earnings
from these service contracts more than offset the discounts
on the phones. In this way, upgraded phones are like the
"doorbuster" deals that brick-and-mortar retailers
use to get customers in the door.
Buybacks is one of several businesses that has tried to turn
upgraded phones into profits. Its business model was simple
arbitrage: buy low and sell high. Wireless Buybacks explained
the details in a promotional video aimed at commercial
customers. These customers purchase multiple lines of cell
service for use by their employees but do not always take
advantage of upgrade offers from their service providers. Yet
they are effectively paying for these unused upgrades through
their regular service charges. Wireless Buybacks offered
businesses a way to "leverage" unused upgrades and
"turn [them] into cash." When contacted by a
business, Wireless Buybacks did the following: (1) performed
a free analysis of the business's account with its
cell-phone carrier; (2) explained to the business how many
upgrades they had available and how much money Wireless
Buybacks would pay for them; (3) gave the business
instructions on how to order the upgraded phones from the
carrier; and (4) once the phones arrived, bought them from
the business, paying cash. The video said that there was
"really no catch," except that cell carriers expect
businesses to renew their service contracts in exchange for
the upgraded phones. The video also explained how Wireless
Buybacks made money: by reselling the phones at higher
claims that it is harmed by this practice of reselling phones
in several ways. Most obviously, Sprint loses money when it
sells upgraded phones to customers who would otherwise
maintain their existing service without ordering upgrades.
Sprint also advances a subtler theory of harm. Customers who
use new phones with the latest technology get better service.
When customers resell their upgraded phones, that means they
are continuing to use old phones-leading to lower customer
satisfaction. In some cases, Sprint claims, customers cancel
their service as a result.
theory of liability is contractual. It claims that its
customers promised not to resell the phones when they agreed
to Sprint's terms and conditions of service, the written
contract here. Businesses like Wireless Buybacks, Sprint
asserts, tortiously interfered with that contractual
relationship by inducing customers to resell upgraded phones
in violation of the terms and conditions.
contract allegedly prohibits reselling phones in these
• "Nature of our Service. Our rate
plans, customer devices, services 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."
• "Basic Definitions In this
document: . . . (3) '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; and (4)
'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. 'Service(s)' also includes any
other product or service that we offer or provide to you that
references these General Terms and Conditions of Service
('Ts&Cs')." J.A. 744.
• "Restrictions On Using Services
. . . . You cannot in any manner resell the Services to
another party." J.A. 746.
"Nature of our Service" clause, Sprint argues,
unambiguously prohibits the resale of any "customer
devices," which include phones. And so too does the
"Restrictions On Using Services" clause because the
definition of "Services," in Sprint's view,
unambiguously includes upgraded phones. Or at least, the
contract prohibits resale during the two-year renewal period
that follows an upgrade-Sprint has appeared, at times, to
advance this narrower proposition. See J.A. 894
(Sprint employee declaration stating that the resale
prohibition no longer applies "after the
customer has completely satisfied its financial obligations
with Sprint"). Wireless Buybacks disagrees and argues
that customers who own their phones outright are free to
are some phones, however, that both Sprint and Wireless
Buybacks agree customers cannot resell. They agree that
customers cannot resell phones that are active on
Sprint's network. They also agree that customers cannot
resell phones that Sprint has provided pursuant to lease and
installment-billing agreements. The agreement governing
leased phones tells customers that they cannot resell the
phones "unless and until you exercise your purchase
option." J.A. 868. The installment-billing agreement
gives Sprint a security interest in the phones and forbids
resale "while the Goods remain subject to our security
interest." J.A. 869. The parties therefore agree that,
at least until these phones are fully owned by the customer,
they cannot be resold.
filed this lawsuit in 2013 against Wireless Buybacks and
other companies that bought and sold upgraded phones, as well
as individuals who owned and worked for those companies. The
complaint asserted several different causes of action,
including claims for tortious interference, fraud,
conversion, and trademark infringement. The district court
rejected the fraud claims on a motion to dismiss but
permitted Sprint's other claims to go forward. Over time,
many of the defendants settled with Sprint, and some
consented to permanent injunctions forbidding them from
reselling Sprint phones. See, e.g., J.A. 150-56.
Wireless Buybacks did not settle.
discovery, Sprint moved for partial summary judgment,
the district court granted the motion in part. As is relevant
for our purposes, it held that Wireless Buybacks was liable
for tortious interference with contract. The court reasoned,
first, that Sprint's contract with its customers
unambiguously prohibited the resale of all Sprint phones. The
district court then concluded that Wireless Buybacks'
business involved inducing Sprint customers to resell their
phones, even though it knew that Sprint's contract
prohibited resale. Finally, the court held that Sprint was
harmed as a result. The court therefore found Wireless
Buybacks liable for tortious interference.
district court's order did not resolve the amount of
Sprint's damages, and the parties began to prepare for a
trial on that issue. They soon ran into disagreement on how
to implement the district court's order. In Wireless
Buybacks' view, Sprint had to make an individualized
showing of unlawful inducement for each customer from whom
Wireless Buybacks had bought a Sprint phone. In Sprint's
view, it merely had to identify how many Sprint phones
Wireless Buybacks acquired and prove how much harm it
suffered as a result. The parties resolved this dispute among
themselves, stipulating that, "[t]o establish damages at
trial, Sprint need only show the amount it has been damaged
and is not again required to show that [Wireless Buybacks]
induced the breach of the Terms & Conditions between
Sprint and every customer." J.A. 642.
the parties decided to avoid the cost and expense of trial by
way of a stipulated judgment. The judgment explained that,
"[i]n order to facilitate appeal of the Court's
Summary Judgment Order without the need for trial, Defendants
consent to damages in the amount of $26, 900, 000 for
Sprint's tortious interference claim." J.A. 678. A
footnote added: "Plaintiffs and Defendants both
expressly reserve all rights to appeal the Court's
rulings regarding liability, and any prior rulings in this
case. The Parties further reserve the right, as may be
allowed by law, to contest the amount of damages in the event
that Defendants' appeal on liability is successful."
J.A. 678 n.1. Accordingly, the judgment awarded Sprint $26.9
million in damages for tortious interference. The judgment
also (1) entered judgment for Sprint on Wireless
Buybacks' counterclaims, (2) dismissed all of
Sprint's other claims against Wireless Buybacks with
prejudice, and (3) dismissed all of Sprint's claims
against the three remaining individual defendants (all
officers and employees of Wireless Buybacks) with prejudice.
Buybacks timely appeals from the district court's order
awarding Sprint partial summary judgment. J.A. 680.
begin by examining our appellate jurisdiction. With a few
exceptions, we generally may review district-court judgments
only once they have become "final." 28 U.S.C.
§ 1291. The exceptions do not apply here, and so our
jurisdiction turns on whether the stipulated judgment entered
by the district court was, in fact, final. There are various
reasons why a district-court order might not be considered
final; for example, orders that dispose of only some of the
claims in the lawsuit typically are not final and appealable.
A different set of finality problems can arise when civil
actions are disposed of by the parties' consent. Appeals
courts generally do not treat private settlements as
reviewable final judgments (again, with exceptions; for
example, we sometimes review settlements of class actions and
other cases in which individual parties represent someone
other than just themselves).
finality concerns here arise from the fact that the parties
seek appellate review of a stipulated judgment entered at
their request. While both sides agree that appellate
jurisdiction exists, we must assure ourselves of jurisdiction
regardless of their wishes. Because the judgment below bears
at least a passing similarity to one the Sixth Circuit found
insufficiently final to confer appellate jurisdiction in
Board of Trustees v. Humbert, 884 F.3d 624 (6th Cir.
2018), we ordered supplemental briefing on the jurisdiction
question. Upon review, however, we conclude that this case is
distinguishable from Humbert and that we have
Supreme Court recently addressed § 1291's finality
requirement in Microsoft v. Baker, 137 S.Ct. 1702
(2017), a class action. In that case, the district court
denied class certification. The plaintiffs then voluntarily
dismissed their individual claims "with prejudice,"
but with the caveat that they could resume their individual
claims if the class-certification decision were reversed.
Id. at 1710-11. Emphasizing that "'finality
is to be given a practical rather than a technical
construction, '" the Court found no appellate
jurisdiction because the plaintiffs' "dismissal
device subverts the final-judgment rule." Id.
at 1712-13 (quoting Eisen v. Carlisle &
Jacquelin, 417 U.S. 156, 171 (1974)). The Court noted
that this device "invites protracted litigation and
piecemeal appeals" and permits plaintiffs to turn any
class-certification decision they do not like into a final,