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Wireless Warehouse, Inc. v. Boost Mobile

January 11, 2011


The opinion of the court was delivered by: Marc L. Goldman United States Magistrate Judge

I. Background

A. Procedural History



On December 8, 2009, Plaintiff Wireless Warehouse, Inc. ("WWI") filed a complaint against Defendant Boost Mobile, LLC ("Boost") alleging causes of action for (1) false promise; (2) promissory estoppel; (3) intentional interference with prospective economic relations; and (4) unfair, deceptive or illegal acts or practices in violation of California Business and Profession Code § 17000 et seq. (Docket No. 1.) WWI is a wireless communications master dealer that provides services to sub-dealers in the United States. (Compl. ¶6.) Boost is a division of Sprint Mobile that offers pre-paid wireless phones and services without contracts or activation fees. (Compl. ¶7.) Plaintiff's claims arise out of an alleged oral promise by Boost to enter into a long-term business partner relationship with WWI. (Compl. ¶9.)

On November 4, 2010, Defendant filed a motion for summary judgment with supporting declarations, exhibits, and statement of uncontroverted facts. On November 15, 2010, Plaintiff filed an opposition to the motion with supporting documents. The Court heard oral argument on December 2, 2010, and took the matter under submission. The matter is now ready for decision.*fn1

B. Factual Background*fn2

The relevant facts, stated in the light most favorable to Plaintiff, are as follows:

Plaintiff and Defendant entered into a one-year written Prepaid Wireless Product Agreement ("PPA") in 2005, which they renewed in March 2006, and again on March 7, 2007, with an effective date of April 1, 2007. (Pl.'s Opp. to Motion for Summ. J. at 2.) The PPA created a distributor-supplier relationship between the parties and outlined the terms by which Plaintiff WWI, the distributor, was to sell Boost's products. (Id.)

Sometime in early 2007, Boost launched a new unlimited service product called Unlimited by Boost ("UBB"). (Pl.'s Opp. at 3.) The C290 handsets were the first model phones offered under Boost's UBB program. (Pennington Decl. in Supp. of Def.'s Mot. for Summ. J., Ex. C, Tucker Depo. at 38:14-17.)

On March 21, 2007, prior to the effective date of the 2007 PPA, Boost sent WWI an attachment to the PPA, which expressly covered the CDMA UBB product line (the "CDMA Attachment"). The CDMA Attachment revised the PPA by, inter alia, (1) establishing that distributors must seek approval for each authorized location in which distributors wished to offer CDMA products; (2) establishing a return policy for CDMA products; (3) setting the gross add bonus for the CDMA handsets (C290) of $5 per new subscriber activation; and (4) listing the fee that distributors may charge consumers to replenish CDMA UBB product accounts. (Anderson Decl. in Supp. of Def.'s Mot. for Summ. J., Ex. B.) The CDMA attachment was sent to Plaintiff through Fedex and was received by Plaintiff on March 22, 2007. (Anderson Decl., Ex. B at 1; Pennington Decl., Ex. D.)

On or about June 1, 2007, Boost invited Howard Kim, Plaintiff's representative, to its main business office in Irvine, California for the purpose of discussing the expansion of its market for UBB. (Pl.'s Opp. at 3.) At Boost's invitation, Kim also attended a conference in Irvine on June 12, 2007. (Id.) While Howard Kim was in California, Job Tucker, the acting vice president of Boost, allegedly told Kim that Boost would enter into a long-term business partner relationship with WWI if WWI would have its sub-dealers across the nation sell Boost's unlimited service, switching their focus from T-Mobile to Boost. (Id.) Job Tucker also allegedly promised to pay Plaintiff $1.00 for each payment and a $3.00 to $20.00 commission per product ("spiff") if Plaintiff would have its sub-dealers sign up as Boost's prepaid service payment centers. (Id.) According to Kim, between June 2007 and February 2008, Boost set specific targets for its market expansion and continuously encouraged WWI to provide more effort in expanding its markets and establishing more payment centers. (Id. at 4.)

Plaintiff alleges that, between June 12, 2007 and February 28, 2008, in reliance on Boost's alleged oral promises, WWI undertook the following actions: (1) set up new facilities across the nation to handle Boost's new product; (2) hired eight additional salespersons solely for the purpose of expanding the market for Boost; (3) sent its representative to meet with its sub-dealers in order to convince them to promote Boost's new product and to sign up as Boost payment centers;

(4) trained its sub-dealers to handle Boost's product and service; and (5) moved to a larger facility with higher monthly mortgage payments and did extensive remodeling on the building. (Id. at 5.)

Because Boost is a prepaid phone brand and does not send monthly bills to customers, in order to collect payment from its customers, Boost utilized several technology service providers ("TSP"). A company named "VIA ONE" was the TSP which dealt with WWI's sub-dealers. In order for WWI to collect the promised "spiff," WWI was required to ask its sub-dealers to sign an application for direct deposit with VIA ONE and to obtain Boost's approval for each retail store and Boost payment center. Between June 2007 and February 2008, WWI obtained more than 700 applications from its sub-dealers, which were approved by Boost as its retail and Boost payment centers. (Id. at 5-6.) Plaintiff claims that, as a result of WWI's efforts and investments, its sub-dealers collected 14,000 payments and were adding approximately 3,000 new subscribers per month by January 2008. (Id. at 8.)

Plaintiff alleges that, on or about February 14, 2008, Roger Schlegel, who was then Boost's regional sales manager, informally advised Howard Kim of the following: (1) Boost was going to terminate its relationship with WWI and had never considered WWI a partner; (2) Boost needed WWI to take WWI's sub-dealers' base for its market expansion; and (3) all of the sub-dealers' accounts which belonged to WWI would be transferred to companies run by Vincent Huang and Jack Huston, who were close friends of Job Tucker. (Id. at 9.)

In March 2008, Boost terminated its business relationship with Plaintiff and declined to renew the PPA, which by its own terms expired on April 1, 2008. Plaintiff claims that, on or before April 1, 2008, Boost sent notices to all of WWI's sub-dealers, notifying them that WWI would no longer act as Boost's master dealer and that the sub-dealers should switch to other master dealers to continue selling Boost's products. (Id.) On March 25, 2008, WWI sent notices to each of its sub-dealers, advising that it was no longer a master dealer for Boost products and encouraging the sub-dealers to focus their marketing efforts on T-Mobile's products.*fn3

Plaintiff alleges that, as a result of Plaintiff's reliance on Defendant's oral promise, Plaintiff sustained the following actual damages: (1) $168,645 in total salaries for eight additional salespersons; (2) $250,000 in remodeling costs for the new building; and (3) $237,000 in additional monthly mortgage payments and property taxes. (Id. at 12-13.) Plaintiff also alleges that it sustained over $1,675,766.59 in expectation damages. (Id. at 13.) Plaintiff further alleges that, as a result of Boost's intentional interference with WWI's business relationship with its sub-dealers, WWI lost T-Mobile commissions, in the amount of $1,948,229.58, for the year 2008. (Id.)

II. Standard of Review

Summary judgment is appropriate when, after reviewing the

discovery and disclosure materials on file and any affidavits, in the light most favorable to the nonmoving party, the Court determines that "there is no genuine issue as to any material fact, and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact, at which time the burden shifts to the nonmoving party to show the existence of a genuine issue. Celotex Corp. V. Catrett, 477 U.S. 317, 322 (1986). The nonmoving party "must come forward with 'specific ...

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