It's okay to sell a Sprint phone, but not if it still is Sprint's phone.
A federal judge in Maryland has awarded Sprint $26.9 million on that basis in one of the company's many cellphone trafficking lawsuits around the nation.
Sprint had sued Wireless Buybacks LLC, Wireless Buybacks Holdings LLC and others on the grounds that they had interfered with Sprint's contracts with its customers. Sprint claimed the companies enticed consumers to sell their phones while still under contract with Sprint.
But Sprint hasn't won all of those trafficking lawsuits — losing in particular to a Kansas City, Kan., man after a five-year court battle. And the attorney for the two Maryland companies said he plans to appeal.
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Charles R. Price, who represented the Wireless Buybacks firms, said the appeal will be based on the same "contract question" that prevailed in the Kansas City, Kan., case won by Brian Vazquez and his company, Middle Man Inc.
"It's the same issue that we had to win on appeal in Middle Man," said Price, who worked on the Middle Man appeal.
Middle Man originally lost in federal court and was ordered to pay a symbolic $1 in damages to Sprint. Vazquez, nevertheless, appealed. The U.S. Court of Appeals for the 10th Circuit held that Sprint's contract was ambiguous and sent the case to the jury, which sided with Middle Man.
The Maryland judge knew all about the Middle Man case, said Jay Heidrick, an attorney with Polsinelli representing Sprint in the Maryland Case.
"The judge considered that opinion and still found that the contract was not ambiguous and Buybacks tortuously interfered with it," Heidrick said.
Heidrick also said that the Middle Man and Maryland cases involve similar contract language but different sets of facts.
At the heart of the Maryland case is Sprint's contract with consumers who bought cellphones from Sprint at heavily subsidized prices. Sprint, like other carriers at the time, sold phones at deeply discounted prices along with a 2-year wireless service contract. Sprint recovered the cost of the phones throughout the 2-year deals.
Heidrick said Sprint's contract prohibited the consumers from selling the phones during the contracts. He said most of those who sold their Sprint phones to Wireless Buybacks were not only still on contracts, but also failed to fulfill them.
Only a few of the customers, he said, continued to pay off the service contract, allowing Sprint to recover the costs of the subsidized phone sale.
"For our damages analysis, we threw those out the window," Heidrick said.
Sprint no longer sells phones that way, switching instead to phone leases. The lease allows the customer ultimately to buy the device, and can lead the consumer to pay for more than the device cost.
The resale issue continues with the leases, a Sprint spokeswoman said, because the lease agreement says the customer does not own the device "until all financial obligations have been fulfilled."
Subsidized phone sales also are largely dead within the industry as AT&T, Verizon and T-Mobile typically sell phones on installment contracts independent of their service agreements with customers.