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MetroPCS Georgia, LLC v. Metro Dealer, Inc

United States District Court, W.D. Washington, Seattle

April 15, 2019

METROPCS GEORGIA, LLC, Plaintiff,
v.
METRO DEALER INC.; JAD DEA; and MOBILE USA, INC., Defendants.

          ORDER

          THE HONORABLE RICHARD A. JONES UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Plaintiff MetroPCS Georgia, LLC's (“MetroPCS”) Motion for Preliminary Injunction. Dkt. # 9. No Defendant has filed any opposition or otherwise responded to MetroPCS' Motion. For the reasons that follow, the Court GRANTS MetroPCS' Motion for Preliminary Injunction.

         I. BACKGROUND

         MetroPCS is a wireless telephone carrier with a national network and brand, which sells wireless personal communications services to its customers, including voice communications, wireless internet services, ringtones, SMS texting, instant messaging, and other wireless phone and data services. Dkt. # 11, ¶ 2. MetroPCS focuses on offering “unlimited” pay-in-advance, prepaid plans. Id. It relies on its dealers and subdealers to market and sell MetroPCS-packaged mobile wireless telephones, data modems, and accessories to users of MetroPCS's service, and to provide customer service. Id. at ¶¶ 2, 6.

         Until July 2018, Defendant Metro Dealer Inc. (“Metro Dealer”) was a MetroPCS subdealer, operating through MetroPCS' Master Dealer, DMW GA, Inc. (“DMW”). Dkt. # 7 at ¶ 1; Dkt. # 10, Ex. A. In October 2017, Metro Dealer and DMW entered into an Exclusive Subdealer's Agreement to Comply With Dealer Agreement (“Subdealer Agreement”), with an effective date of October 12, 2017. Dkt. # 10, Exs. A, B. The Subdealer Agreement required Metro Dealer (along with “Affiliated Persons” and “Affiliated Entities”) to comply with DMW's Exclusive Indirect Dealer Agreement with MetroPCS effective as of September 18, 2017 (“Dealer Agreement”), which Metro Dealer acknowledged having received, read, and understood. Dkt. # 10, Ex. A at ¶¶ 1, 8. Defendant Jad Dea signed this Subdealer Agreement for Metro Dealer. Id.

         The Subdealer Agreement specifically provided that Metro Dealer “shall comply with all terms and conditions of the Dealer Agreement, including but not limited to . . . the covenant not to compete (Section 16.7).” Dkt. # 10, Ex. A at ¶ 1. Paragraph 16.7 of the Dealer Agreement, in turn, provided that the dealer would not sell wireless services in competition with MetroPCS or solicit, divert, or attempt to divert MetroPCS's customers for a period of six months following termination of its agreement, within two miles of any of the storefronts in which it had operated as a MetroPCS dealer. Dkt. # 10, Ex. B at ¶ 16.7. Specifically, Paragraph 16.7 provided:

Dealer covenants and agrees that during the Term of this Agreement and for a period of at least six (6) months following any termination or expiration of this Agreement, Dealers shall not, and will cause its Affiliated Persons and Affiliated Entities, not to directly or indirectly (including by licensing) engage or participate in, or acquire, manage, operate, control or participate in the management, operation or control of, either alone or jointly, any entity that engages in the sale, resale or distribution of any wireless telephone or wireless internet data service including, without limitation, any other wireless phone, or wireless internet service, or service plan that offers unlimited local and/or long distance calls and/or unlimited wireless internet service for a flat price, within a two (2) mile radius of Dealer's MetroPCS Storefront Locations.

Id. Paragraph 16.7 also provided that if the dealer “breaches this warranty and covenant, then, in addition to any other legal or equitable remedy that MetroPCS may have, the post-termination of this warranty covenant will be extended for one (1) day for each day during which the Dealer's breach was ongoing.” Id.

         Paragraph 2.4 of the Dealer Agreement also contained a six-month non-solicitation provision:

All customers are owned by MetroPCS and not by Dealer. During the term of this Agreement and for a period of six (6) months after termination of this Agreement (whether voluntary or involuntary, with or without cause), Dealer, its principals, owners, partners, members, shareholders, officers, directors, employees, agents (“Affiliated Persons”) and any entity in which an Affiliated Person owns an interest and/or any successor entity to Dealer (“Affiliated Entity”) shall not at any time (i) request any MetroPCS customer to curtail or cancel its business with MetroPCS, or (ii) otherwise solicit, divert or attempt to divert any such MetroPCS customer from patronizing MetroPCS.

Dkt. # 10, Ex. B at ¶ 2.4.

         The Subdealer Agreement further provided that MetroPCS was “a third-party beneficiary” of the Subdealer Agreement, and that it “may take any equitable or legal action required to enforce its provisions and the terms and conditions of the Dealer Agreement.” Dkt. # 10, Ex. A at ¶ 5.

         MetroPCS alleges that on or before July 2018, Metro Dealer breached the Subdealer Agreement, prompting DMW and MetroPCS to jointly provide a Notice of Termination of the Subdealer Agreement for cause by letter dated July 13, 2018, effective August 15, 2018. Dkt. # 7 at ¶ 15; Dkt. # 11 at ¶ 8. Soon after termination, MetroPCS became aware that Defendants were selling wireless services from the former MetroPCS store for Tracfone Wireless, a competitor of MetroPCS. Id. at ¶ 9. After serving discovery on Tracfone, MetroPCS discovered that on September 7, 2018, Defendant Jad Dea, Aaron Dea, and Richard Dea incorporated a new company - “Mobile USA Inc.” - with its principal place of business at the same address of the former MetroPCS store. Id. at ¶ 6, Ex. E. Defendant Mobile USA then applied to TracFone to operate as a dealer from this location, and was approved. Id. at Ex. G. This record also lists the principal email address of Mobile Inc. as shelley@metrodealerinc.com. Id.

         On September 21, 2018, Richard Dea incorporated another entity, Mobile USA Dealer Inc., that allegedly entered a “confidential subdealer license agreement” with Mobile USA to operate the store. Dkt. # 10, ¶ 17; Exs. D, F. When MetroPCS questioned “Mobile USA Dealer, Inc.” in November 2018, the representative, Shelly Lawrence, claimed that the store was being operated by “MobileUSA ...


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