Tracfone Wireless, Inc. v. Adams

98 F.Supp.3d 1243

TRACFONE WIRELESS, INC., Plaintiff

v.Dustin L. ADAMS, Defendant.

Case No. 14–cv–24680–TURNOFF.

United States District Court, S.D. Florida.

Signed April 9, 2015.

James Blaker Baldinger, Carlton Fields PA, West Palm Beach, FL, Aaron Stenzler Weiss, Carlton Fields Jorden Burt, P.A., Miami, FL, for Plaintiff.

CONSENT

WILLIAM C. TURNOFF, United States Magistrate Judge.

ORDER GRANTING TRACFONE'S MOTION FOR ENTRY OF FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANT DUSTIN L. ADAMS

THIS MATTER is before the Court on Plaintiff TracFone Wireless, Inc.'s (“TracFone”) Agreed Motion for Entry of Final Judgment and Permanent Injunction Against Defendant Dustin L. Adams. (ECF No. 20). Upon review of the motion, the supporting record, and the applicable law, the motion is GRANTED.

Introduction

In its motion, TracFone seeks entry of final judgment in the amount of $79,795.93 against Adams and the entry of a permanent injunction prohibiting Adams from engaging in the type of conduct that prompted TracFone to file this action. In support of its motion, TracFone relies on the First Declaration of Kevin Wehling¹ (the “First Wehling Declaration”) (ECF No. 4–1); the Second Declaration of Kevin Wehling (the “Second Wehling Declaration”) (ECF No. 19–1); and two declarations of TracFone customers who claim they were defrauded by Defendant Adams: the Declaration of Shelia Burgess (the “Burgess Declaration”) (ECF No. 4–2), and the Declaration of Brian Williams (the “Williams Declaration”) (ECF No. 4–3). Adams has not challenged any of the factual assertions set forth in those declarations. In fact, in addition to those declarations, TracFone also relies on a declaration signed by Adams himself (the “Adams Declaration”). (ECF No. 19–2).

The Court finds that the facts set forth in the several declarations upon which TracFone relies in support of its motion, are credible. The declarations are consistent with each other. Moreover, Adams' own declaration is particularly compelling as he generally admits to engaging in the scheme that TracFone has accused him of perpetrating. Accordingly, as set forth below, the Court makes several findings of fact based upon the declarations.

Findings of Fact

The Court finds that TracFone has established that it sells its products under several different trademarked brands, including Straight Talk, TracFone, and under TracFone's trademarked

(“spiracle logo”). First Wehling Declaration at ¶¶ 16–17. The Court further finds that TracFone has established that it recoups the subsidy it provides for the telephones it sells at reduced prices through profits earned on the sale of its prepaid airtime, which customers must purchase and subsequently load onto the phone in order to make or receive calls on the TracFone network. Id. at 19.

The Court further finds that TracFone has established that Adams perpetrated a scheme by which he unlawfully acquired TracFone airtime for himself and for others, for his own profit (the “Social Engineering Scheme” or “Scheme”). Adams Declaration at ¶ 6. The Court finds that TracFone has established that, as part of his Scheme, Adams advertised and sold TracFone airtime. Id. The Court finds that TracFone has established that Adams marketed his fraudulent airtime through word of mouth outside retail stores that sold legitimate TracFone products. First Wehling Declaration at ¶ 15. The Court further finds that TracFone has established that Adams also advertised his steeply discounted airtime through his personal Facebook profile. Id. The Court further finds that TracFone has established that Adams' customers believed that he was affiliated with TracFone or was otherwise authorized to sell its products. The Court also finds that TracFone has established that Adams' customers further believed that he was selling legitimate TracFone airtime. See Adams Declaration at ¶ 8; see also Burgess Declaration at ¶ 2; see also Williams Declaration at ¶ 2. Further, the Court finds that TracFone has established that Adams sold, and his customers purchased, TracFone airtime at a substantially discounted price. Adams Declaration at ¶¶ 6, 7; Burgess Declaration at ¶ 3; Williams Declaration at ¶¶ 2, 5.

The Court finds that TracFone has established that, once the customer purchased airtime from Adams, he would note the phone number at which the customer wished to apply to the airtime. Adams Declaration at ¶ 9. The Court further finds that TracFone has established that Adams then called into TracFone customer service call centers and impersonated a TracFone technical support agent. Id. at ¶ 10. The Court also finds that TracFone has established that Adams used an employee identification number that belong to an actual TracFone employee in order to dupe the customer service agents into believing that he was a legitimate TracFone representative. Id. Additionally, the Court finds that TracFone has established that, once he engineered his way past TracFone's authentication process, Adams proceeded to coerce the customer service representatives into applying airtime to the previously arranged TracFone telephone number for free. Id. at ¶¶ 9–10.

The Court further finds that TracFone has established that Adams' Scheme required a sophisticated knowledge of TracFone's internal and proprietary systems. In addition, the Court finds that TracFone has established that Adams developed his intimate knowledge of TracFone's internal workings through repeated calls to TracFone customer service call centers.Id. at ¶ 12. The Court also finds that TracFone has established that Adams used this knowledge to access TracFone's internal systems by walking TracFone's customer service representatives through a step-by-step process. See id. at ¶ 12. Moreover, the Court finds that TracFone has established that Adams convinced the customer service representatives that he was a technical support agent calling from TracFone's corporate office in Miami, Florida, and that his system was malfunctioning. Id. at ¶ 11. Further, the Court finds that TracFone has established that Adams would then ask the customer service representative to add the airtime minutes to a certain phone number, which Adams had prearranged with his customers, because he was experiencing technical difficulties with his own system. Id. The Court also finds that TracFone has established that, throughout the process, Adams provided proprietary information, such as access codes, that was available only to legitimate TracFone employees. Id. at ¶ 13. Additionally, the Court finds that TracFone has established that, by directing the customer service representatives to take certain, specific actions over the telephone, Adams coerced the TracFone representatives into adding the airtime services to those prearranged telephone numbers without any payment to TracFone. See id. at ¶ 11.

Further, the Court finds that TracFone has established that Adams was not, and never has been, authorized to take these actions. First Wehling Declaration at ¶¶ 4, 19. The Court also finds that TracFone has established that Adams has acknowledged and admitted that he has never been an agent or employee of TracFone. Adams Declaration at ¶ 14. Additionally, the Court finds that TracFone has established that Adams has also acknowledged and admitted that he was neither authorized to access TracFone's internal systems, nor permitted to sell TracFone products at any time. Id. at ¶¶ 14–15. In addition, the Court finds that TracFone has established that Adams has acknowledged and admitted that he intentionally bypassed TracFone's security measures. Id. at ¶ 16. The Court further finds that TracFone has established that Adams misled customers about the origins of the airtime he was selling and was well aware that customers were purchasing his fraudulent product instead of buying airtime directly from TracFone. Id. at ¶¶ 8, 16; see Burgess Declaration at ¶ 2; see also Williams Declaration at ¶ 2.

The Court further finds that TracFone has established that, as a result of Adams' conduct, it has suffered damages. The Court finds that TracFone has established that the airtime service at issue is valued between $30 and up to $495. First Wehling Declaration at ¶ 13. The Court further finds that, by tricking TracFone employees into issuing the airtime to Adams' customers without payment to TracFone, TracFone has established that it is deprived of the profit it typically derives from its airtime sales. Id. at ¶ 19. The Court further finds that TracFone has established that Adams' conduct has caused confusion and mistake as to the origin of his products, and has led to the loss of goodwill between TracFone and its customers. See id. at ¶ 16; see generally Burgess Declaration; see also generally Williams Declaration.

Finally, the Court finds that TracFone has established that it has incurred substantial financial harm due to Adams' conduct, including, but not limited to, the loss of airtime sales it would have otherwise profited from, the investigation of Adams' Scheme and bringing the instant action, all of which surpass the amount of $5,000, which is the jurisdictional minimum for claims under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030. Second Wehling Declaration at ¶¶ 11–13, 15. With respect to the loss of airtime sales, the Court finds that TracFone has established that it lost at least $48,875, from July 1, 2014 through December 31, 2014. Second Wehling Declaration at ¶ 12. The Court further finds that TracFone has established that it lost at least another $30,000 due to Adams' Scheme for the period between April 1, 2011 and June 30, 2014. Id. at ¶ 13. Finally, the Court finds that TracFone has established that it incurred an expense of $920.93 due to hiring a private investigator to combat Adams' Scheme. Id. at ¶ 15. In sum, the Court finds that TracFone has established that it incurred losses of approximately $79,795.93.

Conclusions of Law

I. Standard Of Review

Pursuant to Fed.R.Civ.P. 58(a), except for...