Tracfone Wireless, Inc. v. Simply Wireless, Inc.

229 F.Supp.3d 1284

TRACFONE WIRELESS, INC., Plaintiff,

v.SIMPLY WIRELESS, INC., a Virginia corporation, d/b/a Shopcelldeals, and Simply Wireless of Miami, Inc., a Florida corporation, Defendants.

Case Number: 15–24565–CIV–MORENO

United States District Court, S.D. Florida, Miami Division.

Signed January 24, 2017

Entered January 26, 2017

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

Rachel Kate Beige, Barry Adam Postman, Joseph Francisco Valdivia, Todd Richard Dobry, Cole, Scott, Kissane, P.A., West Palm Beach, FL, Sean Patrick Roche, Cameron/McEvoy, PLLC, Fairfax, VA, Mark Francis Raymond, Patricia Maria Baloyra, Broad & Cassel, Miami, FL, for Defendants.

ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION AND GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS OR IN THE ALTERNATIVE TO COMPEL ARBITRATION

FEDERICO A. MORENO, UNITED STATES DISTRICT JUDGE

THE MATTER was referred to the Honorable John J. O'Sullivan, United States Magistrate Judge for a Report and Recommendation on Defendants' Motion to Dismiss Second Amended Complaint or, in the Alternative, Motion to Compel Arbitration, filed on April 22, 2016 . The Magistrate Judge filed a Report and Recommendation (D.E. No. 79) filed on September 6, 2016 . The Court has reviewed the entire file and record. The Court has made a de novo review of the issues that the objections to the Magistrate Judge's Report and Recommendation present, and being otherwise fully advised in the premises, it is

ADJUDGED that United States Magistrate Judge John O'Sullivan's Report and Recommendation is AFFIRMED and ADOPTED. Accordingly, it is

ADJUDGED that the motion is GRANTED in part and DENIED in part for the reasons stated in the Magistrate Judge's Report and Recommendation. As to Counts 1–3, the Computer Fraud and Abuse Act claims, the Court denies the motion to dismiss and the motion to compel arbitration. The Court disagrees with the Defendants' position that arbitration is appropriate on counts 1–3, which are against a non-signatory to the arbitration agreement.

As to Count 4 for unjust enrichment, the Court disagrees with the Defendants that the Court should compel arbitration on this claim. Accordingly, the count for unjust enrichment will proceed in this forum.

Consistent with the Magistrate Judge's Report and Recommendation and the parties' agreement, the Court compels arbitration on Counts 5–7 of the Second Amended Complaint.

The Court grants the motion to dismiss Counts 8–11 without prejudice and granting Plaintiff leave to refile those claims.

Finally, the Court denies the motion to dismiss or to compel arbitration on Count 12, which is an accounting claim.

Plaintiff may file an Amended Complaint consistent with this Order by no later than February 15, 2017.

DONE AND ORDERED in Chambers at Miami, Florida, this 24^th of January 2017.

REPORT AND RECOMMENDATION

JOHN J. O'SULLIVAN, UNITED STATES MAGISTRATE JUDGE

THIS MATTER comes before the Court on the Defendants Simply Wireless, Inc., Mobile Now, Inc., and Simply Wireless of Miami, Inc.'s, Motion to Dismiss Second Amended Complaint or, in the Alternative, Motion to Compel Arbitration (DE# 51, 4/22/16). This motion was referred to the undersigned pursuant to 28 U.S.C. § 636(b) for a report and recommendation. See Order of Referral to Magistrate Judge O'Sullivan for All Pretrial Proceedings (DE# 43, 4/5/16). Having reviewed the applicable filings and the law and having held a hearing on September 1, 2016, the undersigned respectfully RECOMMENDS that Defendants Simply Wireless, Inc., Mobile Now, Inc., and Simply Wireless of Miami, Inc.'s, Motion to Dismiss Second Amended Complaint or, in the Alternative, Motion to Compel Arbitration (DE# 51, 4/22/16) be GRANTED in part and DENIED in part for the reasons stated herein.

BACKGROUND

On March 21, 2016, the plaintiff filed a second amended complaint against defendants Simply Wireless, Inc. (hereinafter "Simply Wireless Virginia"), Mobile Now, Inc. (hereinafter "Mobile Now"), and Simply Wireless of Miami, Inc. (hereinafter "Simply Wireless Miami"). See Second Amended Complaint for Damages and Injunctive Relief and Demand for Jury Trial (DE# 33, 3/21/16) (hereinafter "SAC").

The SAC alleges the following causes of action against all defendants: fraud in the inducement of the Transition Agreement in violation of Florida common law (Count 5); breach of Transition Agreement in violation of Florida common law (Count 6) and unjust enrichment (also known as claim for contract implied at law) in violation of Florida common law Transition Agreement (Count 7). See SAC (DE# 33, 3/21/16). The SAC alleges the following causes of action against defendants Simply Wireless Virginia and Mobile Now (collectively referred to as the "Simply Wireless Virginia Entities"): unauthorized access to a protected computer in violation of 18 U.S.C. § 1030 (A)(5)(C), the Computer Fraud and Abuse Act (hereinafter "CFAA") (Count 1); unauthorized access to a protected computer with intent to defraud in violation of 18 U.S.C. § 1030 (A)(4) of the CFAA (Count 2); knowingly trafficking in password information in violation of 18 U.S.C. § 1030 (A)(6) of the CFAA (Count 3); unjust enrichment (also known as claim for contract implied at law) in violation of Florida common law (Count 4); breach of the November 11, 2007 Agreement (Count 10); breach of the implied covenant of good faith and fair dealing in violation of Florida common law: November 11, 2007 Agreement (Count 11) and accounting (Count 12). Id. Finally, the SAC alleges causes of action against defendant Simply Wireless Virginia for federal trademark infringement in violation of 15 U.S.C. § 1114, Section 32 of the Lanham Act (Count 8) and federal false designation of origin and unfair competition in violation of 15 U.S.C. § 1125 (A), Section 43(A) of the Lanham Act (Count 9). Id.

On April 22, 2016, the defendants moved to dismiss the SAC. See Defendants Simply Wireless, Inc., Mobile Now, Inc., and Simply Wireless of Miami, Inc.'s, Motion to Dismiss Second Amended Complaint or, in the Alternative, Motion to Compel Arbitration (DE# 51, 4/22/16) (hereinafter "Motion"). The plaintiff filed its response in opposition on May 17, 2016. See TracFone's Response to Defendants' Motion to Dismiss or, in the Alternative, Motion to Compel Arbitration (DE# 55, 5/17/16) (hereinafter "Response"). The defendants filed their reply on June 7, 2016. See Defendants Simply Wireless, Inc., Mobile Now, Inc., and Simply Wireless of Miami, Inc.'s, Reply in Support of Their Motion to Dismiss Second Amended Complaint or, in the Alternative, Motion to Compel Arbitration (DE# 58, 6/7/16) (hereinafter "Reply").

The undersigned held a hearing on the instant motion on September 1, 2016. This matter is ripe for adjudication.

FACTS

I. November 11, 2007 Agreement

On November 11, 2007, the plaintiff and Simply Wireless Virginia entered into an agreement for the HSN/Simply Wireless Handset Program. See November 11, 2007 Agreement (DE# 51–1 at 2–4, 4/22/16). Under the November 11, 2007 Agreement, the plaintiff would provide Simply Wireless Virginia with Net 10 Motorola W375 handsets together with $15.00 Airtime Cards (hereinafter "PINs") to be sold on the Home Shopping Network ("HSN"). Id. The plaintiff provided Simply Wireless Virginia with these handsets at $56.00 per handset. Id. The PINs were included at no cost to Simply Wireless Virginia. Id. The agreement further provided that: "After all programs/promotions with HSN and Simply Wireless have been completed, Simply Wireless may return any new handset inventory (Net 10 Motorola W375) to TracFone for full credit."Id. The November 11, 2007 Agreement did not address the return of the PINs. Similarly, the November 11, 2007 Agreement provided detailed instructions for the return of defective handsets and provided a TracFone limited warranty, but did not provide any directions for the return of PINs. Id.

II. The October 12, 2011 Agreement

On October 12, 2011, the plaintiff and Simply Wireless Miami entered into an agreement for the TracFone Wireless, Inc. Handset Program. See October 12, 2011 Agreement (DE# 51–3 at 2–10, 4/22/16). The agreement governed eight different handset models¹ and authorized Simply Wireless Miami to solicit the following merchants: HSN, QVC, Amazon, EBay, woot.com, Buy.com, Groupon and infomercials (direct TV sales). See October 12, 2011 Agreement at Exhibit A. The October 12, 2011 Agreement contained a "Prohibition Against Certain Unauthorized Resale Activity" at Exhibit B, which stated in part:

Simply Wireless warrants and represents that it has not at any time in the past engaged in Unauthorized Bulk Reselling Activity and that it is not now engaged, and will not in the future engage, in Unauthorized Bulk Reselling Activity. "Unauthorized Bulk Reselling Activity" is defined as the unauthorized purchase and/or sale of Phones with the knowledge that the Phones will not be activated for use on TracFone's mobile virtual network by an end-user customer; the unauthorized computer unlocking/reflashing of Phones; tampering with TracFone's proprietary prepaid software on the Phone; and/or sale and/or shipment of Phones to an overseas buyer .

October 12, 2011 Agreement at Exhibit B (DE# 51–3 at 7, 4/22/16) (emphasis added).

The October 12, 2011 Agreement provided that:

All purchase orders submitted to and accepted by TracFone for Handsets are and shall be subject to this Agreement and shall be deemed to incorporate the terms and conditions of this Agreement, whether or not so specified in such Purchase Orders. Purchase orders will not modify, supplement or conflict with the terms of this Agreement, unless specifically agreed to in writing otherwise.

Id. at 2–3 (emphasis added). It further provided that "[a]ny action arising from or relating to this Exhibit B to the Agreement [the Prohibition Against Unauthorized Resale...