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Sprint loses lawsuits over reselling devices; Tide is turning on wave, says attorney

By John Breslin | May 25, 2017

WEST PALM BEACH, Fla. (Legal Newsline) – An attorney fighting Sprint and its pattern of filing lawsuits over the reselling of mobile devices says the tide is turning against the company after years of settlements and default judgments.

Also, Florida-based law firm Carlton Fields says it is no longer representing Sprint in these cases, which are mostly filed against small businesses and their owners. Jim Baldinger said his firm was not involved in a number of jury trials that resulted in defeats for Sprint.

The company and other mobile service providers have sued firms for buying phones, unlocking them and allegedly selling them overseas.

"They are all about protecting consumers and wireless service providers and protect against financial incentives," Baldinger told Legal Newsline, speaking of the suits filed on behalf of Sprint and the other providers. He said his firm was involved in, and won, 228 suits. He would not say why his firm no longer represents the wireless service provider.

But Jim Kernell, a Missouri-based attorney who has represented defendants in four cases but advised in others, said the law firm, and Sprint, do like to advertise they have won a case when, in fact, that is not true.

"It was either a default judgment or settlement," Kernell told Legal Newsline. "Now we have three cases that have gone to trial," and each were won by the defendants, two outright and one partially.

In a 2014 post on its website, Sprint's former in-house lawyer, Dan Solomon, said the company "leads the wireless industry in working to thwart phone traffickers who steal the subsidies that are intended to make phones affordable for Sprint’s customers."

Sprint had filed 42 lawsuits against 152 traffickers in federal courts, obtaining 37 permanent injunctions and final judgments awarding more than $93 million, he wrote in the post.

But the tide is turning, Kernell said. There have been reversals, most recently in April before a federal jury in Fort Myers, Florida. The jury rejected claims that Deborah and Dennis Skelly and their company, 4 U Cell LLC, had violated Florida’s law against deceptive and unfair trade practices and were unjustly enriched by their dealings.

Kernell, of Leawood, Kansas, represented The Middle Man Inc. and its owner Brian Vazquez. The Kansas City, Kansas, company battled Sprint for five years in what Kernell described as a breach of contract case. A jury ruled in his favor in March.

Vasquez has counter-sued for malicious prosecution, but Kernell said that case has been dragging on for two years, beset, he said, by difficulties over getting depositions.

In another case, in New York, Sprint did win after claiming trademark infringement following a bench trial, but the judge ruled there was no damage done to the company.

"The company got nothing out of it," Kernell said. "But I disagree with the assessment there was trademark infringement."

"The allegation in many cases is trafficking, that they are buying in bulk, unlocking the phones and shipping them over overseas. Virtually none of it is true," Kernell added.

The attorney said that Carlton Fields sold the story to Sprint that these individuals were doing something illegal and that they should be pursued. But most were not cases where people were stealing phones or involved in any criminal activity, Kernell said.

In many of the settled cases, defendants agreed to pay damages of a certain figure and state they will not sell Sprint products. While the settlements are often confidential, they end up paying much less, sometimes as little as $5,000, Kernell said.

However, many of these small business people are then unable to secure loans or any other credit because of the judgment on their record, he added.

"They sue not just the company but the individual. It destroys people's lives," Kernell said. "It is a scam. The only ones making any money are the law firms and their attorneys."

He added that many of the defendants default or represent themselves. This means the judge relies heavily on what is submitted by the plaintiff lawyers.

"What struck me early on with two judgments, one in New York, the other in California, were that the opinions were identical," Kernell said, adding that he believes they were written by the plaintiff lawyers.

Baldinger, the attorney with Carlton Fields, said his firm has filed federal cases on behalf of wireless service providers for 15 years. Those taken to court are individuals making significant profits by taking advantage of generous subsidies on phones in the US and often selling the devices overseas, Baldinger said.

The attorney did admit that not all the phones are sold overseas as there is a market in this country. He rejected the argument that this was just business, the simple buying and selling of a product.

"I have heard that argument for many years, but frankly it is nonsense," Baldinger said. "People found a way to exploit a loophole. If a bank does not have a lock, can you steal from it? Companies are losing tremendously."

The carrier pays the full amount, maybe $850 for an iPhone, with the expectation that a customer will remain with the company, said Baldinger.

Baldinger said his firm was not involved in those lost in court, and that they won all 228 filed on behalf of wireless providers. Those losses were "inconsistent" with the results in cases filed by Carlton Fields, Baldinger said.

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Carlton Fields P.A.