Sprint Nextel Corp. v. Middle Man, Inc.
2016 U.S. App. LEXIS 8569
10th Cir.2016Background
- Sprint sold mobile phones and service plans; The Middle Man, Inc. (Middle Man) purchased Sprint phones to resell them. A contract accompanied Sprint sales restricting resale of certain items.
- Sprint sued Middle Man for breach of contract; Middle Man counterclaimed seeking a declaratory judgment that resale of inactive Sprint phones was permitted.
- District court construed the contract as unambiguously prohibiting resale of Sprint phones (active or inactive), granted Sprint judgment on the pleadings on the counterclaim, and granted Sprint summary judgment on its breach claim, awarding $1 in nominal damages.
- Middle Man appealed, challenging justiciability, the district court’s interpretation (arguing the contract permits resale of inactive phones or is ambiguous), and a late-raised property-title argument.
- The Tenth Circuit found the appeal justiciable (nominal damages create Article III injury; prudential mootness inapplicable) and held the contract ambiguous as to resale of inactive phones, reversing and remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument (Sprint) | Defendant's Argument (Middle Man) | Held |
|---|---|---|---|
| Appellate standing / justiciability | Middle Man lacks injury and appeals only on principle | Nominal damages and declaratory relief denial cause injury; business model threatened | Middle Man has standing; appeal justiciable (nominal damages suffice) |
| Prudential mootness | Case prudentially moot because relief is mostly academic | Not moot — nominal damages are legal remedy and not moot | Not prudentially moot; nominal damages remove the doctrine’s bar |
| Contract interpretation: whether contract prohibits resale of inactive phones | Contract unambiguously bars resale of Sprint devices regardless of activation; "Services" and "customer devices not for resale" cover all phones | Contract permits resale of phones that are not active on Sprint’s network; language is ambiguous | Contract ambiguous on whether prohibition covers inactive phones; interpretation for factfinder, not resolved as matter of law |
| Request to enter judgment for Middle Man (canons / property-title defense) | Sprint: contract governs; contra proferentem not appropriate now; impaired-title argument forfeited | Apply contra proferentem; impaired-title (full title transfer) precludes resale restriction — entitles judgment for Middle Man | Contra proferentem and property-title arguments not resolved in Middle Man’s favor: contra proferentem for factfinder; impaired-title argument was raised too late and forfeited; judgment for Middle Man denied |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (constitutional standing requires injury in fact)
- Arizonans for Official English v. Arizona, 520 U.S. 43 (appellate standing requirement)
- Utah Animal Rights Coal. v. Salt Lake City Corp., 371 F.3d 1248 (nominal damages can confer Article III standing)
- Waste Connections of Kan., Inc. v. Ritchie Corp., 298 P.3d 250 (Kan. law: ambiguous contract interpretation is for factfinder)
- Kennedy & Mitchell, Inc. v. Anadarko Prod. Co., 754 P.2d 803 (contract construction is question of law absent ambiguity)