DALLAS – Attorneys from the Dallas complex litigation boutique Bailey Brauer PLLC defeated a motion by TracFone Wireless Inc. to enforce an injunction filed against two mobile phone resellers. Named partners Clayton Bailey and Alex Brauer and of counsel Ben Stewart were hired the day before Thanksgiving and took the case to trial only a week later.
“We may not have had a traditional Thanksgiving this year, but we were highly motivated to prevent TracFone from obtaining a court order that would have been a massive overreach against our clients,” Mr. Bailey says. “Had TracFone won, our clients could have been held in contempt, possibly jailed, and forced to pay damages and attorneys’ fees – all for buying mobile phones that weren’t even listed in the injunction.”
TracFone Wireless Inc. v. Vicki S. Brooks and Mohamed A. Mohamed was originally filed in 2008 in the U.S. District Court for the Northern District of Texas in Dallas. In the lawsuit, TracFone claimed that Ms. Brooks and Mr. Mohamed bought TracFone mobile phones in bulk, unlocked them to alter the software code so that other providers’ airtime could be loaded onto the phones, and then resold them. A default judgment was entered in September 2008 against the two defendants, along with an injunction prohibiting them from buying any TracFone products in the future.
The case was dormant until earlier this year, when Ms. Brooks and Mr. Mohamed were allegedly seen buying TracFone products. TracFone then filed a motion to reopen the case and enforce the 2008 injunction by holding Ms. Brooks and Mr. Mohamed in contempt and awarding TracFone damages and attorneys’ fees.
The two defendants appeared without an attorney at a preliminary hearing in November and were ordered to reappear in early December to explain why they should not be held in contempt by the court for violating the earlier injunction.
“We got hired on Wednesday, Nov. 26, and had a week to prepare for trial,” says Mr. Stewart. “The good news was that we were able to ramp up quickly and find ample evidence to defeat TracFone’s motion. What they were trying to do was nothing short of unconscionable.”
The Bailey Brauer attorneys proved to the court that their clients did not know that the phones they purchased – which were marketed under the Straight Talk Wireless brand – were affiliated with TracFone and off-limits under terms of the injunction. Although Straight Talk is a TracFone brand, those phones are marketed separately from TracFone and Straight Talk’s affiliation with TracFone is only visible in small print on the back of the package. The defendants argued that they were not able to read the back of the package, however, because the phones were locked in a case until they were removed by a sales clerk.
“Additionally, Straight Talk phones are only available at Walmart, so my clients assumed they were a Walmart brand,” Mr. Bailey says. “They knew they couldn’t buy TracFone products, so if they had known about any affiliation with TracFone, they wouldn’t have bought them. You have to really hunt for any mention of TracFone in order to find it anywhere on their packaging, or even on their website.”
The attorneys also argued that Straight Talk products weren’t covered by the 2008 injunction because Straight Talk did not exist at the time the injunction was issued.
On Dec. 16, U.S. Magistrate Judge Renée Harris Toliver issued a 15-page order, ruling that, among other things, TracFone’s injunction was “overbroad because, as Defendants note, they would be precluded from going to Verizon, AT&T, Virgin Mobile, or any of TracFone’s other competitors and purchasing any model of phone that TracFone … also happen[s] to sell.”
Even if the injunction were not overbroad, the judge ruled that TracFone failed to demonstrate that the defendants knew or should have known that the phones they purchased violated the injunction.
“Once the decision has been made to purchase a phone and have an employee unlock it from its display, it does not strike the Court as unlikely that one would not then read the back of the package,” Judge Toliver wrote. “Moreover, given the vastly different nature of the Straight Talk and TracFone packaging, store displays, and display locations, Defendants would have had little reason to suspect that there was any association between the two.”
Judge Toliver’s ruling must be confirmed by U.S. District Judge Sam Lindsay.
“This case perfectly illustrates what sets Bailey Brauer apart,” says Mr. Brauer. “Even when we’re brought in at the eleventh hour – and we frequently are – we’re able to get up to speed quickly, map out a strategy to achieve our client’s goals and, ultimately, get a strong result.”
Bailey Brauer PLLC is committed to providing efficient, effective legal representation in high-stakes litigation. Led by experienced trial and appellate lawyers Clayton Bailey and Alex Brauer, the firm focuses on complex commercial litigation, agribusiness, appeals, and class and collective actions. For more information, please contact Bailey Brauer today.