Entertainment USA Inc. v. Cellular Connection LLC

          OPINION AND ORDER

          HOLLY A. BRADY JUDGE

         Defendant, The Cellular Connection, LLC f/k/a Moorehead Communications, Inc. (Moorehead), has filed a Motion for Summary Judgment [ECF No. 37]. Moorehead argues that this litigation is an attempt by Plaintiff Entertaining USA, Inc. d/b/a One Wireless World (OWW) to relitigate a breach of contract claim and a request for accounting that Plaintiff filed against Moorehead in 2012, which was resolved in favor of Moorehead and affirmed on appeal. OWW has not filed a response.

         FACTUAL BACKGROUND

         A. The 2012 Litigation

         In 2012, OWW sued Moorehead in federal district court (the “2012 Complaint”), alleging that it breached the parties' 2006 Referral Agreement, which required Moorehead to pay OWW a fee for each cellular activation and upgrade resulting from OWW referrals to Moorehead. The 2012 Complaint included three counts against Moorehead: breach of contract; accounting; and unjust enrichment. The requested accounting would show all activations and upgrades at any locations covered by the Referral Agreement.

         The terms of the Referral Agreement were litigated and decided through partial summary judgment and a bench trial. In its request for summary judgment, OWW sought more than $23 million for past referral fees and an injunction requiring Moorehead to continue to pay referral fees in the future. Entm't USA, Inc. v. Moorehead Commc'ns, Inc., 93 F.Supp.3d 915, 922 (N.D. Ind. 2015). In deciding the motion, the district court rejected OWW's pursuit of referral fees based solely on the referral of the individuals and entities, rather than locations. Id., 93 F.Supp.3d at 926 (“Looking at the Referral Agreement as a whole, it is clear that the parties intended ‘referrals' to mean only referred locations, and not referred individuals or entities.”). However, genuine issues of material fact remained for trial on the breach of contract claim, including which types of service and service plans constituted “activations” under the Referral Agreement and at which point the parties' contractual obligation terminated. The court also found a question of fact with respect to the accounting claim because, until the finder of fact determined the Referral Agreement's duration, it was premature to decide the accounting claim. Id. at 933. The district court granted summary judgment in Moorehead's favor on OWW's unjust enrichment claim.

         In August 2016, the remaining claims proceeded to a bench trial. At trial, OWW sought damages for referral fees accruing up to the date of trial. It also sought referral fees accruing after the date of trial and going forward until a referred location ceased doing business and having activations and upgrades. OWW also pursued its claim for an accounting to show the activations and upgrades.

         The court found that Moorehead and OWW intended an agreement that would live on as long as any referred location was producing activations. Entm't USA, Inc. v. Moorehead Commc'ns, Inc., No. 1:12-CV-116 RLM, 2017 WL 3432319, at *6 (N.D. Ind. Aug. 9, 2017). The court identified twelve locations for which Moorehead was obligated to pay referral fees (Etown, Wireless Extreme, Smithmeyer Network, Street Kicks, ZHY Wireless, York, Lancaster Wireless. Red Lion, Shrewsbury, Global Solutions, Cellular Nation, and Triangle Communications) for as long as those stores produced two-year activations and reactivations. Id. at *13.

         Although the findings on liability could have entitled OWW to recovery, the court found that OWW failed to prove its damages with any certainty, as was required by Indiana law. “[OWW] hasn't proved that it was paid any less than it should have been. This record doesn't support a damages award in any amount.” Id., 2017 WL 3432319, at *16. Because the plaintiff failed to prove its damages with any certainty, despite the full use of the discovery process, the district court also denied an equitable accounting. Id. at *17. As a result, the district court ruled that OWW “shall take nothing by its complaint.” Id.

         On appeal, the Seventh Circuit focused on the damages issue as a dispositive one that was “sufficient to decide virtually all of this appeal.” Entm't USA, Inc. v. Moorehead Commc'ns, Inc., 897 F.3d 786, 792 (7th Cir. 2018). It concluded that, “[r]egardless of the scope of potential liability under the referral agreement, [OWW] did not show the district court that it was entitled to any recovery.” Id. at 795. Because OWW had not proven its damages with reasonable certainty, despite “equal means of knowledge” through discovery, it was not entitled to the equitable remedy of an accounting as a “second attempt at proving its damages.” Id. at 796.

         B. The Current Litigation

         On October 4, 2018, Entertainment USA, Inc., which does business as OWW, filed a Complaint against The Cellular Connection, LLC f/k/a Moorehead Communications, Inc. The Complaint sets forth the same General Allegations contained in the 2012 Complaint. Additionally, the Complaint recites findings the district court made in the 2012 litigation, including the finding that the parties intended the Referral Agreement to live on as long as any referred location was producing activations. The Complaint identifies four (of the twelve) locations that OWW referred to Moorehead and alleges that, following the trial in the 2012 litigation, these four “Referred Locations were open and producing activations and upgrades” that warranted payment of a referral fee. (Compl., ¶ 16.) According to the Complaint, “[d]espite multiple demands, Moorehead failed and refused to tender any sums to OWW, or to provide an accounting to OWW depicting the number of post-trial activations and upgrades for the Referred Locations.” (Id. ¶ 17.)

         The Complaint asserts that Moorehead has breached the Agreement by refusing to tender payments due (Count I-Breach of Contract). It also requests equitable relief in the form of an order requiring Moorehead to provide OWW with an ongoing monthly accounting of all future upgrades in connection with the referred locations because the accounts and business records necessary to determine the ...