Judge Thomas D. Long, Case 23STCV04121 2023-04-18 Tentative Ruling

On February 23, 2023, Plaintiffs Tommy Campbell, Ana Linayo Del Sol, Kevin Salazar, Matthew Wolpert, Steven Marcangelo, Velinda Valentin, Scott Brady, James Cavanagh, Antonio Herrera, Justin Bright, Alejandra Montano, Luis Quintana, Saxon Butcher, Alexander Boucher, Aaron Alaniz, Carlos Romero, Marcos Montano, Justin Willis, Gabriel Venegas, Aaron Castillo, Steve Santos, Meghan Caldwell, Keyshia Littleton, Trenton Lee Earnhardt, and OM Jaggi (collectively, “Plaintiffs”) filed this action (then assigned to Department 55) against Defendant T-Mobile USA Inc. The Verified Complaint seeks damages and injunctive relief for intentional interference with contractual relations and unfair competition.

On March 2, 2023, Plaintiffs filed an ex parte application for a temporary restraining order (“TRO”). On March 3, 2023, the Court (Department 82) denied the application for TRO, stating, “Based on the papers presented to the court this date, there is an insufficient showing of exigency since notice of the closures was given four months ago. Plaintiffs cannot create exigency by delaying in seeking injunctive relief. In addition, there is an insufficient showing of likelihood of success on the merits as well as irreparable harm inasmuch as plaintiffs have an adequate remedy at law.”

On March 9, 2023, Plaintiffs filed a motion for preliminary injunction. The next day, Plaintiffs filed a preemptory challenge to the judicial officer for Department 55, and the action was reassigned to Department 48. With this reassignment, all future hearing dates were advanced and taken off calendar.

On March 14, 2023, Plaintiffs again filed their motion for preliminary injunction. This motion is nearly identical to the application for TRO, with only minor, non-substantive edits. (See, e.g., Motion at p. 15 [slightly reorganizing the legal standard for injunctive relief from its presentation in the application for TRO]; id. at p. 16 [deleting “As appears below” and “for intentional interference with their employment with Arch and unfair competition” in the final sentence]; id. at p. 19 [adding “who are 85 percent minorities and women” to describe Plaintiffs].)

Defendant makes 217 objections, totaling 118 pages. Plaintiffs also filed a 170-page response to Defendant’s objections.

Many of the objections are improper, asserting that the evidence is argumentative, mischaracterizes the record, or irrelevant when there is facial relevance. Defendant also objects to many Plaintiffs’ declarations, which describe their personal hardships, as being unduly prejudicial. These objections are not well-taken when Plaintiffs are using these declarations to show their purported irreparable harm. The voluminous objections and responses by the parties have the effect of obfuscating the issues on this motion.

The Court declines to rule on Defendant’s voluminous objections because even if it were to overrule all objections and consider all of Plaintiffs’ evidence, the ruling on this motion would be the same.

Declaration of Jeffrey A. Rosenfeld, Objection No. 1: Overruled. This exhibit is used to show the fact of public reporting of the closures, not for any hearsay purpose related to the truth of the article’s contents. (See Opposition at p. 3 [erroneously cited as Ex. E].) Additionally, the Court did not rely on this evidence.

“A party seeking injunctive relief must show the absence of an adequate remedy at law.” (Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist. (1992) 8 Cal.App.4th 1554, 1564; see Code Civ. Proc., § 526, subds. (a)(4)-(5).) “Trial courts traditionally consider and weigh two factors in determining whether to issue a preliminary injunction. They are (1) how likely it is that the moving party will prevail on the merits, and (2) the relative harm the parties will suffer in the interim due to the issuance or nonissuance of the injunction.” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) “‘[T]he greater the . . . showing on one, the less must be shown on the other to support an injunction.’” (Ibid., quoting Butt v. State of California (1992) 4 Cal.4th 668, 678.)

When the effect of an injunction mandates a change in the parties’ relationship to one another from the status quo at the time the action was filed, the injunction is considered a mandatory injunction as opposed to a prohibitory one. (Agricultural Labor Bd. v. Superior Court (1983) 149 Cal.App.3d 709, 713.) Preliminary mandatory injunctions rarely are granted and are reserved for extreme cases where the right is clearly established and irreparable injury will occur in the absence of the injunction. (Board of Supervisors v. McMahon (1990) 219 Cal.App.3d 286, 295 (McMahon).)

The burden of proof is on the moving party to show all elements necessary to support issuance of a preliminary injunction. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) “‘Generally, the ruling on an application for a preliminary injunction rests in the sound discretion of the trial court. The exercise of that discretion will not be disturbed on appeal absent a showing that it has been abused.’” (Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286.)

Plaintiffs are employees of Arch Telecom, Inc. (“Arch”) working at Arch dealer locations across the country. (Complaint at p. 2; Complaint ¶¶ 1-25.) Arch is a Sprint dealer. (Complaint ¶ 33.)

In April 2018, four years ago, Defendant T-Mobile announced a proposed merger with Sprint. (Complaint ¶ 35.) Before the merger, Sprint provided Arch two merger protection addenda to its Authorized Representative Agreement, protecting 58 of Arch’s locations from closure for 18 months after the merger and protecting all stores opened after August 2018 from closure for 18 months after the merger. (Complaint ¶ 40.)

After Defendant’s merger with Sprint, Defendant entered into a Retailer Services Agreement (“RSA”) with Sprint dealers, including Arch. (See Complaint ¶¶ 42-44, 48.) On June 1, 2020, Arch signed the RSA and a Wind Down Addendum that described the terms for closure of 58 of Arch’s stores. (Complaint ¶¶ 48-49.)

On November 8, 2022, Defendant told Arch that it was closing 142 Arch locations. (Complaint ¶ 92.) Plaintiffs are at risk of losing their jobs and retirement benefits due to the closures. (Complaint ¶¶ 123, 128-129.)

Plaintiffs seek a preliminary injunction enjoining Defendant from (1) interfering with Plaintiffs’ employment with Arch by closing any of the 139 stores that Defendant gave notice of its intention to close on November 8, 2022, and the nine stores that Defendant gave notice of its intention not to renew in May 2022 and August 2022; (2) failing to support the stores with products and services necessary to conduct the business of a T-Mobile dealer; (3) denying access to Defendant’s point of sale systems and computer networks; and (4) otherwise interfering with the conduct of Arch’s business and Plaintiffs’ work. (Motion at p. 2.)

Plaintiffs acknowledge that at least 23 store closures will have already occurred by the time the motion is heard. (Reply at pp. 2, 5; see Welker Decl. ¶¶ 9, 27.) The Court therefore cannot award the requested injunctive relief as to these closed stores. “An injunction will not generally be issued to prohibit a completed act.” (Griffith v. Department of Public Works (1959) 52 Cal.2d 848, 853.) If Plaintiffs are instead seeking to re-open those closed stores, such an injunction would be a mandatory injunction, which requires a clear showing of irreparable harm. (McMahon, supra, 219 Cal.App.3d at p. 295.)

Plaintiffs allege that if the stores are closed, they “are uncertain what they will do but doubt they will be able to find employment that will earn as much as Arch pays them.” (Complaint ¶ 31.) They argue that they “will suffer devastating losses that cannot be reversed if T-Mobile proceeds with the announced store closures” because they “depend on their wages from Arch to provide food, shelter, and the necessities of life for themselves, their children, and others who depend on them and do not have savings to fall back on except a retirement benefit that is indexed to Arch’s annual valuation.” (Motion at p. 13.)

One plaintiff highlighted in the motion (Motion at pp. 13-14) is a single parent who has spousal support obligations and a child with special needs. (Santos Decl. ¶ 4.) Another plaintiff supports his wife, two sons, and five grandchildren on his salary, and he has no other retirement savings. (Jaggi Decl. ¶¶ 4-5.) One plaintiff has a stay-at-home wife and would have no other source of income if he lost his job. (Bright Decl. ¶¶ 4-5.) Another plaintiff supports her daughter (who needs a prom dress and will attend college next fall), both parents, and stepfather. (Littleton Decl. ¶ 9.) Other plaintiffs do not think they will find comparable jobs in their areas. (See Herrera Decl. ¶ 18; Cavanagh Decl. ¶ 8; Salazar Decl. ¶ 14; Quintana Decl. ¶ 11; Valentin Decl. ¶ 8; Alaniz Decl. ¶ 6; Castillo Decl. ¶ 5; Boucher Decl. ¶ 7; Marcangelo Decl. ¶ 7.) Plaintiffs further argue, without citing evidence, that “wireless companies tend to promote managers from within,” which will be “all the worse here where 900 workers will be pursuing new jobs in the same field at once.” (Motion at p. 16.)

Although characterized sympathetically with details about the personal hardships that Plaintiffs may suffer without their jobs at Arch, these harms flow from an economic loss that could be remedied with monetary damages. “[L]oss of employment is not generally considered a loss that is inherently immeasurable or noncompensable in monetary terms” (Barndt v. County of Los Angeles (1989) 211 Cal.App.3d 397, 404), and “the temporary loss of income, ultimately to be recovered, does not usually constitute irreparable injury” (Sampson v. Murray (1974) 415 U.S. 61, 90).

Because Plaintiffs have an adequate remedy at law, a preliminary injunction should not be issued. The Court believes this basis alone is sufficient to deny this motion regardless of the merits of Plaintiffs’ claims.

C. Plaintiffs Have Not Shown a Likelihood of Prevailing on the Merits on Either of Their Causes of Action.

The first cause of action alleges intentional interference with contractual relations based on Defendant’s disruption of Plaintiffs’ employment agreements with Arch.

“A third party’s ‘interference with an at-will contract is actionable interference with the contractual relationship’ because the contractual relationship is at the will of the parties, not at the will of outsiders.” (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148.) “[A] plaintiff may recover damages for intentional interference with an at-will employment relation under the same California standard applicable to claims for intentional interference with prospective economic advantage.” (Id. at p. 1152.)

“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.) “The tort of interference with prospective economic advantage protects the same interest in stable economic relationships as does the tort of interference with contract, though interference with prospective advantage does not require proof of a legally binding contract.” (Ibid.)

A claim for interference with prospective economic advantage requires that the defendant engaged in an independently wrongful act. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158.) “[A]n act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Id. at p. 1159.)

Plaintiffs argue that “[f]raud, violation of state franchising statutes, and unfair competition can all constitute an independently wrongful act.” (Motion at p. 18.)

Plaintiffs provide no argument, authority, or evidence supporting fraud outside of their argument regarding unfair competition. (See Motion at pp. 20-21.) As discussed below, Plaintiffs have not shown a likelihood of prevailing on the merits of their unfair competition claim.

Plaintiffs contend that the employment terminations are unlawful under the California Franchise Relations Act (Bus. & Prof. Code, § 20025), “which prohibits terminations except for defined good cause, requires 180 days notice of a nonrenewal which was not given here, and is impermissible where the franchisor seeks to convert the business of the franchisee for its own account . . . [the] notice to terminate and nonrenewals are also independently unlawful under governing franchise law.” (Motion at p. 9.) However, Defendant cites evidence disproving the existence of a franchise relationship between it and Arch. (See Opposition at p. 11; Motion, Ex. B, § 4.4; Welker Decl. ¶ 29.) This evidence is subject to a pending motion to seal, and thus the Court cannot further discuss it or disclose its contents. (California Rules of Court, rule 2.551(c).) In light of the evidence showing that there is no franchise relationship between Defendant and Arch, Defendant cannot be liable for violations of the Franchise Relations Act, and this cannot constitute an independently wrongful act.

Because Plaintiffs have not shown that Defendant engaged in an independently wrongful act, the are not likely to prevail on the merits of their claim.

The second cause of action alleges violation of unfair competition laws in California, Washington, Florida, Nebraska, New York, South Carolina, Pennsylvania, and Texas.

As a preliminary matter, Plaintiffs have not shown that this Court has jurisdiction to enjoin the closure of non-California stores and prevent interference with the employment of non-California residents due to Defendant’s alleged violation of those other states’ unfair competition laws. (See Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (2017) 582 U.S. 255, 266-269.) The Court therefore considers this claim only under California law.

California’s Unfair Competition Law (“UCL”) includes any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising. (Bus. & Prof. Code, § 17200.) The UCL embraces “anything that can properly be called a business practice and that at the same time is forbidden by law.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) “By proscribing any unlawful business practice, section 17200 borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.” (Ibid.; see Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969 [“Virtually any law can serve as the predicate for a section 17200 action.”].)

To bring an action under the UCL, the plaintiff must be “a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.) “A UCL action is an equitable action by means of which a plaintiff may recover money or property obtained from the plaintiff or persons represented by the plaintiff through unfair or unlawful business practices. It is not an all-purpose substitute for a tort or contract action.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.) “A UCL action is equitable in nature; damages cannot be recovered.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144 (Korea Supply).)

Plaintiffs argue that Defendant engaged in unfair competition by violating the laws against intentional interference with contractual relations, fraudulent inducement, and franchise laws. (Motion at pp. 20-21; see Complaint ¶¶ 105-109.) As discussed above, Plaintiffs are unable to show intentional interference with contractual relations and violation of franchise laws. With respect to fraudulent inducement, Plaintiffs do not prove—or even allege—misrepresentations made by Defendant to Plaintiffs that were intended to induce Plaintiffs’ reliance. Instead, they allege that “Plaintiffs reasonably relied on T-Mobile’s misrepresentations and omissions made to Arch which were an immediate cause of injury to Plaintiffs.” (Complaint ¶ 145.)

Plaintiffs also identify unfair competition due to Defendant fraudulently inducing Arch to sign the RSA, fraudulently inducing Arch to proceed with store acquisitions, lying to Arch about plans for the dealers, wrongfully closing Arch stores to requisition customers generated by Arch, changing its store locator algorithm to bias results in favor of corporate stores, preventing Arch stores from referring to their employees as “experts,” no longer treating dealer stores the same as corporate stores, failing to safeguard highly sensitive information about future Arch store closures to cause disruptions in Arch’s recruiting, and “[a]llowing and incentivizing employees at its corporate stores to complete sales for in store customers using an online interface to support the pretext that growing digitalization is the reason for the closure of Arch stores and T-Mobile’s favoring of its corporate stores.” (Motion at pp. 21-22.) Plaintiffs do not further argue or explain how these are fraudulent or unfair practices that harmed Plaintiffs. “A plaintiff alleging unfair business practices under [the UCL] must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

In reply, Plaintiff reframe Defendant’s fraudulent and unlawful acts as “(1) refusing to honor Arch’s agreements with Sprint post-merger and subjecting Arch to economic duress to coerce agreement to the RSA, (2) fraudulently including Arch to enter the RSA and the PCG acquisition by falsely representing that T-Mobile would not use the termination for convenience clause to force accelerated store closures, (3) terminating Arch locations in violation of California and Washington franchising laws.” (Reply at p. 10.) Plaintiffs are not a party to the RSA. In any event, “[T]he ‘unfairness’ prong of section 17200 does not give the courts a general license to review the fairness of contracts.” (Searle v. Wyndham Internat., Inc. (2002) 102 Cal.App.4th 1327, 1334, quotation marks and citation omitted.)

Moreover, Plaintiffs lack standing because they do not allege that they have lost money or property as a result of the unfair competition. (Bus. & Prof. Code, § 17204.) To the extent that some employees may have already lost their jobs due to the 23 store closures that have already occurred (see Reply at pp. 2, 5), there is no evidence demonstrating that Plaintiffs were among those employees. Even if they were among the employees at the now-closed stores, Plaintiffs are not entitled to equitable relief—the only relief available to them under the UCL (Korea Supply, supra, 29 Cal.4th at p. 1144)—because, as discussed above, they have an adequate remedy at law. Any potential lost future compensation caused by the store closures is not an injury and remedy available under the UCL. (See Department of Fair Employment and Housing v. Lucent Technologies, Inc. (N.D. Cal., Dec. 8, 2008, No. C 07-3747 PJH) 2008 WL 5157710, at *22, aff’d (9th Cir. 2011) 642 F.3d 728 [“an award of back pay to compensate for lost employment is not a form of restitution and cannot be recovered under this UCL claim”].)

In sum, Plaintiffs have not shown a likelihood of prevailing on the merits of their claim.

As discussed previously, Plaintiffs not shown that they will suffer irreparable harm or anything other than monetary damages in the absence of an injunction.

If the preliminary injunction issues and Defendant must keep the stores open, Defendant has shown substantial, non-speculative harm. (See Opposition at pp. 14-15; Welker Decl. ¶¶ 23-27.)

When either one of the interrelated factors (likelihood of prevailing and the balance of harms) does not favor the movant, the preliminary injunction should not be issued. (American Academy of Pediatrics v. Van de Kamp (1989) 214 Cal.App.3d 831, 837-838.) Here, no factor favors the movant. The Court finds that Plaintiffs have not shown that they lack an adequate remedy at law such that equitable, injunctive relief is warranted. Additionally, Plaintiffs have not shown a likelihood of prevailing on the merits or that the harm they would suffer without an injunction will outweigh Defendant’s harm if an injunction issued.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court