Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 1 of 49
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`UNITED STATES DISTRICT COURT
`DISTRICT OF CONNECTICUT
`NEW HAVEN DIVISION
`
`
`CIVIL ACTION NO.
`
`Plaintiff,
`
`SOLUTIONS CENTER, LLC,
`
`
`
`v.
`
`T-MOBILE USA, INC. d/b/a T-MOBILE,
`and SPRINT SOLUTIONS, INC. d/b/a
`T-MOBILE,
`
`
`
`
`
`
`
`
`
`
`
`Defendants.
`
`
`COMPLAINT
`
`Plaintiff Solutions Center, LLC (“Solutions Center” or “Plaintiff”), complaining of
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`Defendants T-Mobile USA, Inc. d/b/a T-Mobile (“T-Mobile”) and Sprint Solutions, Inc. d/b/a
`
`T-Mobile (“Sprint”) (each a “Defendant” and collectively “Defendants”), alleges the following:
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`INTRODUCTION
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`1.
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`This action seeks redress for Defendants’ fraudulent, predatory, and anti-
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`competitive conduct that harmed a Connecticut-based business and unlawful abuse of a franchisee
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`in a mislabeled franchise relationship.
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`2.
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`Before T-Mobile systematically dismantled its business without justification,
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`Solutions Center was one of the top-performing Sprint and then T-Mobile dealers in the country.
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`3.
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`Defendants used fraud and deceit, intentional concealment of material facts, and
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`wrongful duress they manufactured as part of a targeted and repeated scheme to unlawfully destroy
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`the businesses of the authorized dealers of Defendants’ products and services, like Solutions
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`Center, all to line Defendants’ and their executives’ respective coffers.
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`4.
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`Defendants then forced those dealer-franchisees, mostly small- and medium-sized
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`businesses run by families or friends, out of the marketplace at unreasonably low values in
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`3:22-CV-235
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 2 of 49
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`transactions over which T-Mobile exerted improper influence – all to the detriment of consumers,
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`the local and national economy, fair competition, and the dealers and their employees.
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`5.
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`T-Mobile’s wrongful manipulation and weaponizing of the contractual relationship
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`with its dealers was carried out as part of an unlawful pattern and practice of:
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`a.
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`Lying (affirmatively and by concealment) to induce dealers to enter contracts
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`with terms that T-Mobile then wrongfully and in bad faith misconstrued and
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`misapplied to damage the dealers;
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`b.
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`Simultaneously creating economic duress that left dealers with no legitimate
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`choice, other than insolvency, but to sign T-Mobile’s documents — all while
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`providing impossibly short deadlines to review T-Mobile’s documents and
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`permitting no negotiation of any terms;
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`c. Cheating the dealers out of promised and anticipated store numbers,
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`compensation, and levels of operation, and diverting compensation to
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`T-Mobile affiliates, and otherwise creating additional financial pressure, both
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`in violation of T-Mobile’s pre-contract representations and in violation of the
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`duty of good faith and fair dealing under the agreements;
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`d.
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`Forcing a fire-sale of the dealers’ businesses — after rapidly dismantling and
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`financially crippling the same — to a favored T-Mobile dealer at prices that
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`T-Mobile used improper and unlawful means to depress; and
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`e. Attempting to evade responsibility through unlawfully induced and invalid
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`putative releases.
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`PARTIES, VENUE, AND JURISDICTION
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`6.
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`Plaintiff Solutions Center is a limited liability company organized and existing
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`under the laws of Connecticut and with a principal place of business in Connecticut.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 3 of 49
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`7.
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`Defendant T-Mobile is a corporation organized and existing under the laws of
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`Delaware, with headquarters in Bellevue, Washington.
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`8.
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`Defendant Sprint is a is a Missouri corporation with its principal place of business
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`in Overland Park, Kansas.
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`9.
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`Venue is proper in the United States District Court for the District of Connecticut
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`pursuant to 28 U.S.C. § 1391(b)(2).
`
`10.
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`This Court has original jurisdiction over this action under 28 U.S.C. § 1332(a)(1)
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`and has personal jurisdiction over Sprint and T-Mobile pursuant to Conn. Gen. Stat. § 52-59b(a),
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`as Sprint operated stores and did substantial business in Connecticut, T-Mobile operates and does
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`substantial business in Connecticut, and both T-Mobile and Sprint directed their actions giving
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`rise to this action to Solutions Center in this state.
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`FACTUAL BACKGROUND
`Background of the Mobile Dealers’ Business Model.
`
`A.
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`11.
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`Dealers like Solutions Center are private companies that sell telecommunications
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`carriers’ wireless products, accessories, and services in retail stores owned and operated by the
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`dealer. Although the dealer owns the assets associated with and leases the space for its retail stores
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`(often called the dealer’s “doors” in the industry), the stores operate under the carrier’s brand and
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`to a consumer would appear to be a “T-Mobile” or “Sprint” store.
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`12.
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`The dealers are small to medium-sized, often family-owned businesses like
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`Solutions Center, which help support the local economy, lease space for store locations, and
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`provide numerous employment opportunities in the communities in which they are located – a
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`high percentage of which are jobs for minorities and persons of color.1
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`1 T-Mobile touts its pro-diversity positions, but contrary to these representations (and the promises it made
`to obtain the government’s permission to merge with Sprint), its post-merger decimation of legacy Sprint dealers has
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 4 of 49
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`13.
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`Solutions Center, like other dealers, sold wireless plans, cell phones, and cell phone
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`accessories.
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`14.
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`For each wireless plan sold, Solutions Center received an initial commission
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`(“commissions”) and, thereafter, a monthly “continuing service award” or residual commission
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`(“residuals”).
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`15.
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`Dealers depend on these commissions and residuals for their livelihood, to meet
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`payroll, and to pay the leases for their stores.
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`16.
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`In addition to wireless plans, Solutions Center sold phones and accessories at retail
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`store locations.
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`17.
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`The dealers lease the physical locations for their stores. The best dealers find good
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`locations and provide exceptional customer service to maximize sales to customers. Dealers
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`undertake a significant financial commitment (and often personal guarantees by their principals)
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`when they lease a store location, and a carrier’s good faith and fair dealing in performing its end
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`of the bargain is vital to the dealers’ ability to meet their financial commitments.
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`B.
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`Founding of Solutions Center and Establishment of Solutions Center’s Relationship
`with Sprint.
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`18. Mr. Mark Hudson, Solutions Center’s principal, was initially a Nextel dealer.
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`19.
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`After Nextel and Sprint merged, in 2006, Mr. Hudson used his life savings to
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`establish Solutions Center and became an authorized Sprint dealer opening his first Sprint store in
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`Connecticut.
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`20.
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`Solutions Center excelled as a wireless products, services, and accessories provider,
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`eventually expanding its retail store footprint across Connecticut, Massachusetts, and Virginia.
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`resulted in a large loss of jobs disproportionately held by minorities and persons of color and fewer options for
`members of these communities. It has also cut jobs in, and otherwise harmed, rural communities.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 5 of 49
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`21.
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`Further, Solutions Center was a strong small business and contributor to the local
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`community. For example, it participated in a Connecticut grant program that required it to create
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`at least 15 jobs, and Solutions Center hired well over 100 people.
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`22.
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`On or about August 7, 2017, Sprint and Solutions Center signed an Authorized
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`Representative Agreement (the “Sprint ARA”), which was to remain effective for two years with
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`an automatic renewal of a two-year period.
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`C.
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`Solutions Center Exceled as an Authorized Sprint Dealer and Expanded its Footprint
`at Sprint’s Behest.
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`23.
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`24.
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`In 2017, Sprint and T-Mobile explored a highly publicized potential merger.
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`The initial merger discussions seemingly ended, and immediately following the
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`announcement that there would be no merger, Sprint contacted many of its dealers, including
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`Solutions Center, and actively encouraged them to “open as many stores as possible.”
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`25.
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`At a dealer summit that took place January 29-31, 2018, Sprint strongly urged
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`dealers, including Solutions Center, to grow and add new locations, especially locations in close
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`proximity to competing T-Mobile stores.
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`26.
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`If the dealers needed to obtain financing or take on debt to open more stores, Sprint
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`encouraged them to do so or find investors so that they could continue to grow.
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`27.
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`Sprint consistently ranked Solutions Center as one of its top dealers in the country,
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`and Solutions Center received several awards for being one of the best Sprint dealers or legacy
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`Sprint dealers in the country. Its accolades included: recognition as a Platinum Partner in 2018
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`and 2019 and recognition multiple times as the “number one” dealer nationally in monthly dealer
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`calls conducted by Cody Welker or Steve Impe of T-Mobile.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 6 of 49
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`28.
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`In light of Solutions Center’s track record of success, Sprint specifically
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`encouraged Solutions Center to expand in markets that Sprint claimed had long-term “strategic”
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`value or benefit to Sprint’s plans.
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`29.
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`Solutions Center grew to 28 stores across Connecticut, Massachusetts, Maryland,
`
`and Virginia, with over 200 employees, which included numerous employees of color.
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`D. While Encouraging Solutions Center to Expand, Sprint Concealed Its Plans to Merge
`with T-Mobile.
`
`30.
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`Sprint knew that it would soon be acquired by T-Mobile but told Solutions Center
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`otherwise, assuring Solutions Center (and other legacy Sprint dealers) that Sprint would remain “a
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`stand-alone company.” Indeed, Sprint’s CEO Marcelo Claure specifically made this statement in
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`a November 2017 email to Sprint’s dealers, wherein he further outlined the “strong plan” he would
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`implement “to grow Sprint as an independent company.”
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`31.
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`Despite Sprint’s efforts to conceal its merger plans from dealers like Solutions
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`Center, rumors persisted in early 2018 that Sprint and T-Mobile might merge.
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`32. When Solutions Center inquired whether there would be a merger, Sprint said there
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`would not be, and again instructed Solutions Center to continue growing and opening new stores
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`in close proximity to T-Mobile locations.
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`33.
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`Solutions Center followed Sprint’s instructions and continued opening new
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`locations.
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`34.
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`On April 29, 2018, Sprint and T-Mobile announced that they had reached a
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`definitive merger agreement.
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`35.
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`Upon information and belief, Sprint knew its prior statements to dealers about the
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`merger were false and that its repeated urging of Solutions Center (and other legacy Sprint dealers)
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`to continue growing and opening new stores was solely to strengthen Sprint’s and its executives’
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 7 of 49
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`position in the ongoing (but concealed) merger negotiations, and would ultimately lead to the
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`demise of dealers like Solutions Center.
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`36.
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`Following the merger announcement, Solutions Center (and other Sprint dealers)
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`asked what they could do to reduce the chance any of their stores would be closed following the
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`merger and to have opportunities to grow and open new stores thereafter. Sprint’s representatives,
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`including but not limited to Tracey Nolan, explained that closure decisions would be based on a
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`store’s performance relative to other stores in close proximity, that Sprint’s dealers needed to grow
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`and perform exceptionally because they were now “writing their own résumé” for the merger and,
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`if they were a top performer they’d be chosen as a growth partner for the “New T-Mobile.” These
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`representations were false, and Sprint and T-Mobile knew they were false.
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`37.
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`To obtain the necessary approvals from the Department of Justice and regulatory
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`agencies, T-Mobile also made representations — not only to existing Sprint dealers, but also to
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`the government and the public — that the merger would increase competition for consumers, result
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`in the opening of new stores, create approximately 100,000 new jobs, and would not produce anti-
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`competitive behavior.
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`38.
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`Among other public appearances to promote the merger, Marcelo Claure and
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`T-Mobile’s CEO John Legere, jointly appeared on CNBC’s “Squawk on the Street” program on
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`April 30, 2018. During that joint appearance, they stated that the new proposed merger would
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`create thousands of jobs and would result in hundreds and hundreds of new stores being opened.
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`A
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`link
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`to
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`the video of program where
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`these statements was made
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`is here
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`-
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`https://www.cnbc.com/video/2018/04/30/T-Mobile-and-sprint-ceos-on-mega-merger.html. Mr.
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`Claure’s and Mr. Legere’s statements on that program are incorporated by reference.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 8 of 49
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`39. Mr. Legere additionally stated that “The New T-Mobile will open 600 new stores
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`to serve rural areas and small towns” (emphasis in original) and that “we will offer a job with
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`the New T-Mobile to every single employee of T-Mobile and Sprint working in one of our retail
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`stores” following the merger, during an April 4, 2019 posting to T-Mobile’s website -
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`https://www.T-Mobile.com/news/un-carrier/new-T-Mobile-creating-jobs, which statements are
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`also incorporated herein.
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`40. Messrs. Claure and Legere made these statements to induce legacy Sprint dealers,
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`including Solutions Center, to continue following Sprint’s supposed growth plan and convince
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`them to not oppose the merger or request that appropriate regulators deny or contest the merger.
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`41. Messrs. Claure and Legere intended that Solutions Center and other Sprint dealers
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`rely on these representations in executing post-merger agreements with T-Mobile so they could
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`complete their merger and enrich themselves to the detriment of legacy Sprint dealers like
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`Solutions Center.
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`42. Messrs. Claure and Legere also intended that Congress rely on these statements, as
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`well as those made in other public appearances and interviews, because they knew the merger
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`would be subject to scrutiny by Congress.
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`43.
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`In fact, during joint testimony sessions to Congress on June 27, 2018 and February
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`19, 2019, Messrs. Claure and Legere reiterated their claims that the merger would not impact
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`legacy Sprint dealers and would in-fact result in more stores being opened.
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`44.
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`Sprint’s lies, concealment of the truth, and wrongful manipulation of Solutions
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`Center (and other legacy Sprint dealers) were intended to profit Sprint and its executives in the
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`coming merger, from which they profited greatly, as a result of the growth they fraudulently
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 9 of 49
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`induced dealers to undertake — growth that the “New T-Mobile” intended to promptly dismantle
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`and destroy once the merger transaction was complete.
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`E.
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`Sprint and T-Mobile Merged, and T-Mobile Coerced and Fraudulently Induced
`Solutions Center to Enter Into New Agreements Based on False Promises of Growth
`and Limited Post-Merger Closures.
`
`45.
`
`46.
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`Sprint and T-Mobile finalized the merger on April 1, 2020.
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`On or about April 25, 2020, representatives from T-Mobile emailed Solutions
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`Center a document outlining T-Mobile’s post-merger dealer strategy as it pertained to Solutions
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`Center (Solutions Center can no longer retrieve this document because T-Mobile emailed it to Mr.
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`Hudson’s T-Mobile-required @tmobile.com email account, to which T-Mobile has revoked
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`access, thereby causing Mr. Hudson to lose access to numerous such documents outlining
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`T-Mobile’s wrongdoings.).
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`47.
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`In the document, T-Mobile announced that it was closing 32% (6 of 28 closures
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`and taking 3 Corporate Owned Retail (“COR”) to dealer doors) of Solutions Center’s stores —
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`most of which were not in extreme proximity to an existing T-Mobile store, and were better
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`performers than the nearest T-Mobile location. This number of closures, and the stores selected
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`for closure, exceeded and was contrary to what Sprint and T-Mobile had intentionally misled
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`Solutions Center to believe.
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`48.
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`After announcing the Sprint dealer closures, T-Mobile stayed on script and repeated
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`the same false statement Sprint fed to the dealers before the merger, claiming the closures were
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`based on extreme proximity to other T-Mobile stores. T-Mobile also falsely represented it was
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`instituting a similar number of closures for legacy Sprint and T-Mobile dealers alike.
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`49.
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`Shocked by the volume of lucrative and successful stores they would lose
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`immediately following the merger, Solutions Center and other legacy Sprint dealers asked
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`T-Mobile if there would be another round of en masse closures subsequent to these. T-Mobile
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 10 of 49
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`falsely said there would not be another round of closures. To bolster this lie, T-Mobile intentionally
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`designed the April 2020 dealer strategy presentations it made to Solutions Center and other legacy
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`Sprint dealers to say nothing suggesting a potential for future closures and to give the impression
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`there would be none.
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`50. When Solutions Center inquired about permission to renew the soon-to-expire-
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`leases on some of its remaining 22 stores, T-Mobile provided its assurances and concealed the fact
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`that T-Mobile had, upon information and belief, already decided it would soon close those stores
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`as well.
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`51.
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`Around the same time in April 2020, during an in-person meeting with Terry Hayes,
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`Northeast Region Vice President General Manager with T-Mobile, Solutions Center also asked
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`whether it would have opportunities to re-grow and acquire new stores following the closures. Mr.
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`Hayes falsely and misleadingly assured Solutions Center that T-Mobile would support its growth
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`once it signed T-Mobile’s agreements.
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`52.
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`T-Mobile bolstered this deceit through Doug Chartier, T-Mobile’s Vice President
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`of sales and distribution, who told Solutions Center it was “okay to shrink to regrow” and that
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`T-Mobile wanted Solutions Center to be “well capitalized and in good financial position” to
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`succeed; and through Scott Keen and Cody Welker, Directors of Sprint’s (and later T-Mobile’s)
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`dealer distribution channels who assured Solutions Center it would be “a growth partner” and “well
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`taken care of,” and that there “would not be” another round of closures.
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`53.
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`According to T-Mobile’s representatives, the “shrink to grow” strategy involved a
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`single round of closures to eliminate — on a fair and reasonable basis — stores that were in close
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`proximity to one another, and then allow dealers like Solutions Center to grow by adding new
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`locations in new areas.
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`54.
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`Indeed, multiple T-Mobile representatives repeatedly assured Solutions Center that
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`there would be no more rounds of store closures and that T-Mobile would facilitate expansion and
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`growth by Solutions Center.
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`55.
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`Further, in response to a specific inquiry from Mr. Hudson of Solutions Center,
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`Carlos Morais of T-Mobile assured Solutions Center that T-Mobile would approve new locations
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`for Solutions Center as long as it had solid performance metrics, but Mr. Morais (and T-Mobile
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`more generally) concealed from Solutions Center that T-Mobile had no intention of allowing
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`Solutions Center to recover from the closures and instead planned to impair the performance
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`capabilities of Solutions Center’s remaining stores and further reduce, not grow, the number of
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`Solutions Center’s stores until it had no choice but to exit the business entirely.
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`56.
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`All of these coordinated statements took place right before T-Mobile forced and
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`coerced legacy Sprint dealers, like Solutions Center, to sign T-Mobile’s dealer agreements. Upon
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`information and belief, at the time T-Mobile made these statements T-Mobile knew that it would
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`make multiple additional rounds of en masse closures of Solutions Center stores and caused its
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`personnel, like Messrs. Keen, Welker, and Morais, to misrepresent its intentions to Solutions
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`Center and other legacy Sprint dealers.
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`57.
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`On or about May 1, 2020, T-Mobile sent Solutions Center a voluminous package
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`of documents (hereinafter the “T-Mobile Agreement Package”), which would require Solutions
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`Center to wind down its existing agreements with Sprint, enter into four new Retailer Services
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`Agreements with T-Mobile, and submit a personal guaranty signed by Mr. Hudson individually.
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`58.
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`The T-Mobile Agreement Package comprised nearly 400 pages of dense legal
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`documents.
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`59.
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`The documents in the T-Mobile Agreement Package included references to and
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`purported to incorporate terms, policies, and procedures that Solutions Center was not permitted
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`to access —– and therefore could neither read nor understand — until after it signed the T-Mobile
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`Agreement Package.
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`60.
`
`T-Mobile’s unwillingness to provide access to the documents referenced in the
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`T-Mobile Agreement Package demonstrates the coercive and fraudulent manner in which
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`T-Mobile proceeded.
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`61.
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`Contemporaneously with its transmission of the T-Mobile Agreement Package,
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`T-Mobile falsely represented that it did not have to and would not honor Sprint’s obligations under
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`Solutions Center’s existing Sprint ARA, which obligations T-Mobile had assumed via the merger
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`and by their terms remained effective as the Sprint ARA contained an automatic renewal clause.
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`62.
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`T-Mobile further falsely represented that, because Sprint no longer existed,
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`T-Mobile was not obligated to provide any benefits under the existing contracts and would not
`
`allow Solutions Center to sell any T-Mobile phones, accessories, or services unless it signed the
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`T-Mobile Agreement Package.
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`63.
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`T-Mobile’s threat stood to deprive Solutions Center of the ability to meet its
`
`expenses of approximately $750,000 per month in lease payments, payroll, taxes, and debt service.
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`64.
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`T-Mobile took the entirely opposite position with respect to Solutions Center’s
`
`burdens under the existing Sprint ARA, stating it would continue to enforce those burdens against
`
`Solutions Center until it signed the T-Mobile Agreement Package.
`
`65.
`
`T-Mobile pressured Solutions Center to quickly sign the T-Mobile Agreement
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`Package, repeatedly emphasizing that no terms would be negotiated, and Solutions Center had no
`
`choice if it wanted to be a part of the new T-Mobile (and that, in fact, Solutions Center’s only
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 13 of 49
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`choice was to be part of T-Mobile because it was still bound by the non-compete provisions of its
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`dealer agreement with Sprint). Contemporaneous with this coercion, T-Mobile of course continued
`
`its assurances that Solutions Center would have growth opportunities and there “would not be”
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`another large round of store closures.2
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`66.
`
`Solutions Center had no legitimate option of suing T-Mobile to avoid signing these
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`documents. If it did not sign them, Solutions Center would lack the cash flow from selling wireless
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`services and products that it would have needed to fund litigation against T-Mobile and Sprint,
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`which were, conversely, well capitalized to resist a challenge (and draw it out to punish Solutions
`
`Center).
`
`67.
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`The risk of taking on T-Mobile while trying to do business with it was significant
`
`because T-Mobile habitually retaliates against dealers that stand up to it.
`
`68.
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`T-Mobile also stated that if Solutions Center did not sign the T-Mobile Agreement
`
`Package by May 8, 2020 (effectively giving Solutions Center only 7 days to attempt to read and
`
`understand, let alone obtain legal advice on, approximately 400 pages of dense contract language),
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`not only would there be a complete and immediate cessation of all Solutions Center’s revenue
`
`producing activity, T-Mobile would withhold the funds needed to remodel Solutions Center’s
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`remaining stores to convert them to T-Mobile-branded locations.
`
`69.
`
`T-Mobile’s statement that Solutions Center would receive a certain amount of
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`money to cover the cost of “refreshing” its stores if it quickly signed the T-Mobile Agreement
`
`Package also concealed the true costs of doing so, which far exceeded the amount T-Mobile said
`
`it would allocate.
`
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`2 Mr. Hudson of Solutions Center made a similar inquiry (about whether there would be further closures)
`shortly after he signed the T-Mobile Agreement Package and received the same response.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 14 of 49
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`70.
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`Faced with an immediate reduction of its business within weeks of the merger, the
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`direct threat of having its remaining stores’ operations grind to a halt with nothing to sell, and the
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`inability to negotiate terms, and relying on T-Mobile’s representations that there would be no
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`further rounds of store closures but instead growth opportunities, Solutions Center signed the
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`T-Mobile Agreement Package on May 8, 2020.
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`71.
`
`The T-Mobile Agreement Package included several T-Mobile Retailer Services
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`Agreements (the “T-Mobile RSAs”), the Wind Down Addendum to the Sprint ARA (the “Wind
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`Down Addendum”), and an individual personal guaranty for Mr. Hudson (the “Guaranty”).
`
`72.
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`Notably, T-Mobile included untruthful language in the Guaranty stating that Mr.
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`Hudson requested to personally guaranty Solutions Center’s obligations, when, in fact, he did not
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`want to sign a personal guaranty.
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`73.
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`Solutions Center only signed the T-Mobile Agreement Package under extreme
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`economic duress, unwillingly, and further coerced by the lies T-Mobile told.
`
`74.
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`The T-Mobile RSAs were one-sided adhesion contracts and, as Solutions Center
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`now realizes, intended only as a façade for T-Mobile’s scheme to rapidly drive Solutions Center
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`(and countless other legacy Sprint dealers) out of business and not to facilitate a legitimate
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`commercial enterprise.
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`F.
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`T Mobile’s Agreements Were Unduly Oppressive, Particularly Given T Mobile’s
`Unreasonable Interpretations To Create Truly Oppressive Terms.
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`75.
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`The T-Mobile RSAs provide for five-year terms. T-Mobile represented that it was
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`providing Solutions Center with a 5-year agreement instead of the “usual” 6-month agreement it
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`was offering other legacy Sprint dealers because Solutions Center was a top performing dealer.
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`The reality, however, was that T-Mobile knew the usual 6 months might not be long enough to
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`dismantle the dealers it wanted to run out of business, and therefore gave those dealers — many
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 15 of 49
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`of which were top performing legacy Sprint dealers, including Solutions Centers — 5-year terms
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`so they would have a longer period of obligations (non-competes and guarantees) and could not
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`leave T-Mobile to sell competing carriers’ products while T-Mobile systematically destroyed their
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`businesses.
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`76.
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`The T-Mobile RSAs provide that the parties can only terminate them for material,
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`uncured default. T-Mobile unilaterally interpreted the RSAs to evade this limited termination
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`provision by relying on other provisions of the RSAs to shut down Solutions Center’s business
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`without any uncured default by Solutions Center.
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`77.
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`The T-Mobile RSAs provide that either party can close a Solutions Center store for
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`any reason or no reason with at least 120-days’ written notice. They go on, however, to limit this
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`right for Solutions Center only to situations in which T-Mobile approves of the closure. The plain
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`language, purpose, and intent of the provision was to allow for occasional, one-off closings of
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`stores that were not performing well or were inconvenient to operate.
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`78.
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`However, T-Mobile adopted an untenable and unethical interpretation of the
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`provision, claiming it authorized T-Mobile to impose broad “rounds” of closures of numerous
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`Solutions Center stores, as often and as numerous as T-Mobile desired for its own benefit, even if
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`so rapid and financially ruinous to Solutions Center that it would be forced to sell its remaining
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`assets to avoid bankruptcy and without ever receiving a bona fide opportunity to be a T-Mobile
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`dealer.
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`79.
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`No rational or fair person could interpret the agreement this way, as indicated by
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`the need for an entirely separate agreement just months prior — the Wind Down Addendum — to
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`address merely the one-time imposition of such sweeping closures, nor would a rational dealer
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`knowingly agree to such an illusory arrangement.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 16 of 49
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`80.
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`Solutions Center’s ability to grow was entirely in the hands of T-Mobile, which
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`gave itself sole discretion to approve or reject Solutions Center’s attempts to open or acquire new
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`store locations, and to approve or reject even the renewal of any existing Solutions Center
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`locations. In essence, Solutions Center’s ability to survive was dependent on T-Mobile’s good
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`faith and fair dealing, which, it turned out, would be non-existent.
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`81.
`
`The T-Mobile RSAs also contain a broad covenant not to compete, which applies
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`during the term of the agreement and for 1-year afterwards and prohibits not only Solutions Center,
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`but also its principals and owners, and any successor entity, from competing with T-Mobile or its
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`dealers in virtually any capacity. Stated differently, T-Mobile closed all of the exit doors for any
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`dealers who did not want to endure its ruinous activity; it impeded the free alienation of businesses
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`and stifled legitimate competition in the marketplace.
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`82.
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`The T-Mobile RSAs (and the Sprint Wind Down Addendum) also greatly reduced
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`Solutions Center’s compensation, depriving it of, among other things, the residuals it had earned
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`while also creating a less profitable platform than the Sprint ARA it had supplanted.
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`83.
`
`The T-Mobile RSAs (and the Wind Down Addendum) also purported to include
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`releases. However, as indicated above, those releases are invalid because they were the product
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`of fraud, coercion, and improper duress created by T-Mobile.3
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`84.
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`Indeed, if T-Mobile had been truthful about its plans to rapidly dismantle these
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`dealers’ businesses, or had it not wrongfully manipulated the relationships to ensure that any
`
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`3 T-Mobile had a pattern and practice of applying improper financial and other pressure to coerce dealers’
`execution of purported releases. Upon information and belief, T-Mobile even sent releases to dealers’ low-level
`managers in hopes an unwitting individual would sign them. These and other unscrupulous tactics, combined with T-
`Mobile’s pressuring of dealers to sign releases inserted into voluminous contract “packages” it gave dealers literally
`days to review and sign if they wanted “to keep doing business,” exposes both T-Mobile’s knowledge of its lies and
`forthcoming wrongdoing, and its attempt to use deceit and coercion to immunize itself from its fraudulent, unfair, and
`anti-competitive conduct.
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`Case 3:22-cv-00235-JCH Document 1 Filed 02/09/22 Page 17 of 49
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`attempt to stand up to T-Mobile guaranteed a dealer’s insolvency, no rational dealer would
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`voluntarily sign such agreements.
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`G.
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`T-Mobile Instituted Additional Closures Despite Representations to the Contrary,
`and Further Engaged in a Pattern and Practice of Anti-Competitive Behavior to
`Harm Solutions Center and Drive it Out of Business.
`
`85.
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`In bad faith, T-Mobile weaponized the terms of the agreements it coerced Solutions
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`Center to sign, imposing rapid and crippling numbers of store closures, which was contrary to
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`T-Mobile’s representations. Specifically:
`
`a.
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`T-Mobile immediately closed the 9 stores representing 32% of Solutions
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`Center’s total stores.
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`b.
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`In November 2020, approximately 6 months after T-Mobile assured Solutions
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`Center it would not be subject to additional closures, T-Mobile announced
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`that it was instituting