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KEMPNER MOBILE ELE., INC. v. SOUTHWESTERN BELL MOBILE SYS.

March 7, 2003

KEMPNER MOBILE ELECTRONICS, INC., AN ILLINOIS CORPORATION, PLAINTIFF, VS. SOUTHWESTERN BELL MOBILE SYSTEMS, LLC, D/B/A CINGULAR WIRELESS F/K/A/ SOUTHWESTERN BELL MOBILE SYSTEMS, INC. D/B/A CELLULAR ONE-CHICAGO, DEFENDANT.


The opinion of the court was delivered by: Sidney I. Schenkier, United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

This diversity lawsuit, originally filed in state court but then removed to federal court, arises out of disputes between the parties concerning their business relationship. Plaintiff, Kempner Mobile Electronics, Inc. ("Kempner"), an Illinois corporation with its principal place of business in Illinois, is engaged in the marketing and sale of, among other things, cellular telephone products and services. Defendant (which, for simplicity, we will refer to as "Cingular"), a Delaware limited liability corporation with its principal place of business in Georgia, is involved in the development, establishment and sale of cellular telephones and services in various parts of the United States, including the Chicago metropolitan area. In late 1999, Kempner and Cingular entered into an Authorized Agency Agreement ("the 1999 Agreement"), which was the last of several written agreements entered into by the parties dating back to the beginning of their relationship in 1989. By its terms, the 1999 Agreement was to extend through December 31, 2002, unless extended by Cingular or terminated early by Kempner or Cingular for one of the specified reasons in the 1999 Agreement.

On May 6, 2002, Kempner filed an eleven-count complaint against Cingular in state court, asserting various claims for breach of contract, and common law and statutory tort. In addition, Kempner sought a declaration that Kempner was not bound by any of the terms of the 1999 Agreement, including its "exclusivity" and non-compete provisions (which, among other things, prohibited Kempner from selling competitive services). Although filed in May 2002, the state court complaint was not served on Cingular until late July 2002 — after Cingular learned that Kempner was selling competitive products and then, on July 23, 2002, issued a notice terminating Kempner as an agent under the 1999 Agreement. Kempner thereafter amended the state court complaint, and on July 26, 2002, filed a motion for a temporary restraining order in state court.

Before a ruling on that motion, Cingular (after an initial misstep) successfully removed this case to federal court (doc. # 1), and Kempner renewed in this Court its motion for preliminary relief (doc. # 2). Cingular responded with a motion to stay the action, pending the outcome of the private mediation process required the 1999 Agreement (doc. # 3). On August 8, 2002, the district judge then presiding in the case granted Cingular's motion to stay, and compelled mediation of all claims "except as to plaintiff's request for preliminary injunction, which will go forward to preserve the status quo and prevent irreparable harm" (doc. # 4).

Pursuant to the consent of the parties (doc. ## 5-6), the case was then reassigned to this Court for all proceedings pursuant to 28 U.S.C. § 636(c) (doc. # 7). On August 21, 2002, the Court considered Kempner's renewed motion for a temporary restraining order. The Court denied that motion insofar as it sought to stay Cingular's termination of Kempner as an agent and to allow Kempner continued access to Cingular's computer system. The Court also denied Kempner's motion to stay enforcement of the non-compete provisions of the 1999 Agreement as moot, because the parties had agreed among themselves that any enforcement of the non-compete provisions would be stayed pending the outcome of a preliminary injunction hearing. Finally, the Court granted the temporary restraining order insofar as it sought to require payment by Cingular to Kempner of $50,000 in commissions allegedly due and owing as of the date of the termination, based on Kempner's unrebutted submissions at that time showing some likelihood of success and irreparable harm. Payment of that amount was conditioned on Kempner posting a $50,000 bond as security, which Kempner subsequently provided.

At that time, with the agreement of the parties, the Court set September 26-27, 2002 for an evidentiary hearing on Kempner's motion for preliminary injunction, and for Cingular's competing motion for preliminary injunction to enforce the non-compete provisions of the 1999 Agreement. That hearing later was continued by agreement of the parties to November 14-15, 2002, and then on Kempner's motion to January 9-10, 2003 (doc. # 17), and later to January 27-28, 2003 (doc. #26). At the joint request of the parties, the date for the preliminary injunction hearing then was adjusted by one day, to take place on January 28-29, 2003 (doc. # 30).

During the more than five months between this Court's ruling on plaintiff's renewed motion for temporary restraining order and the commencement of the preliminary injunction hearing, the parties engaged in substantial discovery. Prior to the preliminary injunction hearing, the parties submitted proposed findings of fact and conclusions of law (doc. # 36-37). In addition, Cingular filed several motions in limine, which the Court ruled upon in advance of the hearing (doc. ## 30, 38). During the preliminary injunction hearing, the Court received into evidence some 72 exhibits, and received testimony from four witnesses testifying in person and from 12 others through depositions and stipulations. At the close of evidence, the Court herd oral argument from the attorneys.

The Court has now considered the testimony of the witnesses, the exhibits presented at the hearing, and the oral and written submissions of counsel. After careful consideration, the Court GRANTS in part and DENIES in part both Kempner's motion to enjoin enforcement of the non-compete provisions of the 1999 Agreement and Cingular's corresponding motion to enforce those provisions. The Court further GRANTS Kempner's motion for preliminary injunction concerning payment of residual commission only as to the $50,000 that Cingular was required to pay pursuant to the Court's August 21, 2002 order; in all other respects, the Court DENIES Kempner's motion for preliminary injunction concerning residual commissions and other payments.

I.

A. The Parties.

Kempner is an Illinois corporation that is engaged in the business of marketing mobile electronic devices including radios, paging equipment, cellular communication equipment and services. The president of Kempner is Scott Kempner. Mr. Kempner entered into this line of business in 1986, when he began selling paging devices (01/28/03 Tr. 12 (Kempner)). In 1989, Mr. Kempner expanded his business to include the sale of cellular equipment and services, and at that time formed Kempner as a proprietorship; subsequently, in 1993, Kempner was incorporated.

It was also in 1989 that Kempner began its business relationship with Cingular, through a contract with Comtech (a division of Cingular) (01/28/03 Tr. 12 (Kempner)).*fn1 Cingular is involved in the development, establishment and sale of Cellular services and equipment in the Chicago metropolitan area and in other markets (see, e.g., PX 1).*fn2

Cingular utilizes several different types of retail channels for its services and equipment: (1) large "big box" retailers (e.g., Best Buy), which offer both Cingular and other companies' cellular services and equipment as part of a large variety of consumer electronic products that they sell; (2) dealers, which tend to be small-scale operations that sell not only cellular equipment and services but other electronic items (such as, paging devices and car alarms); and (3) agents, the larger of which are also known as sales and service centers, which tend to focus more heavily on the marketing and sales of the cellular service and equipment and which, through their "look and feel," tend to be closely associated with Cingular (01/29/03 Tr. 359-360 (Flack)). The sales and service centers, in turn, fall into two categories: those that are "company stores" owned by Cingular, and those that are run by outside agents pursuant to agreements with Cingular (Id. at 360). Outside agents/sales and service centers constitute Cingular's primary channel of distribution, accounting for fifty percent of its sales (Id. at 557 (Nelson)). Company-owned sales and service centers (fifteen percent), big box stores (ten to twenty percent), direct sales by Cingular (ten percent), and dealers (five percent) account for the balance of Cingular sales (Id.). According to Kempner, a close carrier agent relationship helps the carrier retain customers, who otherwise frequently would switch carriers based on price or product promotions (01/28/03 Tr. 213 (Kempner); see also DX 23, ¶ 10).

When Kempner first began selling products and services for Cingular, Kempner's principal customer base consisted of those who had bought paging devices and services; Cingular did not initially provide a primary source of plaintiff's business (01/28/03 Tr. 13 (Kempner)). In 1993, plaintiff entered into a new contract with Cingular to become a sales and service center (Id.). Kempner remained in that relationship with Cingular through the summer of 2002, pursuant to various contracts entered into between 1993 and 1999, all of which were nearly identical in their terms. The last of those agreements, the 1999 Agreement, contains a merger and integration clause stating that it constitutes the "entire agreement of the parties," that there are "no other oral or written understandings or agreements between [the parties] relating to the subject matter" of that Agreement, and that the 1999 Agreement "supersedes any prior agreements or understandings between the parties relating to the subject matter hereof" (PX 1, ¶ 28). For this reason, the Court focuses on the terms of the 1999 Agreement; and, we discuss preceding conversations, agreements, or other writings only insofar as they shed light on the meaning of the 1999 Agreement. See, e.g., Air Safety v. Teachers Realty Corp., 706 N.E.2d 882, 886 (7th S.Ct. 1999) (documents created before the contract was finalized play a limited role).

B. The 1999 Agreement.

The 1999 Agreement is a 25-page, single spaced document containing numerous terms. We summarize here certain of its key terms; to the extent that other terms are relevant to the analysis, we will discuss them below as necessary.

The 1999 Agreement defines "Authorized Services" as the services offered by Cingular that Kempner was allowed to sell under the 1999 Agreement (PX 1, ¶ 1). Under the 1999 Agreement, Kempner was authorized to sell only cellular radio service ("CRS") (Id., Ex. A), not commercial mobile radio services ("CMRS"). Kempner also was authorized to sell or lease customer premises equipment ("CPE"): that is, the cellular telephones or other related hardware necessary for the customer to use Cingular' s cellular services being marketed by Kempner (Id., ¶¶ 1, 4(g)). The 1999 Agreement authorized Kempner to sell these products and services in a defined "Area" — the six-county Chicago metropolitan area (Id., ¶ 1 and Ex. A). The 1999 Agreement defined "Subscribers" as customers of the Authorized Services provided by Cingular; each telephone number assigned to a customer of Authorized Services was counted as a separate "Subscriber" (Id., ¶ 1).

The 1999 Agreement expressly states that the relationship between the parties was not a "general agency, joint venture, partnership, employment relationship or franchise" (PX 1, ¶ 3).*fn3 Under the 1999 Agreement, Kempner was a "non-exclusive authorized agent" for Cingular, in that Cingular reserved the right to market its cellular services and CPE "in the same geographical areas served by [Kempner], whether through [Cingular's] own representatives or through others including, but not limited to, other authorized agents, retailers, resellers and distributors" (Id.). In addition, Kempner was not limited in its ability to sell paging services or CPE offered by companies other than Cingular (Id., ¶ 4(j)). However, the 1999 Agreement prohibited Kempner from acting as a representative or agent of any other reseller or provider of cellular services in a six-county Chicago metropolitan area, or to attempt to persuade Subscribers of Cingular's services to obtain from another provider services that competed with CRS, CMRS or other Authorized Services.

The persons to whom Kempner sold cellular service on behalf of Cingular became customers of Cingular (PX 1, ¶ 3). Cingular retained sole authority to establish the rates, terms and conditions of the sale by Kempner of Authorized Services (Id., ¶ 5(c)). The 1999 Agreement contains no provision that specifies how the rates, terms and conditions for the sale of services offered by Kempner would compare to that offered by other outside agencies, or to company stores or in-house sales outlets. On the other hand, individuals who bought from Kempner's CPEs (and not Cingular-owned CPE) became customers of Kempner, and Kempner had the authority to set the price at which it would sell CPEs (Id., ¶ 4(g)). Kempner agreed that during the term of the 1999 Agreement and thereafter, Kempner would not divulge Subscriber information to others, and would not use it except as necessary for service related to the CPE or for activities unrelated to CRS, CMRS or other Authorized Services (such as, paging services sold by Kempner) (Id., ¶ 4(m)).

Under the 1999 Agreement, Kempner could provide "pre-paid" and "post-paid" cellular services. Pre-paid services involve the sale of a telephone unit along with a telephone card providing a specified number of minutes of cellular services for one fixed price. When the minutes are used up, the customer either must purchase another phone card providing for specified amount of additional cellular service, or convert to a post-paid plan. Postpaid or contract service requires the customer to enter into a contract for a particular service plan for a specified time (ranging from a few months to three years, with one year being the most common time period (01/28/03 Tr. 20-22 (Kempner)).

Under the 1999 Agreement, Kempner was compensated for sales on a commission basis. Kempner received a commission on both pre-paid and post-paid contracts based on a percentage of the initial payments; with respect to post-paid contracts, Kempner also received a residual commission, based on the periodic payments made by the customer (PX 1, ¶ 7(b)).

The purpose of the residual commission, from the carrier's perspective, is to encourage retention of subscribers on a long-term basis (01/28/03 Tr. 19 (Kempner)). The 1999 Agreement specifies a four percent commission rate (Id.); but, that rate later was increased (see, e.g., PX 18). Kempner was entitled to receive only those residual commissions or other compensation that accrued during the term of the 1999 Agreement; Kempner could earn no further compensation after the 1999 Agreement expired by its own terms on December 31, 2002 or was terminated earlier for some other reason (PX 1, ¶ 7). The 1999 Agreement also provided that Cingular could withhold an offset against this commission stream against amounts past due and owing from Kempner to Cingular (Id.).

In addition to requiring that Cingular pay Kempner commissions for sales made, the 1999 Agreement required Cingular to provide Kempner with promotional literature, sales brochures and information for preparation of catalogs, advertising and other promotional activities, and a reasonable amount of sales training (PX 1, ¶ 5(e)-(g)). The 1999 Agreement also allowed Kempner to use certain Cingular marks in marketing Cingular's services. Kempner acknowledged "the great value of the goodwill associated with the Marks," that the goodwill belonged "exclusively" to Cingular, and that any use of the Marks by Kempner and the goodwill associated with them "shall inure to the exclusive benefit of [Cingular]" (Id., ¶ 8). Kempner further agreed that the terms and conditions of the 1999 Agreement were necessary to maintain the "high standards" for Cingular's services, and thus to "protect and preserve the goodwill of [Cingular's] CRS, Services and Marks" (Id., ¶ 2).

Under the 1999 Agreement, Kempner was not permitted to "change or add business locations without [Cingular's] prior written approval," which "shall not be unreasonably withheld" (PX 1, ¶ 4(c) and Ex. A). The 1999 Agreement did not specify the considerations Cingular would use in deciding whether to approve new locations.*fn4

The 1999 Agreement provided that its duration could be extended beyond December 31, 2002 by Cingular upon prior notice (PX 1, ¶ 16). The 1999 Agreement provided that for a period of one year after its termination or expiration, Kempner could not engage in any of the following acts:

(1) Directly or indirectly, induce, influence or suggest to any Subscriber of [Cingular's] CRS to purchase CRS or any other CMRS from another reseller or provider of CRS or CMRS in the Area;
(2) Directly or indirectly, induce, influence or suggest to any Subscriber of any other Authorized Service to purchase a competing service from any provider or reseller of such competing service in the Area, whether or not the competing service is technologically the same as the Authorized Service in question;
(3) Under any circumstances or conditions whatsoever, directly or indirectly, as an individual, partner, stockholder, director, officer, employee, manager or in any other relation or capacity whatsoever engage in the sale or promotion of CRS, CMRS, or any other authorized service on behalf of any competing reseller or provider of such service in the Area;
(4) Directly or indirectly, allow. any other person, firm or other entity to use the name, trade name, goodwill or any other assets or property of [Kempner or Cingular] in any manner in connection with such other entities' sale of CRS, CMRS or any other Authorized Service on behalf of a competing reseller or provider in the Area, . . . and [Kempner] specifically agrees not to transfer, assign, authorize or consent to the transfer of [a Kempner] telephone number to any other person, firm or other entity upon expiration or termination of this Agreement.
(PX 1, ¶ 20). The 1999 Agreement states that the consideration provided by Cingular for these non-compete provisions was Cingular's grant to Kempner "of the right to use the Marks, the right to advertise affiliation with [Cingular] as an authorized agent of [Cingular] and great value of the goodwill associated with [Kempner's] ability to use the Marks. . . and. . . the value of specialized, technical knowledge of the cellular industry and other Services to be imparted by [Cingular] to [Kempner] from time to time" (Id.).

Either party was authorized to terminate the 1999 Agreement early, based the occurrence of certain events. Kempner was authorized to terminate the 1999 Agreement if Kempner was in substantial compliance with its terms, and if Cingular materially breached the 1999 Agreement and then failed to cure that breach within thirty days after receiving written notice by Kempner (PX 1, ¶ 18(A)). In the event that Kempner terminated the 1999 Agreement under these circumstances, the termination would be treated as "for cause" and Kempner would not be bound by the non-compete provisions contained in Paragraph 20 (Id.). Any termination of the 1999 Agreement by Kempner that did not meet these prerequisites would be treated as without cause and, thus, would not relieve Kempner of the requirement to comply with the non-compete provisions (Id.). For its part, Cingular had the right to terminate the 1999 Agreement under a variety of circumstances, including the failure to comply with any provision of the 1999 Agreement, and a failure to timely cure the noncompliance (Id., ¶ 18(B)).

The 1999 Agreement provided that any "specifications, drawings, sketches, models, samples, data, computer programs or documentation, or technical or business information ("Information") furnished or disclosed by [Cingular] to [Kempner] hereunder shall be deemed the exclusive property of [Cingular]" to be "returned to [Cingular] upon completion or termination of authorized work (PX 1, ¶ 33). In addition, the parties agreed that "Subscriber lists and related information or data are the exclusive property of [Cingular] and are to be used by [Kempner] solely in the performance of its obligations and duties under the 1999 Agreement" and that Kempner would return that information to Cingular when the 1999 Agreement came to an end (Id.).

The 1999 Agreement contained a number of other terms of significance here. The agreement provided for a process of private dispute resolution and mediation for all disputes that may arise under that agreement — except for those relating to the non-compete provisions in Paragraph 20 (PX 1, ¶ 35). As stated above, the 1999 Agreement contained a merger and integration clause (PX 1, ¶ 28). The parties agreed that the 1999 Agreement "shall be interpreted under and governed by the laws of the State of Illinois" (PX 1, ¶ 24). The parties further agreed that any suit or action concerning the 1999 Agreement must be brought "within one (1) year after the underlying cause of action accrues" (Id.). The 1999 Agreement also contained a severability clause (Id., ¶ 21), and provided that to the extent the non-compete provisions in Paragraphs 4 or 20 might be deemed unenforceable "by virtue of its scope in terms of area, business activity prohibited and/or length of time, but could be enforceable by reducing any or all thereof, [Kempner and Cingular] agree that same shall be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction in which enforcement is sought" (Id.).

According to the testimony of Mr. Kempner, Cingular presented the 1999 Agreement as a "take it or leave it" proposition, and would not agree to vary or negotiate any of its terms (01/28/02 Tr. 38-39, 41 (Kempner)). In particular, Mr. Kempner testified that he asked that the relationship be nonexciusive rather than exclusive, which would permit him to sell competing products (Id., at 41, 88-89). We find Mr. Kempner's testimony that he sought and was denied this revision credible. We note that there is documentary evidence that Mr. Kempner sought certain changes in an earlier agreement with Cingular, which Cingular denied (see PX 2; see also 01/28/03 Tr. 38, 41 (Kempner)). However, Mr. Kempner acknowledged that he was not compelled to sign the 1999 Agreement (01/28/03 Tr. 131) (Kempner)).

C. The Business Relationship Between The Parties.

For a number of years, the relationship between Kempner and Cingular was "excellent" (01/28/03 Tr. 22 (Kempner)). While Kempner had various complaints from time to time about Cingular (which we will discuss further below), Kempner generally was pleased that Cingular encouraged its growth (Id., at 23). Clearly, the major factor in that growth was the ability of Kempner to offer Cingular's services, and to market itself — through Cingular's products and services, various promotional assistance provided by Cingular see, e.g., DX 15), and the use of Cingular's name and marks — as an authorized sales and service center of Cingular. While Kempner could sell CPE offered by any supplier, the only value of the telephone is the access it provides to the cellular service (01/28/03 Tr. 96 (Kempner)). And, the only such service Kempner offered from 1989 until May 2002 was Cingular's services.

Whether Kempner used various other assistance offered by Cingular is disputed. For example, while Cingular offered various training services to agents such as Kempner (01/29/03 Tr. 381-382 (Flack)), Mr. Kempner testified that he utilized very few of those services, and he focused more on the training sessions offered by cellular phone manufacturers (such as Motorola) than on the characteristics and features of their products (01/28/03 Tr. 93 (Kempner)). Cingular also provided information to Kempner on when particular Subscriber contracts were nearing expiration or had recently expired, with the idea that Kempner could target those customers and attempt to retain them or get them back (01/29/03 Tr. 380 (Flack); see also, DX 9, DX 61)). But, Kempner denied that it used that information (01/28/03 Tr. 331-32 (Kempner)). Kempner did use the access it was afforded to personnel at Cingular (to discuss complaints, to find out information about shipments of goods or promotional opportunities, and to seek approval for special promotions), as well as to a computer system ("Pos.com") to facilitate the activation of customers from Kempner's business location (01/29/03 Tr. 385-389 (Flack)). Kempner also received information from Cingular about promotional offerings (see DX 41-43, 45), schedules showing commissions payable on certain offerings (DX 51), and regular residual commission reports (see, e.g., DX 60). These materials were sent on a regular basis, but generally had little currency after one month or so (01/28/03 Tr. 92 (Kempner)).*fn5

By no later than 2001, the relationship between the parties had soured — at least, from the perspective of Kempner. Kempner had a number of complaints about the treatment it was receiving from Cingular. The complaints that Kempner focused on in the preliminary injunction hearing are discussed below.

1. Store Locations.

The evidence from the hearing shows that, at least as of 1994, Cingular had a "three-mile" policy, pursuant to which Cingular generally would not approve a sales location if it would be within three miles of another Cingular authorized sales and service center (PX 15). Kempner claims that Cingular applied this three-mile policy to deny "repeated requests" by Kempner to open additional locations, but it ignored the policy in allowing Cingular's company-owned stores to open locations within three miles of Kempner's store (see, e.g., Pl.'s Proposed Findings, ¶¶ 43-47). We find the plaintiff's evidence on this point unpersuasive for several reasons.

First, while plaintiff established that it made several requests for store locations that were denied, the evidence showed that, with one exception, all of the requests predated the 1999 Agreement and, indeed, took place more than one year before the contractual limitations period set forth in the 1999 Agreement (PX 1, ¶ 24). Moreover, the evidence showed that the only request that Kempner made for an additional store location during the term of the 1999 Agreement was for a location in Wilmette, Illinois that Kempner sought in April 2000 — which Cingular approved (DX 31).

Second, the evidence showed that the three-mile policy was changed by 1995 (see Boersma Dep. 53-54), thereafter, Cingular looked more generally at the market penetration in a given area, and thus could approve certain locations that were within three miles of another authorized sale and service center (Id., at 54). And, indeed, the evidence showed that the Kempner location in Wilmette, which Cingular approved in April 2000, was within three miles (albeit barely) of another Cingular location (DX 31). Cingular also offered other evidence of some sixteen other instances in which Cingular approved stores that were located within three miles of another existing Cingular outlet — including some within one-half mile or less of each other (DX 64). In at least two instances, these stores were opened within three miles of one another prior to 1995 (DX 64), while the three-mile policy still was in effect — which is consistent with the evidence that the three-mile policy was never a "hard and fast" rule (Klamer Dep. 62).

Third, the presence of a Cingular-owned location within three miles of Kempner — the Lincoln Town Center Mall location — does not strongly favor Kempner' s contention here. Kempner complains that he was denied approval to open a store at the Lincoln Town Center Mall as far back as 1994 (01/28 Tr. 24 (Kempner)), but that Cingular then opened an outlet at that location itself in 1998. Cingular offered evidence that it actually started using the Lincoln Town Center Mall location as far back as October 1994, providing evidence of lease agreements dating from that point through the present (DX 63). While Kempner argues that the existence of the leases does not show that the space was actually used by Cingular prior to 1998 for the sale of its services and products, it would certainly he reasonable to infer that Cingular did not pay tens of thousands of dollars in rent over a four-year period for space that it did not utilize. . . Moreover, Kempner testified that he last sought approval for the Lincoln Town Center location in 1997 (01/28 Tr. 24-25) (Kempner)), long before the signing of the 1999 Agreement and well outside the one-year contractual limitations imposed by that agreement.*fn6

For all these reasons, we find that the evidence does establish a likelihood of success in showing that Cingular unreasonably withheld approval of new locations for Kempner, or unfairly allowed others to be opened to Kempner's detriment.

2. Misidentification of Kempner's Wilmette Location.

Cingular maintained a toll-free number that customers and potential customers could use to identify authorized sales and service locations located within particular geographic areas represented by zip codes. In May 2001, Kempner informed Cingular that a recorded message for the zip code, in which Kempner's Wilmette location was located, identified Kempner' s store by the wrong name (Gillian Wireless) and the wrong location (Road House, Illinois), while giving the correct name and location of a Cingular-owned store within the same zip code (01/28/03 Tr. 308 (Kempner) (see also PX31).

Cingular's explanation is that it took prompt action to correct this problem (01/29/03 Tr. 520 (Whiddon)) is not credible. The problem persisted for about a year thereafter (PX 32), even though Mr. Whiddon had informed plaintiff that Cingular was "reviewing the store listings" on the toll free numbers and "planned to make the necessary revisions in the June [2001] time frame" (PX 18). However, we note that by the spring or early summer of 2002, this problem was corrected.

3. Denial of Promotional Opportunities.

According to Kempner, when it became an authorized sales and service center in 1993, Kempner was told by Cingular that it would g&the benefit of the same pricing on equipment and services as Cingular gave to its internal channels of distribution (01/28/03 Tr. 16 (Kempner)). The 1999 Agreement does not specifically contain such a guarantee: it simply says that Cingular would establish "rates, terms, and conditions" for the sales of its services (PX 1, ¶ 5(c)), without indicating what standards Cingular would use or how those prices would compare to prices offered to Cellular-owned channels of distribution. However, in May 2001, Cingular did represent to Kempner in writing that, like all dealers, Kempner would "have access to the same level of service pricing as the internal team," but that any discounts on equipment and accessories "are left to the discretion of the internal/dealer organization" (PX 18; see also 01/29/03 Tr. 517 (Whiddon)).

Kempner offered evidence of specific requests it made for promotional pricing that Kempner said was being offered by Cingular-owned channels of distribution, but that were denied to Kempner (see PX 19-21, 23, 45). For its part, Cingular offered evidence that Kempner's requests were denied because they were not identical to the promotions being offered, and included more expensive features that would have made it unprofitable for Cingular to offer them (01/29/03 Tr. 398-99 (Flack) (DX 58). The Court's review of these exhibits indicates that there is some merit to Cingular's point; we also note that the exhibits show that, in two instances, while Kempner's proposal was denied as presented, Cingular offered Kempner ...


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