February 21, 2018
from the United States District Court for the Northern
District of Indiana, Fort Wayne Division. No. 12-CV-116 -
Robert L. Miller, Jr., Judge.
Ripple, Kanne, and Hamilton, Circuit Judges.
Hamilton, Circuit Judge.
2006, plaintiff Entertainment USA sold cellular telephones
and service contracts in central Pennsylvania through a
network of retail dealers. Defendant Moorehead
Communications, an Indiana company, sought to break into that
geographic market by offering dealers the chance to sell
Verizon products and services. Without aid of counsel, the
two companies signed a two-page "referral
agreement" connecting Moorehead with a number of
Entertainment USA's dealers. The agreement promised
Entertainment USA a "referral fee" for every
Verizon activation or upgrade that resulted.
years later, this referral agreement became the subject of
litigation in the Northern District of Indiana. Entertainment
USA alleged that Moorehead breached the agreement by
discontinuing the referral payments. After a bench trial, the
district court agreed that Moorehead had breached, but in
much narrower ways than Entertainment USA had claimed. The
court also found, however, that Entertainment USA had failed
to prove the amount of its damages with reasonable certainty.
The court therefore awarded no damages to Entertainment USA.
Entertainment USA, Inc. v. Moorehead Communications,
Inc., 2017 WL 3432319 (N.D. Ind. Aug. 9, 2017). We
Factual Background and Procedural History
The Referral Agreement
case is about selling cell phones. More specifically, it is
about who sells cell phones. When a customer walks into a
cellular telephone retail store, depending on the store, the
customer may have a choice of wireless carrier service
contracts with different companies (e.g., AT&T, T-Mobile,
etc.), or the store may offer only one option (e.g., only
Verizon or only Sprint). Whether the customer has a choice of
carrier or not depends on the licensing status of the store
owner and its wholesaler, and the licensing policies of the
2006, plaintiff Entertainment USA-doing business as One
Wireless World or "OWW," as the parties'
documents sometimes called it-operated as a cell phone
wholesaler and licensor. It had a network of affiliated
dealers and retail stores in central
Pennsylvania. At that time, the stores affiliated with
Entertainment USA offered their customers service contracts
through several different carriers, including AT&T,
Sprint, and T-Mobile. Entertainment USA did not have a
relationship with Ver i z o n, however, so its stores could
not offer customers Verizon service. Around this time,
defendant Moorehead Communications, a Verizon master agent
based in Indiana, sought to expand its presence in central
Pennsylvania by signing up dealers and their stores with
USA had the kind of stores Moorehead sought to do business
with, but Entertainment USA would probably lose out on some
revenue from offering service through other carriers if its
stores added Verizon to its lineup. So the parties made a
deal: the referral agreement whereby Entertainment USA agreed
to refer some of its stores to Moorehead for consideration as
potential new Verizon locations. In return, Moorehead agreed
to pay Entertainment USA a "referral bonus" for
each new Verizon activation that eventually resulted from
this arrangement, whether or not the referred stores
continued to offer service with other carriers.
Representatives for both sides worked together to draft a
two- page contract formalizing this arrangement in January
2006, though neither side engaged counsel. The relevant
portions of the referral agreement are as follows:
proposed referral fee is designed to compensate OWW for
location handoffs and offset loss incurred from adding
another carrier to their Branded Store's existing lineup.
This will also include any locations, other than the current
list of Branded stores that are approved through Verizon and
signed up under Moorehead Communications in the future that
are referred directly to us by the OWW group.
is proposing the follo wing:
-For all handoffs / referrals from OWW, dating back to Jan 1,
2006 and any locations that are approved following that date
as a direct result of an OWW referral, we will pay a referral
bonus in the amount described below.
Monthly Activations for the referred group
*** 20$ per activation (New Activations Only) to assist with
ramp up period which will remain in effect 6 months from the
date this agreement is signed by both parties. After which,
referral bonus will be adjusted to the appropriate tier. (See
50-150 per month - 10$ referral bonus per activation
151-250 per month - 15$ referral bonus per activation
251-350 per month - 20$ referral bonus per ...