Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LLC v. Global Cellular, Inc.

United States District Court, District of Columbia

March 19, 2019

3E MOBILE, LLC, Plaintiff and Counter Defendant,
GLOBAL CELLULAR, INC. Defendant and Counter Claimant.



         This is the rare contract case in which two fairly sophisticated parties-Plaintiff and Counter Defendant 3E Mobile, LLC (“Plaintiff” or “3E”) and Defendant and Counter Claimant Global Cellular, Inc. (“Defendant” or “Global”)-entered into an agreement about which they had such fundamentally different understandings that it cannot be said that they had the required “meeting of the minds” to form an enforceable agreement. That failure of accord is evidenced (and perhaps was exacerbated) in part by the vagueness of the written agreement; but it was more clearly manifested by the parties' discordant conduct during the approximately eleven months that each behaved in keeping with its apparent perception of the letter and spirit of the document. Upon consideration of the record and the evidence and testimony presented at trial, [1] the Court finds that no enforceable agreement was formed, and that, therefore, neither can be liable for breach.


         This lawsuit arises from a dispute over a putative contract between 3E and Global that was entered into in September 2013. In November 2014, 3E filed its complaint alleging that Global had breached the contract, known as the Manufacturing Agreement or the Manufacturer Agreement.[2] ECF No. 1. In January 2015, Global filed a counterclaim alleging that 3E had breached that agreement and the implied covenant of good faith and fair dealing or that 3E had been unjustly enriched. ECF No. 5 at 9-14. 3E then filed a motion to dismiss Global's counterclaims or, in the alternative, to strike its request for attorney's fees. ECF No. 11-2. Judge Sullivan denied the motion to dismiss and motion to strike on August 11, 2015.[3] See 3E Mobile, LLC v. Glob. Cellular, Inc., 121 F.Supp.3d 106 (D.D.C. 2015).

         An initial scheduling order was entered in September 2015 (ECF No. 26), and the parties engaged in discovery and attempted, unsuccessfully, to mediate the dispute (ECF No. 31). A bench trial was scheduled to begin on January 24, 2017. ECF No. 33 at 2. However, discovery disputes arose, and Global filed a motion to compel 3E to respond to document requests and interrogatories in August 2016 (ECF No. 38) and a motion for sanctions in October 2016 (ECF No. 41). In light of the pending motions, the trial date was adjourned sine die. Minute Order dated Nov. 30, 2016. Noting that 3E had not filed an opposition to Global's motion to compel, Judge Sullivan granted it on December 22, 2016. Minute Order dated Dec. 22, 2016. Judge Sullivan also granted in part and denied in part Global's motion for sanctions, finding that 3E's conduct did not merit issue-related sanctions, such as an adverse evidentiary inference, but imposing monetary sanctions in the form of attorney's fees. 3E Mobile, LLC v. Global Cellular, 222 F.Supp.3d 50, 57 (D.D.C. 2016). The trial date was eventually rescheduled to February 26, 2018. Minute Order dated Sept. 6, 2017.

         Soon after the trial date was rescheduled, the parties consented to the jurisdiction of the undersigned for all purposes pursuant to 28 U.S.C. § 636(c) and Local Civil Rule 73.1. Minute Order dated Oct. 20, 2017. Therefter, the date for commencement of the bench trial was again rescheduled to March 20, 2018. ECF No. 65. The trial began as scheduled on that date and continued on April 19, and 20, 2018.[4] At trial, 3E called three witnesses: Tommy Wang and Harry Wang, brothers who are the owners of 3E (ECF No. 72 at 35), and Walter Tymoczko, its Chief Financial Officer (id. at 178). Global also called three witnesses: Konstantinos (known as “Taki”) Skouras, CEO of Gobal (ECF No. 80 at 54-55), Joseph Brown, Global's Chief Product Officer (ECF No. 81 at 76-77), and Susan Duan, Global's Procurement and Logistics Manager (ECF No. 79 at 10). After testimony concluded, the parties simultaneously submitted proposed findings of fact and conclusions of law on June 8, 2018 (ECF No. 86; ECF No. 87) and responses on June 22, 2018 (ECF No. 88; ECF No. 89). The Court then heard closing arguments on July 13, 2018.


         Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, in an action tried without a jury, the Court “must find the facts specially and state its conclusions of law separately.”[5] Fed.R.Civ.P. 52(a)(1). “In setting forth the findings of fact, the court need not address every factual contention and argumentative detail raised by the parties, [n]or discuss all evidence presented at trial.” Yah Kai World Wide Enters., Inc. v. Napper, 292 F.Supp.3d 337, 344 (D.D.C. 2018) (alteration in original) (quoting Moore v. Hartman, 102 F.Supp.3d 35, 65 (D.D.C. 2015)), appeal dismissed, No. 18-7041, 2018 WL 4641349 (D.C. Cir. May 30, 2018). “The Court is neither ‘require[d]' nor ‘encourage[d]' ‘to assert the negative of each rejected contention as well as the affirmative of those which they find to be correct.'” Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V., 188 F.Supp.3d 22, 34 (D.D.C. 2016) (alterations in original) (quoting Schilling v. Schwitzer-Cummins Co., 142 F.2d 82, 84 (D.C. Cir. 1944), aff'd, 743 Fed.Appx. 457 (D.C. Cir. 2018). Instead, the Court need only “make brief, definite, pertinent findings and conclusions on the contested matters” that are “sufficient to allow the appellate court to conduct meaningful review.” Yah Kai World Wide Enters., 292 F.Supp.3d at 344 (quoting Wise v. United States, 145 F.Supp.3d 53, 57 (D.D.C. 2015)). Such findings and conclusions “may be incorporated in any opinion or memorandum of decision the court may file.” Paleteria La Michoacana, 188 F.Supp.3d at 34 (quoting Defs. of Wildlife, Inc. v. Endangered Species Sci. Auth., 659 F.2d 168, 176 (D.C. Cir. 1981)).


         Global is a product company and wholesaler that sells accessories for mobile devices, such as cell phone cases, to a related company, Cellairis Franchise, Inc. (“Cellairis”), which franchises kiosks in the common areas of shopping malls. ECF No. 80 at 55-56. Global, a Georgia corporation, was founded in 2000 by Taki Skouras, who is the C.E.O. of both Global and Cellairis, Joseph Brown, the Chief Product Officer of Cellairis, and another partner. ECF No. 68-4 at 1; ECF No. 80 at 56-57; ECF No. 81 at 76-77. Global obtains its products both from manufacturers, which fabricate the products Global orders, and from wholesalers, which generally buy products that another manufacturer builds and sells them to companies like Global. ECF No. 81 at 77-78. Most of the manufacturers and wholesalers with which Global works are located in the People's Republic of China. ECF No. 80 at 63; ECF No. 81 at 77.

         In 2012, Crystal Icing, LLC (“Crystal Icing”), a company that also sold cell phone cases, sued Global and Cellairis in the U.S. District Court for the Western District of New York alleging that certain of Global's cell phone cases infringed on designs copyrighted by Crystal Icing. ECF No. 80 at 64-65. In April or May of 2013, 3E, a Pennsylvania company owned by brothers Tommy and Henry Wang through their company TMD Holdings, [6] acquired Crystal Icing for a cash payment of $10, 000, assumption of $25, 000 in leases, and payment of an outstanding legal bill of approximately $30, 000 connected with the infringement action against Global and Cellairis. ECF No. 68-4 at 1; ECF No. 72 at 35-36, 42-43, 129, 197-98, 200. In that transaction, 3E acquired Crystal Icing's trademarks and inventory as well as its copyright infringement case. ECF No. 72 at 198-99. 3E also took on two of Crystal Icing's employees. Id. 3E is not a manufacturing company but was created for the sole purpose of acquiring Crystal Icing and another mobile accessories company (called Lex Mobile) and merging them together to become the mobile accessories division of TMD. Id. at 129.

         A. Mediation of Copyright Infringement Case

         In June 2013, after 3E had acquired Crystal Icing, the parties to the copyright infringement case engaged in a mediation of the dispute in Rochester, New York. ECF No. 72 at 45, 48. Global was represented by Mr. Skouras and Mr. Brown; 3E was represented by Mr. Tymoczko and Tommy Wang. Id. at 45, 179-80; ECF 80 at 67; ECF 81 at 82. During the discussions, Global became interested in 3E's representations regarding its expertise in manufacturing and sourcing products from China; 3E was intrigued by Global's representations regarding the size of Cellairis and the extent of their purchasing needs. ECF No. 72 at 45; ECF No. 80 at 67-68. The parties discussed having 3E manufacture product for Global as well as having 3E purchase products from one of Global's suppliers and provide those products to Global. ECF No. 72 at 45, 70, 160; ECF No. 80 at 72. One of the ways that the latter strategy would benefit the parties was through a Chinese intra-country tax credit (that is, a tax credit on transactions between Chinese companies) that could be realized if 3E took a purchase order from Global for goods to be sourced from China, substituted one of 3E's affiliates located in China as the buyer, and placed that modified purchase order with a Chinese supplier. ECF No. 72 at 148-151, 159-60, 177; ECF No. 80 at 73-74, 76- 77; ECF No. 81 at 82. Even if 3E placed an order with one of Global's then-current Chinese suppliers, the tax credit would kick in, and 3E could share that credit with Global by discounting the price of the order. ECF No. 72 at 159-60; ECF No. 80 at 47-48, 74, 77-78.

         After a day of discussions, the parties signed a term sheet. ECF No. 68-2; ECF No. 72 at 47. As relevant here, the document reflected the parties' agreement that the Crystal Icing litigation would be dismissed once a settlement agreement was executed and that Global would pay 3E $100, 000 within five days of the dismissal, without admitting liability, and would refrain from using the accused designs. ECF No. 68-2, §§ 3-4, 6. The term sheet further stated that 3E and Global would

enter into a comprehensive manufacturing agreement (the “Manufacturing Agreement”), which will contain the following terms:
a. For 12 months, Global will pay 3E Mobile $25, 000 per month, with the first payment due on the 60th day after the settlement agreement is signed.
b. For 24 months, beginning immediately after the 12-month period referenced above, Global will pay 3E Mobile $20, 000 per month.
c. The payments referenced in a and b above[] will be held by 3E Mobile as a credit for use by Global in the event that Global places an order (or orders) for product, as follows: Global will receive a 20% credit on all orders placed with 3E Mobile within three years and 60 days from the date of the settlement agreement, to be paid by the credit funds referenced above. . . . The purpose of these funds is to guarantee 3E Mobile a 20% credit on $3.9 million in purchases by Global.
d. At any time, Global can place orders with 3E Mobile. The first $3.9 million of such orders will be governed in accordance with the Manufacturing Agreement and used against the credit terms above. . . .
e. If at the end of three years and 60 days from the date of the Settlement Agreement Global has an unused credit with 3E Mobile, such unused funds shall become the sole and exclusive property of 3E mobile . . . .

Id., § 7. The document also included terms that guaranteed the quality of products 3E provided to Global and mandated a price equal to or less than Global then paid. Id., § 7.j. It further addressed situations in which “Global provides 3E Mobile a product to manufacture, ”-requiring provision of a sample for Global's approval and allowing that, if 3E could not provide the product “for any reason, ” it would “have the product produced by one of Global's current manufacturers.” Id. In that event, Global had the responsibility to provide 3E “information sufficient to identify and contact current manufacturers and to place orders with such manufacturers.” Id. There was also a notice-and-cure provision in the event of a default by either party. Id., § 7.i.

         B. Manufacturing Agreement and Settlement Agreement

         On September 30, 2013, the parties entered into a “Manufacturing Agreement” that closely tracked the provisions describing the “comprehensive manufacturing agreement” in the term sheet. The document designated 3E as an approved manufacturer for products to be sold to Global (and thereafter to be used in or resold by Cellairis kiosks), and “contemplate[d] that during the [36-month] Term [of the agreement] Global shall purchase a minimum of three million nine hundred thousand dollars ($3, 900, 000) in Product from [3E].” ECF No. 68-4 at 1 & §§ 1, 4.A, 12. The agreement could then be renewed for successive twelve-month periods. Id., § 12.

         Global agreed to pay 3E “an advance against purchases of Product to be made by Global” in the amount of $25, 000 per month for twelve months (beginning sixty days after September 30, 2018, the effective date of the agreement) and $20, 000 per month for the next 24 months, for a total of $780, 000.[7] Id., §§ 4.B & C. Those payments were to be held by 3E “as a credit for use by Global in the event that Global places an order (or orders) for Product, ” such that Global would “receive a twenty percent (20%) credit on all orders placed with [3E] during the Term”; the purpose of the payments was “to guarantee [3E] a twenty percent (20%) credit on the three million nine hundred thousand dollars ($3, 900, 000) in purchases of Product by Global.” Id., § 4.D. If Global placed orders in amounts that outpaced the 20% credit Global had already paid in, Global was relieved from making further advance payments until the amount of the credit caught up to 20% of the amount of the purchases.[8] Id., § 4.E. If Global ordered $3.9 million in product from 3E, Global would recoup (or be relieved from paying) the entire $780, 000 in anticipated advance payments.[9] If there was unused credit at the end of the 36-month term of the agreement, 3E would keep the money. Id., § 4.F. This arrangement provided security for 3E by ensuring payments of at least $780, 000 and encouraging Global to purchase the contemplated $3.9 million in products from 3E, thus cementing the relationship between the two companies. ECF No. 72 at 160-61; ECF No. 80 at 69-71.

         Under Section 2.C of the Manufacturing Agreement, 3E could supply products to Global by manufacturing the products itself or by sourcing them from Global's existing suppliers. ECF No. 72 at 70, 262; ECF No. 80 at 51; ECF No. 81 at 31-32, 49. It is worth quoting that section at some length, as it is at the heart of this dispute:

If Global provides [3E] a Product to manufacture, [3E] shall have thirty (30) days to create a mold and provide a sample of such Product for approval by Global. Global shall pay the cost of any such mold, which shall be at a cost less than or equal to the costs for molds currently charged to Global by its current manufacturers for the same molds . . . . After the date of approval. [3E] shall provide the Product to Global within a mass production time equivalent to Global's then current manufacturers of equivalent products. In the event [#E] cannot provide the product for any reason, [3E] may arrange to have the Product produced by one of Global's current manufacturers. In that event, Global will provide [3E] with information sufficient to identify and contact Global's current manufacturers and to place orders with such manufacturers.

ECF No. 68-4. § 2.C. Thus, if Global “provide[d] 3E a Product to manufacture, ” 3E would have 30 days to create a mold (at Global's expense) and send a sample to Global for its approval. Id., § 2.C. If Global approved a sample made by 3E, 3E was to send Global a written document with the final specifications for the product. ECF No. 68-4, § 2.E. 3E was also obligated to provide the product to Global “within a mass production time equivalent to that of Global's then current manufacturers of equivalent products.” Id., § 2.C. However, if 3E was unable to provide a requested product “for any reason, ” it “may arrange to have the Product produced by one of Global's current manufacturers. In that event, Global [would] provide [3E] with information sufficient to identify and contact Global's current manufacturers and to place orders with such manufacturers.” Id. In any case, 3E agreed to sell products to Global “at a price less than or equal to prices currently charged to Global . . . by its current manufacturers.” Id., § 2.A. Moreover, for products that 3E purchased “using one of Global's then current manufacturer[s], ” payment for the products would be “on the same terms and conditions as the manufacturing agreement executed between the parties for the manufacturer being utilized.” Id., § 2.G. Those provisions provided protection for Global by ensuring that, if 3E could not make the products desired, it could purchase them from Global's existing suppliers and sell them to Global on the same or better terms. ECF No. 80 at 69-70, 90. Global could “place orders with [3E] at any time during the Term.” ECF No. 68-4, § 4.E. However, the Manufacturing Agreement does not describe the manner in which Global was to “provide” a product to 3E or otherwise place an order.

         The default provision of the Manufacturing Agreement requires the non-defaulting party to provide notice to the defaulting party within ten days of the alleged default, after which the defaulting party would have 30 days to cure. ECF No. 68-4, § 15. If a cure were not accomplished in that period, the non-defaulting party could terminate the agreement. Id. If Global defaulted on its advance payments “and its failure to cure its default [led] to termination, ” Global's advance payments would become due immediately. Id.

         The Manufacturing Agreement contains an integration clause stating that the document “constitutes the entire Agreement between Global and [3E] regarding the Approval [of 3E as a manufacturer for Global] and supersedes any and all prior negotiations, understandings, and/or agreements, oral or written, between the parties hereto with respect to the subject matter hereof.” Id., § 23. It further requires any modifications to be set out in “an instrument in writing signed by the parties.” Id., § 21. The document also chooses this District as the exclusive forum for “disputes regarding the Manufacturing Agreement” and chooses Pennsylvania law to govern its interpretation. Id., § 20.

         On October 3, 2013, 3E and Global entered into the “Settlement Agreement.” ECF No. 68-5 at 1, 7. That document recites that the parties desired to settle the Crystal Icing action and had entered into a term sheet on June 25, 2013, “which contemplates the Parties' execution of certain formal agreements.” The parties agreed to settle and dismiss the case for a payment from Global to 3E of $100, 000 and a promise that Global would stop selling the designs at issue in the action. Id., §§ 1-4, 6. The Settlement Agreement also states that “3E and Global will enter into a manufacturing agreement, ” which was to be attached to the Settlement Agreement as an exhibit.[10]Id., § 7. The Settlement Agreement contains an integration clause asserting that it “contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations or agreements between the Parties.” Id., § 16. Unlike the Manufacturing Agreement, however, it does not mandate an exclusive forum to adjudicate any disputes that may arise or a governing body of law.

         C. Post-Agreement Conduct

         Soon after the effective date of the Manufacturing Agreement, at the end of October 2013, Susan Duan, Global's Purchasing Team Lead, reached out to 3E via email with a request to produce an injection mold for one of Global's cell phone cases. ECF No. 68-7; ECF No. 79 at 16- 18. Later that month, Global made a similar request in connection with two other cases. ECF No. 68-14; ECF No. 79 at 18-19. Neither of those projects came to fruition; that is, 3E neither manufactured the products nor purchased them from Global's current suppliers. ECF No. 79 at 18-19, 36-37.

         Consequently, in November 2013, the parties began discussions to “nail down the ordering process.” ECF No. 68-17; ECF No. 79 at 36; ECF No. 80 at 79. In mid-November, the parties held a meeting attended by Mr. Brown and Ms. Duan from Global and, from 3E Henry Wang and Lisa Kennedy, 3E's director of sourcing. ECF No. 72 at 103, 214; ECF No. 79 at 36-37; ECF No. 80 at 82-83. At that meeting, 3E stated that it would help come up with a new process by which Global could order products from 3E and help Global reduce costs by finding new manufacturers for its products. ECF No. 79 at 37-38. 3E later proposed a system in which Global would “carbon copy” 3E on its purchase orders, thus allowing 3E access to those orders. ECF No. 72 at 270; ECF No. 79 at 39-41; ECF No. 81 at 83-84.

         In December 2013, Global asked 3E to manufacture packaging for a new product launch. ECF No. 79 at 25-27. 3E provided a sample to Global in May 2014, but the quality was sub-par. Id. at 30. Global eventually ordered the packaging from one of its then-current suppliers. Id. at 31-32.

         In January 2014, Ms. Duan emailed Ms. Kennedy noting that she had sent a sample shirt to 3E so that 3E would manufacture shirts to be worn by Cellairis sales associates. ECF No. 68- 21 at 2; ECF No. 72 at 73. On February 13, 2014, in response to a request from Ms. Kennedy, Ms. Duan sent Ms. Kennedy an email providing an estimate of the quantities of each shirt size sought. ECF No. 68-21 at 1-2. At the end of the message, Ms. Duan wrote, “Joseph [Brown] would like to start the new process ASAP. So we can send the order to [3E] and [3E] send it to our factory. Can you please let me know when we can start this process?” Id. at 2. In a draft response sent to Henry Wang, Ms. Kennedy wrote:

Please see my proposed response to Susan below . . . . Let me know if this is acceptable or if you want to make any changes.
Hi Susan:
I have spoken at length with both Tommy and Henry about the PO's moving forward.
1) What we propose is for you to continue to place your orders for existing product directly to your factory. Please send us hard samples and a PO to the factory. We will then work with our factories or your existing suppliers to see if we [can] further reduce the cost or provide other improvements. As Henry discussed when we were in Atlanta [for the November 2013 meeting], our goal would be to ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.