APG, Inc. v. MCI Telecommunications Corp.

436 F.3d 294, 2006 U.S. App. LEXIS 3018, 2006 WL 295503
CourtCourt of Appeals for the First Circuit
DecidedFebruary 8, 2006
Docket02-1120
StatusPublished
Cited by12 cases

This text of 436 F.3d 294 (APG, Inc. v. MCI Telecommunications Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
APG, Inc. v. MCI Telecommunications Corp., 436 F.3d 294, 2006 U.S. App. LEXIS 3018, 2006 WL 295503 (1st Cir. 2006).

Opinion

COFFIN, Senior Circuit Judge.

In early 1997, appellant APG, Inc., acting as a middleman, initiated discussions with CVS Corp. (“CVS”), the national drug store chain, in an effort to persuade CVS to buy, for re-sale in its stores, prepaid telephone cards provided by MCI Telecommunications Corp. (“MCI”). Ultimately, CVS and MCI bypassed APG; CVS contracted directly with MCI to buy thousands of prepaid cards annually. In this diversity action, APG claims that MCI deceitfully closed the deal on its own at the last minute, taking advantage of APG’s efforts and unfairly depriving the small company of commissions. APG’s complaint sought damages on both tort and contract theories. The district court granted summary judgment in favor of MCI on the tort claims and later granted judgment as a matter of law on the contract claim. Asked to review each of those dispositions, we have carefully examined the record and relevant law. Although we agree that the district court properly dismissed most of the claims, we conclude that the facts of record thus far, viewed in appellant’s favor, leave open the possibility of liability on a theory of unjust enrichment. We therefore remand for further proceedings on that issue.

I. Factual Background

We draw the facts from the depositions and other materials contained in the summary judgment record, as well as from the testimony adduced during the trial on the contract claim, and recount them in the light most favorable to appellant. See Burton v. Town of Littleton, 426 F.3d 9, 14 (1st Cir.2005); González-Piña v. Rodríguez, 407 F.3d 425, 431 (1st Cir.2005). 1

Appellant APG is a small family business that was incorporated in the mid-1990s by Jordan Rice, a resident of Florida. The company was involved primarily in the sale of automobiles before Rice’s son, Steven, joined the company as vice president in late 1996 and decided to explore adding the sale of prepaid telephone cards to the company’s other activities. He was referred by an MCI representative to Conserv Corp. (“Conserv”), one of a number of third-party distributors that purchased MCI prepaid cards for re-sale. Typically in MCI’s prepaid sales department, such independent distributors pursue sales to smaller businesses, while larger potential accounts — the “top 200” or so companies — are handled directly by MCI’s own sales staff. On occasion, when a distributor has special access to one of the large companies through a personal contact, MCI will pursue that account through the distributor.

Steven Rice and his brother, Robert, APG’s president, had just such a connection to offer Conserv: their mother, Janice, was an old friend of CVS’s president and CEO, Stanley Goldstein. Steven Rice proposed that APG serve as a sub-distributor or sub-agent of Conserv for the sale of MCI prepaid cards, with commissions to be paid when Rice linked Conserv with his “retail contacts.” APG and Conserv subsequently entered into a “Non-Circumvention/Non-Disclosure Sales . Agreement” *298 specifically with respect to the sale of prepaid telephone cards to CVS. Dated January 16, 1997, the agreement provided that Conserv would not “circumvent, avoid, or bypass APG either directly or indirectly, to avoid payment of fees or commissions or other benefits to APG.... ”

About a week after the two companies signed the agreement, Steven Rice spoke with the CVS buyer responsible for prepaid cards, Janice Jacobs, and scheduled a meeting at CVS headquarters to discuss CVS’s possible purchase of MCI prepaid cards. An assistant to Goldstein had called Jacobs and requested that she speak with Rice about the telephone cards following a phone conversation between Janice Rice and her old friend. In attendance at the meeting, which took place on January 29, were Jacobs, Rice, Conserv’s vice president Jim Vinci, and Cindy Isaacs, an MCI prepaid agent manager. As an agent manager, Isaac, an MCI employee, helped her assigned distributors sell MCI prepaid cards, and Vinci had asked her to attend the meeting to support Conserv and APG.

Rice and Vinci had prepared a written proposal for CVS using a “Power Point” format that MCI had provided and, at the meeting, Isaacs made a presentation about MCI prepaid cards that included assurances that Conserv could meet CVS’s needs, supported by MCI and its technical staff. A number of follow-up conversations took place, including one in which Robert Rice assured Jacobs that “dealing with us at Conserv was like dealing with MCI directly.”

In March, Jacobs sent Vinci a letter stating that CVS was putting the prepaid program on hold until mid-August and that she would contact him again when the program became active. In a phone conversation with Vinci, Jacobs attributed the delay to CVS’s pending merger with Rev-eo. In late April, however, Jacobs called Vinci to request additional information about Conserv’s bid. Her call triggered a flurry of activity: Vinci called Isaacs to obtain answers to some of the questions Jacobs had raised; Vinci notified APG of the renewed contact; and, after Vinci’s call to her, Isaacs sent an email to Mary McGann, MCI’s in-house sales manager, to give her “a heads-up” about CVS’s apparently imminent plan to choose a prepaid provider. The email reported that Jacobs had identified four companies “in the running for the deal,” including Conserv, and Isaacs noted that none was a major carrier. The email also detailed the information that CVS was seeking from Conserv.

Isaacs’ email is pivotal to appellant’s claims in this case. APG maintains that it was this email that put MCI’s direct sales division on notice of CVS’s impending purchase of prepaid cards and prompted that division to step in and appropriate the sales opportunity developed by Conserv and APG. Although the immediacy of CVS’s intent to choose a provider apparently was news to MCI, the record shows that, prior to Isaacs’ email, MCI’s direct sales team had taken steps toward marketing prepaid cards to CVS, which already was a high-volume customer of MCI’s regular long-distance service. The record contains a draft of a letter from an MCI national accounts manager, dated March 24, 1997, and a series of emails among MCI executives dated April 7 and 8, which contain references to the marketing of prepaid services to CVS. In another series of emails sent on April 21 — four days before Isaacs’ email — McGann and others involved with direct sales made comments that indicated that MCI was moving ahead with a direct pursuit of CVS’s prepaid business. Indeed, in her reply to Isaacs, McGann noted that “[w]e have had high level meetings with this account,” including a dinner meeting “the other night” with a *299 merchandising executive, and she observed that “Janice [Jacobs] seems to be going down a different path.” Isaacs herself had referred in her email to the direct sales department’s relationship with CVS, stating that “I know that CVS is on your list.”

Despite this internal discussion about MCI’s direct interest, Isaacs continued to support Conserv’s efforts to secure the account, and it appears that neither Con-serv nor APG was aware of any separate dealings by MCI to make a direct sale.

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Bluebook (online)
436 F.3d 294, 2006 U.S. App. LEXIS 3018, 2006 WL 295503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/apg-inc-v-mci-telecommunications-corp-ca1-2006.