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CNE Direct, Inc. v. Blackberry Corp.

United States Court of Appeals, First Circuit

May 2, 2016

CNE DIRECT, INC., Plaintiff, Appellant,
v.
BLACKBERRY CORPORATION, f/k/a RESEARCH IN MOTION CORPORATION, Defendant, Appellee,

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. F. Dennis Saylor, IV, U.S. District Judge.

         Jack Irving Siegal, with whom William C. Nystrom, Dana A. Zakarian, and Nystrom Beckman & Paris LLP, were on brief, for appellant.

         Sanford F. Remz, with whom Noemi A. Kawamoto, Donald K. Stern, and Yurko, Salvesen & Remz P.C., were on brief, for appellee.

         Before Thompson and Kayatta, Circuit Judges, and Mastroianni,[*] District Judge. THOMPSON, Circuit Judge, dissenting in part.

          OPINION

Page 147

          KAYATTA, Circuit Judge.

          CNE Direct, Inc. (" CNE" ) is a Massachusetts corporation in the business of buying and reselling bulk technological components. In November 2013, CNE reached an agreement with Asset Recovery Associates Worldwide, Ltd. (" Asset" ) to purchase phone parts manufactured by BlackBerry Corporation (" BlackBerry" ). Asset thereafter failed to make the parts available at the agreed-upon price, causing CNE to suffer a substantial loss in connection with its own commitment to resell the

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parts to other parties. In addition to suing Asset, CNE seeks to hold BlackBerry itself liable, contending that Asset was acting as BlackBerry's actual or apparent agent in the November 2013 transaction. After each party marshalled its best evidence following full discovery, and after entering default judgment against the now-defunct Asset, the district court entered summary judgment in favor of BlackBerry. CNE Direct, Inc. v. BlackBerry Corp., No. 14-cv-10149-FDS, 2015 WL 4750847, at *6, *11 (D. Mass. Aug. 10, 2015). After considering CNE's appeal, we affirm.

         I. Background

          As this is an appeal from a grant of summary judgment, we recite the facts in the light most favorable to CNE, the non-movant, and draw all reasonable inferences in its favor. See Martinez v. Petrenko, 792 F.3d 173, 175 (1st Cir. 2015).

         On October 25, 2013, Asset received an email from BlackBerry stating that it was " looking to move" excess memory parts and listing its excess units. Asset forwarded the email to CNE. CNE thereafter entered into discussions with Asset on the terms pursuant to which Asset would supply the BlackBerry parts to CNE. According to CNE, CNE and Asset eventually reached agreement on the terms of a sale. CNE then sent Asset a purchase order to confirm the agreed-upon deal. The purchase order identified Asset as the " supplier" of the parts and stated the agreed-upon price. Asset then backtracked, first demanding a price increase of approximately 2%, then an increase of approximately 28%. CNE claims that Asset's back-tracking was an orchestrated attempt by BlackBerry to take advantage of CNE's " position of weakness." CNE complained to Asset, and also sought intercession by BlackBerry, which declined.

         As we will discuss, there was nothing about the foregoing transaction and dealings in October and November 2013 that would support an argument that Asset acted as an actual or apparent agent of BlackBerry. As CNE points out, though, it had prior dealings with Asset for the purchase and sale of BlackBerry parts. Those prior dealings, CNE argues, provide a course of conduct, or at least context, sufficient to cast the aborted November 2013 transaction in a different light. So we turn to consider those prior dealings.

         In May 2011, Christopher Tejeda, then a trader at CNE, first called BlackBerry to inquire about purchasing excess inventory. He reached Chris Efstathiou, the individual responsible for managing BlackBerry's excess inventory. During their initial phone conversation, Efstathiou told Tejeda that if he wanted to purchase BlackBerry's excess inventory, he should speak to Stephen Miele, the individual in control of Asset. At the time, Asset was one of many third-party resellers to which BlackBerry sold its excess inventory. CNE suspected this was the case by October 2012 and knew it to be true by October 2013, notwithstanding Miele's best efforts to hold himself out as the " exclusive" source of BlackBerry parts or as BlackBerry's " agent" and BlackBerry's apparent lack of interest in helping to connect CNE with a different inventory reseller.

         CNE thereafter dealt with Miele. An initial phone call between Tejeda and Miele in May 2011 led to additional conversations regarding the available BlackBerry parts and negotiations over CNE's bid for the parts. Once CNE and Asset reached an agreement, CNE prepared a " purchase order" to confirm the purchase price, listing a company affiliated with Asset as the supplier. When Asset passed this documentation along to BlackBerry, BlackBerry objected and asked that it instead be

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listed as the supplier. CNE changed the purchase order form to accommodate this request, received an invoice from BlackBerry in return, and wired the funds directly to BlackBerry. BlackBerry, in turn, paid Asset a five percent commission on the sale.

         The next relevant transaction, in August 2011, followed a slightly different course. Viewing the record most favorably to CNE, it appears that BlackBerry first passed along a list of its on-hand excess inventory to Asset. Asset disseminated the lists to its customers, including CNE, seeking per-unit bids. Asset then collated the bids it received and shared the amounts of bids and identities of the bidders with BlackBerry, profiting by reserving for itself a markup on the products that varied between approximately 10% and 50% of the bid.[1] No written agreement governed the terms of Asset's relationship with BlackBerry, though the parties operated under an understanding that BlackBerry retained the right to refuse to sell to Asset based on the amount it was willing to pay for the parts or the identity of the intended downstream purchaser.[2]

         Once CNE placed its bid with Asset and BlackBerry had informed Asset that the bid was acceptable, CNE confirmed the transaction by issuing to Asset a purchase order memorializing the agreed-upon price. Asset then remitted a " pro forma" invoice to confirm the exact quantity of goods that would be sold. As with the original transaction, CNE's purchase order identified BlackBerry as the supplier. Unlike the first transaction, CNE did not pay BlackBerry but instead wired funds to Asset or its affiliates.

         Between August 2011 and August 2012, the parties conducted seven transactions for BlackBerry parts that followed this pattern and amounted to approximately $836,000. At no point in the parties' dealings did Asset take physical possession of the goods. Rather, CNE retrieved the parts at BlackBerry's warehouse.

         Over time, CNE grew frustrated with Miele's conduct. On August 30, 2012, CNE emailed BlackBerry and expressed frustration with Miele. On October 23, 2012, CNE emailed BlackBerry to complain about Miele's lack of professionalism. CNE at that point had determined that Miele was untrustworthy and had lied to CNE repeatedly. BlackBerry's response, from a new manager who had taken over BlackBerry's dealings with Asset, characterized CNE's acquisition of the parts as involving two transactions, one between BlackBerry and Asset, and a second between Asset and CNE. Consistent with this characterization, the emailed response concluded as follows:

As for professional business standards, the purchase of the LCD's was between you and Stephen and that is the forum that should be maintained is it not? Sorry, but I don't wish to get in the middle between yourself and Stephen as relationships are important to myself and RIM as a whole. I suggest you need to deal ...

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