Court Opinion

ID: 9387125
Source: CourtListenerOpinion
Date Created: 2023-04-14 20:02:51.41682+00
Date Added: 2024-06-11T17:18:11.523917
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

COX COMMUNICATIONS, INC.,                §
                                         §   No. 103, 2023
       Plaintiff/Counterclaim            §
       Defendant Below,                  §   Court Below–Court of Chancery
       Appellant,                        §   of the State of Delaware
                                         §
       v.                                §   C.A. No. 2021-0010
                                         §
T-MOBILE US, INC.,                       §
                                         §
       Defendant/Counterclaim            §
       Plaintiff Below,                  §
       Appellee.                         §

                             Submitted: March 24, 2023
                             Decided:   April 14, 2023

Before SEITZ, Chief Justice; VALIHURA and TRAYNOR, Justices.

                                       ORDER

      After consideration of the notice of interlocutory appeal and its exhibits, it

appears to the Court that:

      (1)    In 2017, the appellant, Cox Communications, Inc., and Sprint

Corporation resolved two lawsuits between the parties by entering into a settlement

agreement (the “Settlement Agreement”).         In Section 9(e) of the Settlement

Agreement, Cox agreed that, before it offered wireless mobile services to its

customers, it would enter into a “definitive” exclusive provider agreement with

Sprint “on terms to be mutually agreed upon between the parties for an initial period

of 36 months[.]” In 2020, the appellee—T-Mobile US, Inc., Sprint’s successor in
interest—and Cox negotiated toward a mobile virtual network operator (“MVNO”)

agreement but did not agree to final terms. In September 2020, Cox decided to enter

into an MVNO agreement with Verizon.

         (2)    In January 2021, Cox filed a complaint in the Court of Chancery

seeking to enjoin T-Mobile from attempting to use Section 9(e) to interfere with

Cox’s MVNO agreement with Verizon. T-Mobile filed counterclaims for, among

other things, breach of contract. On October 8, 2021, the Court of Chancery issued

a post-trial bench ruling permanently enjoining Cox from offering wireless mobile

services by partnering with any mobile network operator other than T-Mobile before

entering into a MVNO agreement with T-Mobile.1 The court found that Section 9(e)

contains two promises: (i) an obligation to refrain from entering the wireless mobile

services market or broker a deal with T-Mobile (as Sprint’s successor-in-interest)

and (ii) a Type II preliminary agreement that kicks in once Cox enters into an

exclusive relationship with T-Mobile and requires both parties to negotiate open

issues in good faith. Because the court concluded that Cox had violated Section 9(e)

by offering wireless mobile services through a carrier other than T-Mobile, the court

did not reach the question of whether the parties had negotiated the open terms in

good faith.

1
    Cox Commc’ns v. T-Mobile US, Inc., 2021 WL 4863119 (Del. Ch. Oct. 18, 2021).
                                               2
       (3)     Cox appealed the decision. While the appeal was pending, Cox and T-

Mobile again tried to negotiate a MVNO agreement but were unable to agree on final

terms. On March 3, 2022, we reversed the trial court’s interpretation of Section 9(e),

vacated the injunction, and remanded the case for further proceedings.2 Specifically,

we held that Section 9(e) contains a single promise—a “paradigmatic Type II

agreement of the kind we recognized in SIGA v. PharmAthene.”3 Because parties to

such agreements must negotiate the open terms in good faith, we directed the Court

of Chancery on remand to determine whether Cox and T-Mobile have discharged

their obligations to negotiate in good faith.4

       (4)     Following       remand,      the       parties   stipulated    to    T-Mobile’s

supplementation of its counterclaims, and Cox moved to dismiss them. On February

27, 2023, the Court of Chancery denied Cox’s motion to dismiss T-Mobile’s

supplemental claims (the “Ruling”).               The Court of Chancery rejected Cox’s

arguments that T-Mobile’s supplemental counterclaims: (i) exceed the scope of this

Court’s remand, (ii) improperly rely on settlement negotiations and therefore run

afoul of Delaware Rule of Evidence 408; and (iii) fail to state a claim for breach of

contract. Cox timely moved for the certification of an interlocutory appeal. T-

Mobile opposed the application.

2
  Cox Commc’ns, Inc. v. T-Mobile US, Inc., 273 A.3d 752 (Del. 2022).
3
  Id. at 760 (citing SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d 330, 349 (Del. 2013)).
4
  Id. at 768.
                                                  3
       (5)     On March 23, 2023, the Court of Chancery denied Cox’s application.

The Court of Chancery disagreed with Cox’s claim that the Ruling had decided a

substantial issue of material importance—a threshold consideration under Rule

425—because (i) denials of motions to dismiss are rarely, if ever, decide issues of

substantial issues of material importance and (ii) its decision to reopen the record on

remand was a discretionary one. Even so, the Court of Chancery also reviewed the

Rule 42(b)(iii) factors cited by Cox and concluded that they did not weigh in favor

certification of an interlocutory appeal. First, the Court of Chancery found that the

Ruling neither created a “new rule” nor overruled prior Supreme Court decisions6

with regard to the parties’ responsibilities to negotiate Type II agreements in good

faith. Likewise, the Court of Chancery found that the Ruling did not conflict with

prior trial court decisions’ interpretation of the applicability of DRE 408 at the

pleadings stage.7 And the Court of Chancery, noting that it exercised its discretion

to permit T-Mobile to supplement its claims on remand, rejected Cox’s argument

that interlocutory review would serve the considerations of justice8 on that basis.

The Court of Chancery also considered the remaining Rule 42(b)(iii) factors and

5
  Del. Supr. Ct. R. 42(b)(i).
6
  Del. Supr. Ct. R. 42(b)(iii)(A) & (B).
7
  Del. Supr. Ct. R. 42(b)(iii)(B).
8
  Del. Supr. Ct. R. 42(b)(iii)(H).
                                           4
found that none of them weighed in favor of certification. We agree with the Court

of Chancery that interlocutory review is not warranted in this case.

        (6)     Applications for interlocutory review are addressed to the sound

discretion of the Court.9 In the exercise of its discretion and giving due weight to

the Court of Chancery’s analysis, the Court has concluded that the application for

interlocutory review does not meet the strict standards for certification under Rule

42(b). Exceptional circumstances that would merit interlocutory review of the

Ruling do not exist in this case,10 and the potential benefits of interlocutory review

do not outweigh the inefficiency, disruption, and probable costs caused by an

interlocutory appeal.11

        NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is

REFUSED.

                                       BY THE COURT:

                                       /s/ Gary F. Traynor
                                       Justice

9
  Del. Supr. Ct. R. 42(d)(v).
10
   Del. Supr. Ct. R. 42(b)(ii).
11
   Del. Supr. Ct. R. 42(b)(iii).
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