Suit was filed in the United States District Court for the Eastern District of New York by multiple T-Mobile dealers against the carrier and a number of Master Agents.
The dealers are suing for damages of $100 million, plus punitive damages of $1 billion.
The lawsuit alleges the carrier unlawfully misled the government and minority-owned retailers by claiming “hundreds of stores” would open up after its merger with Sprint and failing to disclose “an internal conspiracy” to take over existing stores “without just and fair compensation.”
T-Mobile is accused of playing a game of “squeeze and buy” in conspiring with Master Agent and co-defendant Arch Telecom to announce to franchisees that their “viable and profitable” stores would be closed, and then essentially work the businesses over by offering to buy the stores for next to nothing.
The five plaintiff companies (the dealers) represent “a tiny fraction” of the mostly minority-owned, community-based businesses, called “sub-dealers,” who have been “betrayed” by T-Mobile and “master dealers” such as Arch Telecom, who the lawsuit contends have a legal duty to warn the plaintiffs of “any events or changes” that might impact their earnings, store operations and livelihoods.
“It is not corporate greed and dishonesty that the Plaintiffs challenge here,” the filing reads. “Rather, it is T-Mobile and Defendants’ blatant violations of law which the Plaintiffs seek to address through this action.”
Specifically, the complaint alleges T-Mobile knew that the initial terms of its agreements with the plaintiffs and other sub-dealers lasted until June 2024 yet conspired with Arch Telecom to “create an earlier and artificial termination date” of March 2023. In the lead-up to this month, the case says, T-Mobile allowed, and still allows, Arch Telecom to “contact the Plaintiffs to work them over,” namely by announcing the termination of their contracts and then offering to buy their businesses for next to nothing.
“This is occurring as of the time this Complaint is being filed,” the suit stresses.
In April 2018, with the announcement of the Sprint / T-Mobile merger, T-Mobile promised that “hundreds” of stores would be created, not eliminated. The plaintiffs charge that T-Mobile, prior to the approval of the merger, never informed them or other sub-dealers of its plan to close stores.
Per the suit, T-Mobile managers who showed up to audit the plaintiffs’ stores continued to claim that “business is continuing as usual,” and even represented that the carrier was creating more stores, not shutting them down.
“T-Mobile and Arch Telecom continued to pretend as if business was as good as usual, urging Sub-Agents to continue to renovate and renew existing leases for as long as five (5) years,” the lawsuit says. “This gave the Plaintiffs the absolutely false impression that, even after the merger, their respective small businesses would continue to thrive.”
One plaintiff spent more than $150,000 to renovate its store “to T-Mobile standards,” including remodeling the space and buying new furniture and equipment. The plaintiffs have renewed their leases, becoming saddled with significant rental costs, “[i]n reliance on the promises and concealments” of T-Mobile, the suit claims.
Others, the lawsuit continues, took out loans during the pandemic to ensure their T-Mobile businesses continued to operate.
“The Plaintiffs—unlike the Defendants—were loyal,” the suit attests.
According to the filing, two of the defendants (both Master Agents) – The Portables Choice Group LLC (PCG) and Arch Telecom knew of T-Mobile’s plans to eliminate sub-dealers yet failed to pass this information along to the plaintiffs while suggesting that business would continue as usual. Per the case, within roughly two months of Arch’s announcement that it had acquired PCG, the former sent the plaintiffs notice stating that T-Mobile was exercising its right to terminate their locations in March 2023.
After being told they must close their stores, however, the plaintiffs and other sub-dealers received calls from Arch Telecom, whose agent said the company would be willing to buy their store “for a negligible amount of money,” far less than required to compensate the business owners for renovation costs and the loss of commissions, investments and profits, the suit says.
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