Sprint Communications Co. v. CAT Communications International, Inc.

Sprint Communications Co. (Sprint) (plaintiff) provided long-distance telephone service through its network. Sprint carried long-distance calls that were forwarded by local exchange carriers (LECs) and had a billing process in place with the LECs. The LECs maintained local telephone lines. CAT Communications International, Inc. (CAT) (defendant) leased telephone lines from LECs and sold local telephone service to the public on a prepaid basis. At one point, Sprint’s network began receiving many unauthorized, unpaid long-distance calls from CAT’s customers. Sprint tried to work with CAT to either prevent the unauthorized usage or implement a mechanism for Sprint to bill the customers. When CAT failed to respond, Sprint sued CAT in district court alleging trespass and conversion. Following a hearing in May 2000, the court granted Sprint’s request for a preliminary injunction requiring CAT to restrict customers’ access to Sprint’s long-distance network. CAT provided no sworn evidence of how costly its compliance efforts would be. The court ordered Sprint to post an injunction bond of $250,000, based principally on Sprint’s evidence of accumulated, unpaid long-distance calls. For nearly two years, CAT complied with the preliminary injunction by paying fees to “block” customers’ calls from Sprint’s network, costing millions. In 2022, under a new presiding judge, the court held a hearing on motions for summary judgment. The court denied both parties’ summary-judgment motions but dissolved the preliminary injunction and increased the injunction bond to $4.95 million based on CAT’s cost of compliance. The court evidently reconsidered the preliminary injunction and found that the cost to block unauthorized calls was unjustified. Sprint appealed, challenging the increase in the injunction bond and the dissolution of the preliminary injunction.