Israeli Cloud Storage Vendor Sues T-Mobile for Breach of Contract

Cloud server company Hyperlync Technologies sued T-Mobile Tuesday for breach of contract and quantum meruit. It alleged in a class action (docket 2:23-cv-00734) in U.S. District Court for Central California in Los Angeles that the carrier failed to honor agreements it had with Sprint before T-Mobile's Sprint buy closed in April 2020.

Israel-based Hyperlync signed a master agreement with Sprint in April 2016 to develop cloud storage that would be made available to customers on the Sprint network. The plaintiff cited a clause in the agreement that said it was “binding and enforceable by each party’s permitted successors and assigns.” The agreement allowed for Sprint to terminate in the event of a change in control, but it didn’t do so until Nov. 1, 2022, over two years after the Sprint/T-Mobile combination, said the plaintiff.

A September 2019 email confirmed the parties had "agreed to all terms," with the only remaining issue the timing and amount of Sprint's initial payment to Hyperlync, the complaint said. Hyperlync CEO Harry Fox asked for an addendum to the contract reflecting a "sign off on the $250k" to be deducted from the first royalties, it said.

In December 2020, after several personnel changes at T-Mobile following the Sprint transaction, Hyperlync was told the Unlimited Cloud project was “officially prioritized” as a project for 2021 with a six-week launch process, said the complaint. An email confirmed T-Mobile’s use of, and need to pay for, Hyperlync’s service, which the company continued to work on, the complaint said.

During the following few months, “T-Mobile ignored Hyperlync,” alleged the plaintiff, noting changes in company contacts during the period. An email in May 2021 confirmed T-Mobile intended to “keep things moving,” the complaint said. In April 2022, T-Mobile informed Hyperlync that “T-Mobile does not have any interest in the Digital Vault Product or IP.” The plaintiff sent an invoice in August for services performed, and demanding payment, but “T-Mobile refused to pay,” it said.

T-Mobile breached agreements Hyperlync had with Sprint by attempting to sever the agreement and refusing to pay the cloud service company, the complaint said. T-Mobile became indebted to the plaintiff within the last two years for work, labor and services rendered to T-Mobile, for which the company had promised to pay Hyperlync the “reasonable value of the services.”

Hyperlync seeks compensatory damages of $6.22 million, not including lost profit and interest accruing from April 5, plus costs. It’s also seeking interest, “reasonable value of work, labor and services,” attorneys’ and legal costs, and lost profits based on profits that were to be shared at a rate of $1-$1.35 per T-Mobile customers’ devices, the complaint said.