New Comm Wireless Services, Inc. v. SprintCom, Inc.

United States Court of Appeals
For the First Circuit

No. 01-2541
01-2603

NEW COMM WIRELESS SERVICES, INC., D/B/A MOVISTAR,
Plaintiff, Appellee,

v.

SPRINTCOM, INC., AND SPRINT SPECTRUM LP,
Defendants, Appellants.

CENTENNIAL PUERTO RICO LICENSE CORP.,
Intervenor, Appellant.
____________________

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Gustavo A. Gelpi, U.S. Magistrate Judge]

Before

Boudin, Chief Judge,
Selya and Lipez, Circuit Judges.

Miguel J. Rodríguez Marxuach, with whom Fernando J. Gierbolini
was on brief, for defendants-appellants.
Antonio L. Roig-Lorenzo, with whom Edgardo Rodríguez-
Quilichini and O'Neill & Borges were on brief, for intervenor-
appellant.
Eycko O. Lugo-Rivera, with whom Carlos Berreteaga was on
brief, for appellee.

April 5, 2002
 SELYA, Circuit Judge. These interlocutory appeals

implicate the brave new world of wireless communications. In the

underlying action, the district court sided with plaintiff-appellee

New Comm Wireless Services ("Movistar") and issued a preliminary

injunction against two related companies, SprintCom and Sprint

Spectrum (collectively, "Sprint"). After clearing a path through

the technological thicket, we reverse.

I. BACKGROUND

We divide our discussion of the relevant background into

four segments. Except as otherwise indicated, the facts are not

disputed.

A. The Wireless Revolution.

The wireless telephone system challenges traditional

concepts of the communications infrastructure. Instead of poles

and wires, service carriers use Signal IDs ("SIDs") to connect

subscribers to their networks. Each SID operates within a basic

trading area ("BTA") — a specific geographic region, customarily

linked with a major urban center. The Federal Communications

Commission licenses wireless communications companies to broadcast

in particular BTAs and maintains a list of usable SIDs. The

private sector then takes over: CIBERNET (a private company)

administers the assignment of particular SIDs to licensed service

carriers for specific BTAs. Thus, a service carrier licensed to

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broadcast in a given BTA (say, Pittsburgh) may apply for an SID for

that BTA, and CIBERNET will assign one (say, 4171).

In this arcane endeavor, substance trumps form. Thus,

even though SIDs are assigned to particular BTAs, the reality is

that an SID may be broadcast in any BTA, as long as the carrier is

appropriately licensed. If a carrier is licensed in, say, Richmond

and Charlotte, it might choose to use the same SID in both cities.

The net result is that few SIDs are broadcast in the BTAs to which

they originally were assigned.1

To operate a wireless communications network, each

handset must have a method by which it can access the service

carrier's SID. This phenomenon — sometimes called "hooking" — is

effected through a computer program known as a preferred roaming

list ("PRL"). The PRL is installed in the subscriber's handset so

that the handset will search for known SIDs in rank order and

connect to the first available signal.

Since the BTA designation of a given SID has no necessary

correlation with the SID's broadcast location, the construction of

the PRL is vitally important. PRLs typically divide SIDs into "geo

groups" — that is, groups of signals that are actually broadcast in

particular regions. Within each geo group, SIDs are preferentially

ranked. The PRL searches first for the most favored signal in a

1
This industry practice comes as no surprise to Movistar,
which has licenses to broadcast separate SIDs for Mayaguez (5207)
and San Juan (5205) — but uses the San Juan SID in both BTAs.

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geo group and, if unsuccessful, works its way sequentially through

the remaining SIDs in that group. It is therefore essential that

service carriers, when programming their PRLs, have accurate

information as to which SID is broadcast in which market, and that

they place SIDs not only in the proper geo groups but also in the

appropriate sequence within each geo group. The erroneous

placement of an SID may either force a customer to roam onto an

unwanted network or cause the handset to fail completely.

The number of BTAs in which a portable telephone can

operate depends, then, on the number of SIDs programmed into the

PRL for that instrument. Since subscribers usually want their

telephones to function in as many regions as possible, carriers

often enter into roaming agreements with other carriers. This

process entails an exchange of SID information and augmentation of

the parties' PRLs to increase the coverage area. Thus, if a

subscriber leaves the area in which his service carrier broadcasts

and enters a new area in which the carrier has established a

roaming agreement with a local carrier (i.e., a carrier that serves

the new area), the subscriber's handset automatically will hook

into the local carrier's network.

Which SID is found by a subscriber's PRL is a matter of

consequence beyond mere convenience. Most customers have contracts

that provide for a certain number of prepaid minutes, and therefore

receive a discount when their handsets hook into their carrier's

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SID. Once a user begins roaming on another carrier's network,

however, that carrier typically will charge higher rates to the

roamer. Moreover, the subscriber's own carrier ordinarily receives

no share of the proceeds from a call that is placed on a "roamed"

carrier's network.

Most roaming agreements involve carriers that operate in

different regions. One notable exception comprises what is called

"home-on-home" roaming. The signatories to a home-on-home

agreement operate in the same territory, but one of them usually

cannot provide a signal to the entire region. To compensate for

this deficiency and ensure its subscribers comprehensive service,

it enters a home-on-home agreement with a competitor. Under such

an agreement, a subscriber's handset will roam to the second

carrier's signal when it is unable to hook into the subscribed

carrier's signal — and this phenomenon occurs even though both

carriers operate in the customer's "home" region.

B. When Opposites Attract.

The controversy before us involves a study in contrasts:

a roaming agreement between Sprint (a large, well-established

carrier with approximately 13,000,000 customers throughout the

United States) and Movistar (a local carrier with approximately

190,000 customers, all in Puerto Rico). At the time Movistar

approached Sprint, the latter was not yet broadcasting a signal in

Puerto Rico (although it was licensed to do so). To close this gap

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in its network, Sprint had entered into roaming arrangements with

other service carriers, including Centennial Puerto Rico

(Centennial). It aspired to broadcast its own signal in Puerto

Rico, however, and had told any roaming partner that asked

(including Centennial) that it planned to use the 5142 SID (an SID

assigned to Sprint for the Virgin Islands BTA).2

Movistar was in a start-up mode. When Sprint and

Movistar signed the roaming agreement (July 7, 1999), Movistar had

been licensed and assigned SIDs to broadcast in both the San Juan

and Mayaguez BTAs, but its service was not yet up and running.

Movistar's marketing strategy was to advertise its embryonic

network as capable of providing "automatic roaming" to customers

traveling within the continental United States. This made Sprint

an attractive roaming partner, for Sprint boasted of having

established a "nationwide network."

Sprint drafted the Sprint/Movistar roaming agreement,

using a form that it had developed for that purpose. In this

document, the parties agreed to permit reciprocal roaming in areas

in which one of them had no accessible SID. The agreement

obligated Movistar to "take all actions necessary" to ensure that

any Movistar customers who roamed "in a geographic service area

2
As a courtesy, Sprint provided technical updates to its
roaming partners on a bi-weekly basis, alerting them to changes in
its network. These updates included information about Sprint's
planned expansion into new markets and identified the SIDs that it
proposed to use.

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where Sprint PCS is a carrier" would use the Sprint network, but

imposed no reciprocal obligation upon Sprint.

To effectuate the agreement, Sprint and Movistar needed

to exchange lists of SIDs so that the numbers could be programmed

into their respective PRLs (and then loaded onto their customers'

handsets). To this end, they attached to the agreement schedules

listing the BTAs in which each party was licensed and the

corresponding SIDs that CIBERNET had assigned. Sprint's list

contained well over 100 BTAs, whereas Movistar's contained only

two. These schedules revealed, inter alia, two critically

important facts: (1) Sprint was licensed to broadcast in San Juan

and Mayaguez; and (2) Sprint had been assigned the 5142 SID (albeit

designated by CIBERNET for the Virgin Islands).

Having executed the roaming agreement, Movistar's next

step was to triage the Sprint information and load the data into

its customers' handsets. This required the creation of a PRL, but

Movistar had no expertise in that field. It decided to rely on the

handset manufacturers to create the needed PRL and assigned one of

its engineers, Pedro Sepúlveda, to oversee this operation.

Sepúlveda, though, had no knowledge of the workings of a PRL.3

A handset manufacturer (Nokia) instructed Sepúlveda to

get the relevant SID information from Sprint. Sepúlveda contacted

3
Indeed, Sepúlveda confessed at the preliminary injunction
hearing that he had no knowledge of the functions of an SID.

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Sprint — which did not know either that Movistar lacked even the

most elementary knowledge of how to design a PRL or that it planned

to rely entirely on handset manufacturers in that regard — and

Sprint agreed to give him a PRL containing all of its broadcasting

information. This task fell to Robert Lamb, one of Sprint's in-

house development analysts. When Lamb asked Sepúlveda for

specifications, Sepúlveda gave him only one: Movistar's SID in San

Juan (5205).

Lamb then constructed the program. As he had done in

developing designs for many other roaming partners, he inserted

into the PRL every SID that Sprint was broadcasting or planning to

broadcast, dividing them into geo groups corresponding to the BTAs

in which the SIDs would actually be used. Thinking that Movistar

would want its customers to pick up a signal whenever one was

available, he positioned Sprint for home-on-home roaming (just as

he had always done in PRLs for other roaming partners). To that

end, he placed the intended Sprint SID for Puerto Rico, 5142, in

the Puerto Rico geo group.

Unbeknownst to Lamb, Movistar had decided to look

elsewhere for home-on-home roaming. Within a few weeks of the time

that Lamb forwarded the completed PRL to Sepúlveda — whether before

or after is not clear from the record — Movistar entered into a

home-on-home roaming agreement with Puerto Rico Telephone Company.

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The record is pellucid that Movistar never informed Sprint of its

decision to use another carrier for home-on-home roaming.

Lamb sent the completed PRL, labeled v930 (or version

930), to Sepúlveda on August 9, 1999. He attached a bit file

containing the program itself and a text file delineating the

contents of the program. We attach a copy of the pertinent portion

of the text file as an appendix to this opinion.

Some elucidation of the text file may prove helpful. The

second column from the left lists all the SIDs in order of geo

group. The fifth column shows that every time the program

encounters the term "new," it will know that it is entering a

neoteric geo group. Finally, the column farthest on the right

indicates whether or not the customer is roaming on another

network.

Following this conventional praxis, Lamb programmed the

PRL so that it would recognize Movistar's signal before all others

when the subscriber was located in an area served by Movistar. To

implement this decision, he placed the word "new" next to "5205"

(indicating a new geo group) and the word "off" (indicating that

the caller was not roaming). He placed the SID that Sprint planned

to deploy in Puerto Rico — 5142 — directly below 5205 and in the

same geo group, but with a lower preference. Thus, if a subscriber

could not pick up the Movistar SID in Puerto Rico, he would hook

into the Sprint SID if available (but the subscriber would then be

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roaming and would be alerted to his roaming status). When Lamb

forwarded these files to Sepúlveda, his transmittal note stated:

"This should take care of all of your PRL troubles for a long time

to come."

Sepúlveda sent the PRL to the handset manufacturers.

Nokia loaded its telephones with the PRL, but the instruments did

not function as expected. Sepúlveda asked one of Nokia's

competitors, Qualcomm, for advice. A Qualcomm representative, Polo

Aviles, scrutinized the PRL text file and spotted two potential

glitches. First, Lamb had accidentally placed one of Centennial's

SIDs (4176) in the wrong geo group, so that the PRL would lock into

that SID before it located Movistar's SID. Second, Aviles

questioned the placement of the 5142 SID inside the Puerto Rico geo

group; he did not know to whom it belonged and he worried that it

might cause problems in the future. Aviles discussed these matters

with Sepúlveda and another Movistar official. He showed them how

to read the PRL text file, but he did not make any changes to the

PRL.

Movistar proceeded to tinker with the PRL. Someone other

than Sprint — the record is obscure as to the identity of the

person or persons — created at least four, and perhaps as many as

seven, different versions of the PRL before settling on v937. The

individual who designed v937 assumed that Sprint would broadcast

its 5142 SID only in the Virgin Islands, and, therefore, placed

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5142 in a geo group outside Puerto Rico. Movistar never consulted

Sprint about this decision, or, for that matter, about any other

changes to Lamb's original PRL.

C. Sprint's Launch.

On September 23, 1999, Movistar inaugurated its service.

For a time, things went smoothly. Sprint, meanwhile, continued

with its plans to extend its network to Puerto Rico. In February

of 2001, Lamb (who now had the responsibility of choosing which SID

to broadcast) noticed a potential problem with using 5142 in Puerto

Rico: this SID was not programmed into the PRLs of approximately

one-sixth of the handsets carried by Sprint customers, and those

customers (some 2,000,000 strong) would roam onto other networks if

that SID were used in Puerto Rico. Lamb initially proposed to

solve this problem by substituting 4396 — an SID assigned to Sprint

for the Cleveland BTA.

Sprint announced through an update issued in April of

2001 that it planned to use the 4396 SID in Puerto Rico. That

prospect never materialized, for when Sprint field-tested 4396 in

Puerto Rico, Centennial and Movistar both complained. As matters

turned out, Sprint's use of 4396 in Puerto Rico proved likely to

cause some of Centennial's and Movistar's customers to roam

inadvertently onto the Sprint network even while on the island.

Centennial expressed especial indignation because it had relied on

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Sprint's earlier representations and blocked the 5142 signal on its

handsets (but not 4396).

After discussing the situation with Centennial engineers,

Lamb wrote a memorandum to his superiors. This communique, dated

September 7, 2001, weighed the relative advantages and

disadvantages of reverting to the original plan. In it, Lamb

concluded that using 5142 would ameliorate the difficulties

experienced by the other service providers but would force a great

many Sprint subscribers to roam while in Puerto Rico unless updated

PRLs were programed into their handsets.

Notwithstanding the inconvenience to its own customers

and the concomitant loss of revenue when those customers roamed on

other networks, Sprint opted to placate Centennial and Movistar.

This decision led Sprint to revive its plan to broadcast on 5142 in

Puerto Rico. On September 16, a Sprint executive called a Movistar

hierarch, Claudio Hidalgo, and told him of this outcome. Hidalgo

thanked the caller and expressed his belief that Sprint's use of

the 5142 SID would solve Movistar's problems.

Sprint launched its service in Puerto Rico the next day.4

While its use of 5142 satisfied Centennial's concerns, Movistar's

troubles were only beginning. Because Movistar's PRL placed 5142

in a different (non-Puerto Rico) geo group, many of its customers'

4
Sprint announced its decision to revert to the use of 5142 in
an update issued on September 28, 2001.

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handsets hooked onto that SID without first searching for

Movistar's SID. Thus, although calling within Puerto Rico, these

customers would roam on the Sprint network, accruing significantly

higher charges than if they had accessed the Movistar network. On

a single day in the first week of Sprint's launch, 166,080 calls

placed by Movistar customers in Puerto Rico wound up on Sprint's

network.

Movistar promptly informed Sprint of the difficulties

that its customers were experiencing and requested that Sprint

suspend use of the 5142 SID in Puerto Rico for six months so that

Movistar could reprogram its customers' software. In exchange,

Movistar offered to give Sprint subscribers sharply reduced roaming

rates on its network. As an alternative solution, Movistar

proposed that Sprint deploy an SID ostensibly assigned to Sprint

for use in the Dominican Republic.5

Sprint flatly refused these entreaties. It had examined

the situation in some depth before launching its Puerto Rico

operation and had concluded that there was no feasible alternative

to using 5142. It attempted to ameliorate the hardship to

Movistar's clients who hooked into Sprint's Puerto Rico network by

5
We say "ostensibly" because the record before us contains no
materials showing either that Sprint holds a license to broadcast
in that country or that it has been assigned an SID for use there.

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funneling them to Movistar's service center for instructions on how

to reprogram their handsets to block non-Movistar signals.6

Although the number of calls by Movistar users on the

Sprint network dropped to approximately 2,000 per day within a

month, Sprint's solution did not satisfy Movistar. Some handsets

needed to be taken to a customer service center for reprogramming,

and all Movistar customers wishing to roam on the mainland had to

reprogram their handsets whenever they left Puerto Rico. This

prevented Movistar from advertising that its service included

"automatic roaming."

D. The Proceedings Below.

On September 21, 2001, Movistar invoked diversity

jurisdiction, 28 U.S.C. § 1332(a), and sued Sprint in the United

States District Court for the District of Puerto Rico. It alleged

that Sprint had tortiously interfered with the contractual

relationship between Movistar and its subscribers, violated a good

faith covenant contained in the roaming agreement, and otherwise

behaved badly. To remedy these transgressions in the short run,

Movistar sought an injunction barring Sprint from broadcasting the

5142 SID in Puerto Rico.

The matter first came before a district judge, who

refused to issue a temporary restraining order. Thereafter, the

6
Sprint also offered to charge discounted rates to Movistar
customers roaming in Puerto Rico, but Movistar rejected this
approach.

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parties consented to proceed before a magistrate judge, see 28

U.S.C. § 636(c), who expedited discovery and scheduled an

evidentiary hearing. The judge then heard four days of testimony

on Movistar's request for a preliminary injunction. For the most

part, the testimony was not conflicting, and the judge stated that

he considered all the witnesses credible.

Roughly one week after the end of the hearing, the

magistrate judge granted Movistar's prayer for a preliminary

injunction. In his rescript, the judge found that Movistar was

likely to succeed on both its tortious interference and breach of

good faith claims; that Movistar faced irreparable harm due to the

"injury to its image, goodwill and reputation before its clients as

a result of Sprint's use of SID 5142"; that the harm that Sprint

stood to suffer upon the issuance of an injunction deserved little

weight because Sprint's actions had caused the predicament; and

that an injunction was in the public interest.

Centennial reacted with dismay to news of the court's

order. It had blocked the 5142 SID in anticipation of Sprint's

launch in Puerto Rico and, if Sprint were forced to broadcast on a

different (unblocked) SID, Centennial subscribers in Puerto Rico

would wind up roaming on the Sprint network. In an effort to

forestall this result, Centennial moved to intervene, see Fed. R.

Civ. P. 24(a)(2), and to stay the preliminary injunction pending

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appeal. The court granted the motion to intervene, but refused the

stay.

Sprint and Centennial both appealed from the issuance of

the injunction. We consolidated the appeals and expedited

appellate proceedings.

II. ANALYSIS

Whether or not to issue a preliminary injunction depends

upon four factors: (1) the movant's probability of success on the

merits, (2) the likelihood of irreparable harm absent preliminary

injunctive relief, (3) a comparison between the harm to the movant

if no injunction issues and the harm to the objectors if one does

issue, and (4) how the granting or denial of an injunction will

interact with the public interest. Ross-Simons of Warwick, Inc. v.

Baccarat, Inc., 102 F.3d 12, 15 (1st Cir. 1996). The sine qua non

of this four-part inquiry is likelihood of success on the merits:

if the moving party cannot demonstrate that he is likely to succeed

in his quest, the remaining factors become matters of idle

curiosity. Weaver v. Henderson, 984 F.2d 11, 12 (1st Cir. 1993).

With this framework in mind, we examine the district

court's conclusion that Movistar showed a likelihood of succeeding

on its claims against Sprint. Broadly speaking, our review is for

abuse of discretion. Ross-Simons, 102 F.3d at 16. We are mindful,

however, that this rubric does not impose a unitary standard.

Rather, it demands that we scrutinize abstract legal matters de

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novo, findings of fact for clear error, and judgment calls with

considerable deference to the trier. Langlois v. Abington Hous.

Auth., 207 F.3d 43, 47 (1st Cir. 2000). We note, moreover, that

this is a diversity case, so the substantive law of Puerto Rico

controls. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938);

Elliot v. S.D. Warren Co., 134 F.3d 1, 5 (1st Cir. 1998).

A. Likelihood of Success: Tortious Interference.

Movistar's allegations involve two different sets of

contracts: its subscriber contracts and its roaming agreement with

Sprint. Its principal claim focuses on the subscriber contracts.

This claim is brought under 31 P.R. Laws Ann. § 5141, which

provides in pertinent part that "[a] person who by an act or

omission causes damage to another through fault or negligence shall

be obliged to repair the damage so done."

In General Office Products Corp. v. A.M. Capen's Sons,

Inc., 115 P.R. Offic. Trans. 727, 734 (1984), the Supreme Court of

Puerto Rico determined that this provision encompasses claims of

tortious interference. The court carefully circumscribed the

resultant cause of action, requiring claimants to show (1) the

existence of a contract between two or more parties, (2)

interference with that contract by the defendant, (3) "fault" on

the defendant's part, (4) damage to the plaintiff, and (5) a nexus

between the plaintiff's fault and the defendant's damage. Id. at

734-35.

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 The magistrate judge held that Movistar proved all of

these elements. Pertinently, he found that Sprint was at fault

because the schedules Sprint attached to the roaming agreement had

"induced plaintiff to reasonably believe that SID 5142 was intended

for the U.S. Virgin Islands," yet Sprint then proceeded to

broadcast that signal in Puerto Rico. In making this "reliance"

finding, the judge leaned heavily on the testimony of witnesses who

had little to no involvement in the design of the successive

versions of Movistar's PRL. Perhaps more troubling, the judge

discounted the testimony of four knowledgeable witnesses — Lamb,

Aviles, Weston Coffindaffer (a Sprint executive), and Miguel

Palacios (a Centennial engineer) — each of whom noted that the

version of the PRL prepared by Lamb (v930) placed the 5142 SID

within the Puerto Rico geo group, and, accordingly, gave fair

warning that 5142 would be broadcast in Puerto Rico. The judge did

not question either the credibility of these witnesses or the

authenticity of the trade usage that they described, but

nonetheless dismissed their evidence on the ground that Movistar,

as a neophyte in the industry, was entitled to special swaddling.

The judge stated:

Notwithstanding, the court does not consider
said expert opinion of weight in this
instance, given the fact that in 1999
[Movistar] entered the cellular telephone
market in Puerto Rico, and did not have
Sprint's technical expertise nor highly
qualified personnel. As mentioned earlier,

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 [Movistar] relied on Sprint to set up its
initial PRL.

This rationale is insufficient to warrant an affirmative

"likelihood of success" determination. Under Puerto Rico law, the

"fault" element of tortious interference requires a stronger

showing. In General Office Products, the Supreme Court of Puerto

Rico indicated that, to be liable, a defendant must have "acted

tortiously, with knowledge of the contract's existence." 115 P.R.

Offic. Trans. at 734. The court recently elaborated on the scope

of this requirement, explaining that the plaintiff must show that

the defendant intended to interfere with the contract, knowing that

this interference would cause injury to the plaintiff. Jusino

Figueroa v. Walgreens of San Patricio Inc., 2001 TSPR 150, 2001 WL

1414693, at *5 (P.R. 2001). Thus, to ground liability the

defendant's actions must at least evince a quasi-delictive intent.

Id.

The magistrate judge's "likelihood of success" finding

cannot be sustained under this criterion. As indicated above, the

judge based his ruling on one piece of evidence: Movistar's

supposed reliance on the schedules attached to the original roaming

agreement. But even if Sprint bore some responsibility for that

reliance — a doubtful proposition, given the unchallenged evidence

of trade usage and Movistar's failure to ask Sprint to explain the

schedules — the record is uncontradicted that Sprint called

Movistar on the eve of the launch to inform it of the decision to

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use 5142. Movistar told Sprint unequivocally that it was satisfied

with that decision. Given this explicit statement and Movistar's

acquiescence in Sprint's plan, the record simply cannot justify a

finding that Sprint induced Movistar to believe that it (Sprint)

would broadcast 5142 only in the Virgin Islands.

The only remaining question is whether Sprint somehow

tricked Movistar into consenting to the plan despite knowing that

the use of 5142 in Puerto Rico would disrupt Movistar's service.

The proof plainly refutes this possibility. After all, Lamb had

programmed the PRL so that 5142 would not interfere with Movistar's

service — and if 5142 had remained in the Puerto Rico geo group

(where Lamb had placed it), Movistar's subscribers would have

hooked into that SID only when Movistar's signal was unavailable.

The modification of the geo groups in Movistar's PRL is at the root

of the problem — and there is absolutely no evidence that Sprint

knew that Movistar had tinkered with the PRL at all, let alone that

it had placed the 5142 SID in a totally different geo group.

To cinch matters, the remainder of the record is barren

of any evidence of an intent to interfere with Movistar's

subscriber contracts. Sprint's attentiveness to Movistar's (and

Centennial's) complaints led it to abandon its plan to use the 4396

SID in Puerto Rico, and that attentiveness itself is significant

evidence of Sprint's lack of improper intent. Sprint's ensuing

decision to use 5142 in lieu of 4396 is equally persuasive evidence

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that it had no intention of interfering with Movistar's subscriber

contracts. By foregoing the use of an SID that had been

preprogramed into all of its subscribers' handsets, Sprint assumed

the burden of reprogramming approximately 2,000,000 instruments and

forced many of its own customers to continue using the networks of

its roaming partners when they traveled to Puerto Rico. We believe

that this sacrifice amply demonstrates that Sprint had no ulterior

motive in deciding to broadcast 5142 in Puerto Rico.

Movistar attempts to parry this thrust by pointing to

other evidence. Specifically, it says that it informed Sprint

shortly after Sprint's Puerto Rico launch that the 5142 SID was

interfering with its service, but that Sprint nonetheless continued

broadcasting on this SID. In Movistar's view, this proves that

Sprint's decision to persist in broadcasting 5142 was made with

knowledge that it would injure Movistar.

This asseveration lacks force. The magistrate judge

predicated his finding on what transpired up to the time of

Sprint's Puerto Rico launch, not on what transpired thereafter.

And in all events, Sprint's conduct after learning of Movistar's

plight, as depicted in the record before us, does not support a

plausible inference that it intended to interfere with Movistar's

subscriber contracts. When the problem surfaced, Sprint consulted

promptly with Movistar on how to resolve it and immediately began

diverting callers to Movistar's service center so that they could

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stop unwanted roaming. Sprint also offered to have Movistar's

subscribers roam at sharply reduced rates until Movistar could

reprogram its customers' handsets. It was Movistar, not Sprint,

that refused this seemingly reasonable compromise. See supra note

6.

We summarize succinctly. On the record as it stands,

there is no adequate evidentiary basis for finding that Sprint

either led Movistar to believe that 5142 would be broadcast only in

the Virgin Islands or otherwise manifested an intent to interfere

with Movistar's operations. Hence, the magistrate judge's

determination that Movistar was likely to succeed on its tortious

interference claim is clearly erroneous. See Cumpiano v. Banco

Santander, 902 F.2d 148, 152 (1st Cir. 1990) (explaining that a

finding is clearly erroneous if whole-record review produces "a

strong, unyielding belief that a mistake has been made").

In light of this conclusion, the fate of the preliminary

injunction hinges on the magistrate judge's alternative finding:

that Movistar exhibited a likelihood of success on its claim that

Sprint violated the covenant of good faith and fair dealing

contained in the roaming agreement. We turn next to that finding.

B. Likelihood of Success: Good Faith.

In adjudicating this issue, the magistrate judge drew

heavily upon Article 14.3 of the roaming agreement, which provides:

The Parties agree to use their respective
best, diligent, and good faith efforts to

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 fulfill all of their obligations under this
Agreement. The Parties recognize, however,
that to effectuate all the purposes of this
Agreement, it may be necessary either to enter
into future agreements or to amend this
Agreement, or both. In that event, the
Parties agree to negotiate with each other in
good faith.

Extrapolating from this provision, the judge concluded, correctly

in our view, that "Sprint's contemporaneous acts of entering into

a roaming agreement with plaintiff and setting up plaintiff's PRL

must both be governed by 'good faith' in dealing." The judge then

went on to find that because "Sprint induced [Movistar] to

reasonably understand that SID 5142 was intended for the U.S.

Virgin Islands," it undertook a duty (which it breached) to refrain

from adversely affecting Movistar's PRL by using 5142 in Puerto

Rico. We concentrate our analysis on this finding.

The term "good faith," used here in respect to how the

parties will effectuate the roaming agreement and how they will

negotiate any ancillary agreements, has a particular meaning within

the Puerto Rico Civil Code. See 31 P.R. Laws Ann. § 3375. That

statute requires the parties to a contract to perform all aspects

of the contract — in respect to the consequences as well as in

respect to the terms — in good faith. Id. Writ large, that

requirement serves "the commendable purpose of injecting ethical

content into the legal order." Velilla v. Pueblo Supermarkets,

Inc., 111 P.R. Offic. Trans. 732, 736 (1981). When one moves from

the general to the specific, however, the ethical content of each

-23-
act must be examined in the light of its particular circumstances.

Id. at 735-36.

In determining whether liability attaches in a particular

instance, an inquiring court typically examines the totality of the

circumstances. See Shelley v. Trafalgar House Pub. Ltd., 977 F.

Supp. 95, 98 (D.P.R. 1997). Liability exists if, in light of all

the surrounding circumstances, the party's actions appear

arbitrary, deceitful, or animated by some improper purpose. See

Velazquez Casillas v. Forest Labs., Inc., 90 F. Supp. 2d 161, 167

(D.P.R. 2000); Producciones Tommy Muñiz, Inc. v. COPAN, 113 P.R.

Dec. 517, 526-27 (1982).

Against this backdrop, our inquiry reduces to whether the

record, in its current, partially-developed state, evinces

sufficient support for a finding that Sprint engaged in unethical

behavior either while carrying out the terms of the roaming

agreement or while addressing the problems that plagued Movistar

after Sprint's Puerto Rico launch. This question demands a

negative answer.

The key facts are not in dispute. When Lamb designed the

PRL (v930), he conferred with Movistar's representative (Sepúlveda)

to learn Movistar's specifications. Consistent with what he was

told, he placed the Movistar SID ahead of Sprint's anticipated SID

(5142) in the order of preference for the Puerto Rico geo group.

This effectuated the parties' mutual intent by preventing

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Movistar's customers from hooking into Sprint's signal so long as

Movistar's signal was available. After completing this task, Lamb

took pains to provide a text file along with the bit file so that

persons acting in Movistar's interest would know both the content

of the PRL and the placement of the components within it. Movistar

thus received the benefit of its bargain.

Nor were Sprint's actions once it had delivered the PRL

calculated to deprive Movistar of that benefit. When Sprint toyed

with the notion of using 4396 in Puerto Rico, it prudently embarked

on a field test. Discovering that 4396 caused problems for other

service providers (including Movistar), Sprint responded by

abandoning its plans to broadcast that signal in Puerto Rico.

Forced to substitute a different SID, Sprint reverted to an

alternative — 5142 — that seemingly put others' interests ahead of

its own. To be on the safe side, it asked for, and explicitly

received, clearance from the other service providers (Movistar

included) before beginning to broadcast on 5142 .

We think that this evidence strongly preponderates

against a conclusion that Sprint acted in bad faith. At the time

of its Puerto Rico launch, it had absolutely no reason to believe

that its switch from 4396 to 5142 would hinder, rather than help,

Movistar's customers. After all, Movistar had expressly approved

the switch, and, moreover, Sprint had no reason to believe that the

PRL Lamb prepared (v930) had been altered in any material respect.

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Had that PRL remained as originally programmed, the home-on-home

roaming option would have permitted Movistar's customers to

complete their calls on the Movistar network whenever and wherever

Movistar's signal was available. What Sprint did have reason to

believe was that, by using 5142, it would be acting to its own

detriment. Nonetheless, it was willing to absorb this loss in

order to avoid possible harm to its roaming partners. That is

scarcely a badge of bad faith.

So too Sprint's actions after the launch. When it was

presented with a windfall from unexpected Movistar roamers in

Puerto Rico, Sprint acted expeditiously to stem the tide by

shuttling those customers to Movistar's service center. It also

offered to take other steps to palliate the problem, but could not

do so because Movistar balked.

Evidence of "the direction of . . . negotiations" can be

highly relevant in assessing good faith in contract cases.

Shelley, 977 F. Supp. at 98. Here, that evidence tends to

exonerate Sprint. Although Movistar may feel dissatisfied at this

stage of the proceedings, it is surpassingly difficult to see how

Sprint's negotiating posture, or its other post-launch actions, can

give rise to a conclusion that it acted in bad faith.

In sum, the magistrate judge's determination that Sprint

likely would be found to have acted in bad faith lacks an adequate

evidentiary predicate (and, therefore, is clearly erroneous). See

-26-
McGuire v. Reilly, 260 F.3d 36, 45 (1st Cir. 2001). Accordingly,

the district court erred in resting the preliminary injunction on

this ground.

C. Other Theories.

Movistar attempts to shore up the preliminary injunction

on two additional bases. Arguing that its complaint gives rise to

other statements of claim — Sprint's breach of an implied warranty

in the v930 PRL and its negligence in deciding to broadcast the

5142 SID in Puerto Rico — Movistar posits that it is likely to

succeed on these initiatives. The magistrate judge did not opine

on either theory. Nor do we.

Injunctive relief is, by its very nature, fact-sensitive

and case-specific. For that reason, the court of appeals

ordinarily will not uphold a preliminary injunction on a ground

that was not fully addressed by the trial court. See, e.g., TEC

Eng'g Corp. v. Budget Molders Supply, Inc., 82 F.3d 542, 545 (1st

Cir. 1996); Aoude v. Mobil Oil Corp., 862 F.2d 890, 895 (1st Cir.

1988); cf. Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 15 F.3d

1222, 1228 (1st Cir. 1994) (construing Fed. R. Civ. P. 52(a) to

require district courts to make sufficiently detailed findings to

permit informed appellate review).

To be sure, there will from time to time be exceptions —

but those exceptions are likely to involve alternate theories that

present abstract legal questions and, therefore, do not require

-27-
differential factfinding. See, e.g., McGuire, 260 F.3d at 50

(addressing, and rejecting, an alternative ground that depended on

a question of statutory interpretation). Here, however,

circumspection is especially appropriate. To the extent that they

are viable at all, the new theories are factbound. Moreover, the

intervenor (Centennial) joined the fray only after the magistrate

judge had ruled, and so had no opportunity to present evidence or

argument in the trial court. In its filings, it has raised

legitimate questions about the effect of an injunction on its

customers — and we have every reason to believe that it can make a

substantial contribution to the factfinding process. Under the

circumstances, we think that Movistar's other claims are better

addressed, in the first instance, by the court below.

III. CONCLUSION

Because a showing of likelihood of success on the merits

is essential to the issuance of a preliminary injunction, see Ross-

Simons, 102 F.3d at 16; Weaver, 984 F.2d at 12, it would serve no

useful purpose either to review the magistrate judge's other

findings or to discuss how this case fits into the remaining three

facets of the preliminary injunction framework. It suffices to say

that, absent a demonstrated likelihood of success on the issues

considered below, the preliminary injunction must be vacated and

the case remanded for further proceedings.

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 Although we need go no further, we remark the obvious:

the attractiveness of a negotiated settlement is undeniable, and we

commend earnest consideration of that course to all parties. It

does not take a savant to recognize that this case is far better

suited to practical resolution by businessmen familiar with the

industry than by protracted litigation (which is bound to prove

costly, inefficient, and time-consuming). Sprint can take only

limited comfort in the ruling that we announce today. That ruling

reflects our analysis of a partially-developed record (and, thus,

is hardly definitive). It most assuredly does not impugn the

possibility that Movistar may ultimately succeed on some or all of

its claims once the evidence is fully developed. See Narragansett

Indian Tribe v. Guilbert, 934 F.2d 4, 6 (1st Cir. 1991) (explaining

that "a court's conclusions as to the merits of the issues

presented on preliminary injunction are to be understood as [no

more than] statements of probable outcomes"). Given the complexity

of the technology, the multiplicity of interests involved, and the

tangled nature of the case, anything is possible.

Vacated and remanded.

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 APPENDIX

prl v930

. . . .

System Table
_________________________________________________________________

no sid nid neg_pref geo pri acq_index roam_ind
_________________________________________________________________

0 16410 65535 Preferred New (0) More (1) 4 On
1 4106 65535 Preferred New (0) Same (1) 14 On

. . . .

20 484 65535 Preferred Same(1) More (1) 4 On
21 5205 65535 Preferred New (0) More (1) 22 Off
22 5142 65535 Preferred Same(1) More (1) 0 On
23 4145 65535 Preferred New (0) Same (0) 3 On

. . . .

252 32767 930 Negative New (0) Same (0) 26

-30-