Case ID: f-appx_669/html/0421-01.html
Source: Caselaw Access Project
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Date Created: 2024-08-24T03:29:51.129683

URICA, INC., Plaintiff-Appellant, v. MEDLINE INDUSTRIES, INC.; Defendant-Appellee.
    No. 14-56545
    United States Court of Appeals, Ninth Circuit.
    Submitted September 2, 2016  Pasadena, California
    Filed September 30, 2016
    ■ Gary (Chia Heng) Ho, Blum Collins LLP, Douglas L. Thorpe, Douglas L. Thorpe, A Professional Corp., Los Ange-les, CA, for Plaintiff-Appellant
    Douglas Axel, Attorney, Nitin Reddy, Alycia A. Degen, Sidley Austin LLP, Los Angeles, CA, for Defendant-Appellee
    Before: TASHIMA, WARDLAW, and BYBEE, Circuit Judges.
    
      
       The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).
    
   MEMORANDUM

Urica, Inc. (“Urica”) asks us to reverse the district court’s grant of summary judgment to defendant Medline Industries, Inc. (“Medline”) on Urica’s inducing breach of contract claim. We have jurisdiction under 28 U.S.C. § 1291, and affirm.

Under California law, there are five elements for a claim of intentional interference with contractual relations: “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal.3d 1118, 1126, 270 Cal.Rptr. 1, 791 P.2d 587 (1990). Each element must be established to succeed on the claim. The district court correctly found that Urica failed to offer proof of resulting damages.

“[Djamages for the loss of prospective profits are recoverable where the evidence makes reasonably certain their occurrence and extent.” Grupe v. Glick, 26 Cal.2d 680, 693, 160 P.2d 832 (1945). During trial, Uri-ca conceded that it could not make an admissible claim for lost profits. As Urica’s counsel stated: “[P]laintiffs must concede to the Court that we cannot make an admissible case for lost profits ... where Pharmaplast continued to supply goods to existing customers, the Court concluded that it would be too speculative. And we, of course, have no evidence to the contrary. ...” Reporter’s Transcript of Proceedings at 7, Urica, Inc. v. Medline Indus., Inc., No. CV11-2476-MMM-RZ (C.D. Cal. Apr. 15, 2013). Indeed, the evidence shows that Urica’s affiliate URI Health & Beauty LLC (“URIHB”) did not lose any existing or future customers as a result of Medline’s alleged interference. Despite the 2008 agreement between Med-line and Pharmaplast S.A.E. (“Pharma-plast”), Pharmaplast continued to sell products to URIHB for existing customers. And Pharmaplast decided to stop quoting prices for new URIHB customers in late 2007 or early 2008 (before Medline’s alleged interference) because of URIHB’s chronic late payments.

Urica suggests that Medline's profits from sales of Pharmaplast products would be an appropriate measurement of damages. California courts have permitted consideration of a defendant’s profits in measuring a plaintiffs loss of profits. See GHK Assocs. v. Mayer Grp., 224 Cal.App.3d 856, 874, 274 Cal.Rptr. 168 (1990); Ramona Manor Convalescent Hosp. v. Care Enters., 177 Cal.App.3d 1120, 1140, 225 Cal.Rptr. 120 (1986). But using a defendant’s profits as a measurement of damages is appropriate only when the plaintiff has first produced evidence that it was, in fact, damaged by the defendant’s interference. See GHK, 224 Cal.App.3d at 873, 274 Cal.Rptr. 168 (using the defendant’s profits as a measurement of damages only after first finding that “substantial evidence” showed that the plaintiff was damaged and noting that “[w]here the fact of damages is certain, the amount of damages need not be calculated with absolute certainty”).

Urica failed to make the initial'showing that it was damaged by Medline’s alleged interference. As explained previously, Uri-ca continued to place orders with Pharma-plast for existing customers through 2011, and Pharmaplast chose not to quote prices for new URIHB customers for reasons independent of its later agreement with Medline.

As the district court also noted, California law generally does not allow plaintiffs to recover more on an inducing breach of contract theory than they would have had the contract been fully performed. See GHK, 224 Cal.App.3d at 874-75, 274 Cal.Rptr. 168. Notably, the district court granted summary judgment to Pharma-plast on Urica’s breach of contract claim on the ground that Urica suffered no damages as a result of that breach, and Urica does not appeal that holding. If Urica cannot recover against Pharmaplast (the very party that allegedly breached the exclusivity contract) because there were no resulting damages, then it necessarily follows that it cannot recover against Medline for inducing that breach. Further, expert testimony showed that, even if Pharmaplast would have been willing to supply UR-IHB’s new customers, URIHB would not have been able to take on the clients that Medline acquired because URIHB lacked the resources and management to handle such a large increase in sales. Accordingly, any attribution of Medline’s sales to UR-IHB for the purpose of calculating UR-IHB’s damages would likely result in a windfall to URIHB.

AFFIRMED. 
      
       This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.