good morning may it please the court my name is leonard feldman and counsel for the plaintiff in the appellant united national maine in the previous appeal in this matter the court agreed with the district court that there was instructional error regarding united's interference with contract claim so it remained in the matter to the district court for a specific purpose which was to craft an appropriate jury instruction interpret ing the terms of united contracts and the court explained that in order for the jury to understand whether united's performance was disrupted it needed to know what contractual rights united possessed so that was the pivotal issue on remand what contractual rights the united possess under its contracts with g s and champion and the problem here is that the district court in ri mand misinterpreted those contracts according to the district courts united's contractual rights were subject to whatever policies rules and regulations s t c imposed on trade show associations but the problem with that is there isn't a single word in the contracts that united executed with g s and champion that would support that view and with all due respect to the district court this is not a particularly complex issue if you want to know whether united agreed to be subject to s t c's policies rules and regulations the simplest and easiest and correct thing to do is to look at united's contracts and determine whether there is a provision in those contracts that says united shall be subject to s d c's rules regulations and policies but there isn't any such language there cas let me ask you just to help me understand the can the contractual structure here i live in san diego so i'm familiar with the commission center and the convention center if they institute a policy saying that anyone who works in the convention center whether directly for the convention center a corporation or for one of the vendors must have a college degree  seems like a silly rule but let's say they passed that that was a new rule that they passed there that would presumably increase the cost of companies that were having people clean the convention center under your view of the case would that be potential torturers interference with a contract it would unless you have entities that have agreed to comply with s d c's rules and regulations but that doesn't mean that  automatically subject to liability because the test for interference with contract claim is very demanding and it's multi faceted and it requires the s t c know about those contracts that it interfered with that it acted intentionally to interfere with those contracts and that it acted without any justification and that last prongs particularly significant in this case because our case is unusual in the sense that when s t c implemented it exclusivity policy it knew about united's contracts with g s and champion it intended to interfere with those it argued to the jury that its exclusivity policy was motivated by security concerns and quality concerns and the jury rejected that in a unanimous verdict and while s t c has its argument which we're all familiar with from the briefing that it had a contractual right or privileged to interfere it hasn't said one word to this court nor did it say it in the previous appeal challenging the jury's verdict on sufficiency of evidence grounds so we have a jury that has unanimously concluded that the policy they implemented wasn't for security wasn't for quality it was a money grab and so to your question wrong with a money grab when they didn't sign the contract with your client why aren't they entitled to act in their own economic best interests they're certainly entitled to do that but it can and in this case does give rise to liability why because you didn't agree to let your client be employed and they didn't sign that contract  look we're operating in our own best interests and we think it's going to work out better for the convention center we have our people there will have better relations with their union or whatever else i'm not sure what you describe as a money grab isn't what they're entitled to do in their own self interest if they have a justification for interval make more money money grab all except your characterization what's wrong with that if a money grab satisfies the justification prong then interferes with contract claim would no longer be a claim it would simply be a no latine california law and of course this issue was litigated and we have a jury verdict that found that there was no justification so if we were to assume that a money grab is a justification the jury rejected that one of the justification would there be i don't know other than a money grab but it but it and i think that's the problem here i mean i think that you know the convention center has and is trying to make money trying to pay its bills and if they can find ways to make more money that that does not directly violate other federal laws to say look we can maximize revenue but i do in this way i have i'm having trouble it i understand from a jury's perspective it sounds yukky these big rich guys are hurting the little people cleaning i get that but from a legal perspective i judge clifton's question but there's an assumption built into your question which i think is very important and you said as long as it doesn't violate a federal statute so if the rule was you know muslims can't perform cleaning services i think we'd all agree that would be unlawful ye california has implemented its own laws it's not just a question of federal law of the month but i mean everything's about mean half of our cases are money grabbing we would have our docket be cut sixty percent if we were here a money grab actually so i guess is there something else besides if they have a motive to make money and i'll put the screws to them and they'll probably admit yes the reason was to make more money can you give us a case that says that that is improper other women from we're familiar logically it can't be because all torts whether it's an antitrust violation all economic business torts they are motivated by financial considerations the question is in this case is whether s t c had a contractual right to be able to do that and what california has said and it's never going to the contract with your client and that's that's very significant you know if they haven't agreed to anything with your client i part of the problem here is the merger of contract law and tort law we're using different concepts in essentially the same context but this starts as a contract action yeah let me follow up on that because i'm trying to find  g s you have to either do the cleaning if i understand the new policy you have two options you can do the cleaning and then you have to use our employees to actually do the work right but you manage the contracts and do all of that and we'll give you a cut or you can turn the whole cleaning operation back over to us right right your client to handle the cleaning services right is that right that's crazy the policy doesn't affect the contract between you and g e s that's right let me finish the cause your contract with g s is i read it and doesn't specify who does the work who the employees of you and  will be and how much you're going to pay that's left open to the particular clients at that particular time this is not a correct reading of your contract with g s yes and that's why we have not so that this new policy really is a regulatory impact on your business but i can't which may or may not be correct i mean may or may not be a legitimate regulatory action by the management which happens to be a government not that i don't find what contract yeah it is being directly c do the work we're not going to hire you anymore but there's nothing that requires that you be hired so what california courts have said and they've said this repeatedly and they've said it very clearly is that there's two ways to interfere with the contract one is to prevent performance in the other is to make performance more expensive or difficult and so your right the contract doesn't indicate who would actually be employed doing the cleaning services united has its own employees in a pays them about ten dollars an hour all of a sudden s t c comes in and those prices skyrocket that's the interference claim and so interferes with your ability to carry out your contract with g e s correct and that if g s wants to continue to hire you under those circumstances but there's no obligation on either of your parts well there is an obligation on g s his part as well as champions park to hire united unless the trade so association has a relationship with another cleaning company so g s and champion continued to hire united and united of course was contractually obligated to continue to do the work but the california courts have made a policy determination that when somebody jumps in and makes performance more expensive that's actionable unless they can show that there's a justification and that's the protection and this isn't a governmental regulation if it was we'd be talking about it in different terms it is a policy that was implemented that is implemented pursuant to a contract between  and the trade show associations and it interfered with a contract between united and g s and champion and that is the paradigm of interference with contract claim  california law there are a number of additional issues in this case including the renewal contracts but i'd prefer to reserve my time is very well thank you after constructing the contracts between you and him on the one hand and the decorators and champion on the other hand now after the july two thousand and eleven jury trial it's been a while  district court granted estes motion for a new trial reasoning that it had committed prejudicial error by failing to instruct the jury as to un em's rights under those contracts the g d s and champion in light of the extens e evidence this court affirmed and it mandated that the district court engage in the contract instructions and the language from this court's opinion states for the jury to understand whether your attempts performance was disrupted required the district court to determine what contractual rights you want in possessed this thus required a legal interpretation of the contract and the trial court correctly concluded that it erred in this case by not doing so the question the real question here is can you an ems rights be determined by the four corners of the contract between you and him on the one hand and the decorators on the other answer that is no they cannot those contracts don't mention s  c and more importantly those contracts don't mention the source of the right for un m to use its own employees in s d she's building simple analogy i enter into a contract with judge owens to clean glorious building there's a dispute at the contract doesn't state whether judge owen has the right to give me the clean cleaning work we have to look outside the four corners of that contract between me and judge i'm going to determine whether or not judge owen has the right to contract with me but that's not it issue in this case is that well it is the analogy well judge jones i don't have the authority i do not have  the cleaning services it's the same presumption here we have to go way up the chain of contracting to get to the original license agreement and that's the license between s t c and the events themselves and example comic con those licenses are entered into years way in advance of the events the bigger the event the further in advance those licenses are entered into those licenses agreements specifically provide that the licensee in our example now come a co is bound by the p r hours the procedure is rules and regulations of the conventions and when this new policy let into effect in twenty zero seven were there any license agreements already in place and were there any contracts in place between the decorators and un m yeah their work so they were all valid and not affected because you couldn't make this policy record active to prior contracts that you we we could not we asked we could actually because our license agreement specifically gave us the right to change the p r hours from the date that the contract was entered into to the date of the event and that's what happened here we changed the rules effective two thousand and seven we changed the p r hours prohibiting any clean contractor not just you and him from having its own employees do work in the building that the licensees agreed when they entered into this contract they agreed that they would have died by future changes to the p r c and that's what we did now the licensees then go back to the contract structure here which it's trial exhibit eight seventy two it's in the record at page two sixteen there's a little structure from the top of that structure with the license that we talked about comic con doesn't actually put on the show itself after the licenses are entered into comic con enters into contracts with the decorators general contractors who actually physically build things in the convention center in a very quick pace they build the show in two days and take it down in two days those contracts are not in the record but whatever rights s t c grants the licensees those licensees can't grant greater rights as a matter of distinguish between your power to change the rules once and twenty eleven these contracts that you hand them on telling you what's troubling me and twenty eleven when u we negotiating contracts with the decorators are already want to call them in no question that s c c has the power to implement its policy i'm a little concerned about these prior contracts that are already in place and as you say as of twenty zero seven a lot of the performance requirements were already locked into agreements between the decorators and show going forward basis that's exactly what it did here this is there's a significant period of time here the marketplace changes someone's going to have the burden of the change of that marketplace it's either going to be s t c if it didn't reserve to itself the right to change or it's going to be somebody else the licensee or downstream the decorators there's nothing in this case nothing in the law that prohibited two thousand and seven as d c saying i'm going to shift the burden of the changes in the marketplace to someone downstream to the people that use the facility that's not illegal and it's not it doesn't violate any contract so as of two thousand and seven u s d a had the absolute right to say i'm shifting the burden here to the licensees now too themselves figure out how to deal with the changes that we're going to give them later and that's what they did the the one headed with this with this argument your honor is is what rights how do you define the rights in the contract between the u n and the decorators they don't exist in thin air u n and can't have in the country the decorators don't have a right if it doesn't come from somewhere else in this building those rights are limited to them to change it of cautious of what other contractual commitments that need if those contractual commitments are subject to those rights for this building because it's s t c that controls its house it's s has the right to say who's going to work in the building and under what circumstances so yes i hear s t c reserved to itself the right to make that change even retroactively for contracts that were entered into prior to two thousand and seven it gave notice of the change through the p r hours and it was up to the licensees and the downstream sub licensees to deal with those changes you agree that the policy change had the effect of increasing united's costs the policy change increased united squashed but the question is did it just drop the contract rights i was to go through the elements of the california cause of action for part of the verdict well i want to discuss the justification issues they're not before the court here the only issue before the court here is the summary judgment issue of whether or not there was a disruption or a determination or you and i was right held that if you are an ems rights are conditioned on the usage policies of s t c then s t ceased change determined rather than disrupted you want a performance that's at the first year and in case of page one thousand  and by that because of the fact that the licenses take away the right for you want him to use its own employees in the convention center effective july one two thousand and seven that change determined you in ems rights it didn't disrupt it you can't look at the four corners of the un m contracts with the decorators to determine those rights they have to come from somewhere they're limited they we're taking it rather if the policy had said we're taking all this in house we're going to do all the cleaning with our own employees we're taking control there simply nothing left for the decorators to contract for with regard to cleaning services i'd be one thing we have here is something that said we're taking the staffing in the house you've got to use people that we have hired and this is what it's going to cost you so united could continue i mean the decorators still had cleaning services they needed and united could continue to form that contract they just had to do so at a much higher cost at seventeen dollars an hour having the effect of increasing their costs and under california law that seems to be disruption so i kept your promise that that you have to look to the contract to figure out what it was that happened but what happened wasn't that there was no cleaning service to be performed or united couldn't perform the cleaning service you just had to do it in a much higher cost well but i still want you to get to the justification point because in the end it seems to me that would be an easy answer to this case except that the jury said no to that question the jury verdict was set aside and there is no jury verdict itself in this universe that we are today if this case gets retried  as to what justification defense the convention center is going to put forward if at all clearly this is after nine eleven there were a host of reasons just because of the record here because the justification for a long time after nine eleven saw it took a long time a public entity to make some decisions on what to do with a very valuable significant assets on the waterfront in a very difficult place on the waterfront so there was a whole analysis that went into the this what the justifications work that are see anything in the objections are in the first decision from this court that smoke justification there is your correct your are the issue before the court is whether or not you are contract rights determined as opposed to disrupted th arms contracts rights that's really the only issue here and if those contract rights take precedent over u n arms contracts then it determines them not disrupted them and one last point i want to make  is there was some discussion with my post in council regarding the contracts themselves between g e s and champion on one side and you and him they have best efforts clauses in them one of them actually use the words best efforts another one has a very similar language  i question whether or not there wasn't an out in those contracts by either g e s or un ham if there's a license above them that says i can't use you anymore u n employees ok do we really have  a threat of a breach at that contract level those best efforts clauses are enforceable under california law so again it if you go even stay within the four corners a contract there's really an issue as to whether or not there was any  any entitlement by you and i am on the one side or g e s and champion on the other to actually go through those contracts at a significant more expense you want to chose to preserve its business model and go forward and file a lawsuit to try and enforce that business m and we've been at it for ten years just to wrap up your honor i see my time is very short we request that the summary judgment and heard by the thank you as my opposing counsel mentioned what this court said in its previous decision is if you in ams contractual rights were conditioned on the usage policies of s d c that was the first half of the sense that he overlooked and it's the critical part of the sentence because that's the dispositive issue under the district court's analysis were united contractual rights conditioned on the usage policies  and the way to answer that is to look at the contract and this isn't a more tight your contract or contract look at the se at united's contracts with g s and champion and if you look at the ninth circuit's previous decision it's crystal clear in that regard the section at issue section four begins with during trial the district court rejected s t c request for a legal interpretation of potential conditions precedent in united's contracts with the decorators that entire section of this court's opinion is about united's contracts with the decorators and if you look at the trottier case that's a construction project and it shows a very different contractual chain where you have sub contractors in a construction project that are agreeing to be bound by the prime contract united never agreed to be bound by s d c's license agreements with trade associations i'm not sure how that's s t c is problem it's always f do you see said look we're doing all this in house so the decorators don't have cleaning services they need anymore i think they do that i don't think they could they didn't do it but i also think it's important for your honor to recognize the reason they didn't do it is because in the first chapter of this case we were litigating the antitrust issues and it was a significant point for s c to be able to say in response the essential facilities doctrine claim that we didn't take it in house we still let you do the cleaning services you just have to use our employees the other thing that's important there is that if  brought it in house their costs would increase s t c wants to remain competitive with anaheim in las vegas and it made a decision i had good reasons to make a decision not to bring it in house but i would submit my question is a somewhat broader one not as to whether that would have been a good idea but it seems to me on some level the notion that united didn't agree to be governed by whatever s t c decided can't be right because  hasn't agreed to subordinate its rights as owner to some agreement the decorator entered into with united suppose i hire yard service from my house and they come and the yard service guy hires some body to work for him and i know i'm taking you over time how is it that whatever the yard service guy does with his employee can somehow affect what i can do with my house so i don't like the art service anymore and i don't have a contract with the armed services gives them rights to continue for the next six months i say get outta here and you're going to tell me that the person that the our service contracted with has got rights against me i just don't follow that the the now gee isn't quite on point i'm not surprised look at it this way there's a landlord the landlord leases you the space and you live in that space and you hire a cleaning company and that cleaning company sub contracts out with a gentleman who's going to provide you know the the the yard service and the landlord comes in and says you know what i have now sell gasoline and so you in the end directs this policy to your yard service and says anybody who's moaning that grass now has to buy my gasoline for eighty dollars a gallon that's the analogy it's not about your right ok let's make that it why am i as the owner required to subordinate my rights to an agreement made by in this case the decorator in my case the yard service well i mean algae the owner had a contract with the landlord so the trade associations did agree and there's no doubt about that they did agree to comply with the policies rules and regulations but united did not so united sam's in a better position than the party that actually has a contract with s t c for how can that be because california has made a determination that the protection that we give in that circumstance comes from the various elements of the tour including justification and if they could have shown justification which as you pointed out they didn't and the jury rejected their argument this would