ruled that california terms can section five hundred and thirty three which prohibits the insurance of intentional conduct defeated office steeples claims in doing so that the district court reason that the only intentional conduct was alleged in the show pleadings prior panel of this court reversed reasoning with the district court had read the sure one claims to narrowly and concluded that office depot actually faced potential liability for not intentional conduct it was remanded the case to the district work to consider the substance of coverage arguments that were here for now in the st instance and office depot respectfully submit that in the district court have been reached again by not properly analyzing the contest the undisputed evidence leading to the settlement of the case which energy also refused to participate in settlement it also at office depot so office depot seeking summary judgment with respect to both  act definition a wrongful act under this policy only occurs solely in the use or distribution except for a of materials and what the district court did is the district court concluded that because the sure when allegations spanned a period of time before the policy irrespective of any analysis as to whether the quote unquote wrongful acts the subset of acts covered by this policy it concluded that because wrongful acts may have occurred prior to the policy there could never be coverage here and the thing that i think is is critically important here is the specific language of the wrongful act or excuse me the pri order it it it focuses on women quote unquote wrongful conduct began as opposed to focusing specifically on what this particular policy is designed to cover and as it was  materials is referenced in the complaint occurred after inception of the policies in the summer of two thousand and seven that was with respect to the the so called switched option to allegations in addition with respect to the claims then that these these parties were were entitled to best government pricing the allegations there examined purchases after march of two thousand and seven when the policy incepted with respect to other categories of alleged misconduct change unless price and discontinued product exceptions this comparable continued product allegations the argument was that the the use of materials catalogs except for a that those those initiatives did not become major initiatives until the end of two thousand complaint not allowed to a limit the potential for coverage the only materials referenced in the complaint were were referenced in the timeframe after march of two thousand and s  occur prior to these policies but those statements are relevant to do is defend is judged at the time of the tender not in hindsight based on litigation positions but more importantly none of those defenses are positions because the california of claims act claims allow recovery for reckless or reckless misconduct office depot at least based the potential for that liability in question of officers and directors and office depot only so that lower level employees who may have even engaged in this conduct are not covered by that exclusion and in the share one cleanings you had allegations of both the c f c s the a violation as well as breach of contract violations and fraud allegations and so that's products and so that that is a a really important point i mean even the intervene  says the exclusion that excludes claims arising out of extra liability or obligation under any contract or agreement or out of reach a contract however does not apply to liability contract and we've cited the law that essentially also claims that claims of different elements and different make up the recent contract claim and then when the interveners came in not only did they sue for breach contract the suit you know they brought other extra contractual claims and so you know i g obviously one still wants to read that claw back language very narrowly but  you know again it's not an exclusion that excludes all claims where the parties for example came together by virtue of a contract that it's more specific and that it addresses liability obligations in the absence of model and it has no application to a case like this the district court didn't reject that argument it just didn't reach it this is a contract dispute with government purchasers office depot says despite the fact that a i g wrote this policy in march two thousand and seven somehow he is obligated to ensure a key cham action alleging that office depot cheated california taxpayers dating way back to two thousand and one by knowingly violating contracts with state and local government agencies the district court appropriately granted summary judgment on each of those grounds which are independent and sufficient now it hurt a lot about wrongful acts what are they well they're defined in the media module as harm cause sawi through the creation or publication of materials but what materials office depot says it and its brief at pages butter of a retail operations commercial transactions with all customers all the time a complaint nowhere alleges that the mere publication or creation of any of these materials cause harm all liability in this case  knowing violation of contract pricing guaranteed the use of these materials described in allegedly complaint or incidental to effectuating or violating the contract price guarantees now when does office depot contention this occurred well this is critical because of the prior act beater of this policy it ensures wrongful acts only if they st occur during the policy period and as off as the acknowledge there is an exclusion this says the page nineteen of its opening brief office depot concedes coverage must be decided based on the complaint at the time of tender compared to the policy language yet in their briefs they rely extensively on what happened in the show when litigation after wa litigated that's all legally immaterial they also concede in their briefing today that the complaint in the sherman case allege wrongful conduct from the start of the two thousand one master agreement there were two master agreements being soup on one started and stop before the well so you are never i mean i understand you have a separate cover enjoyment but reading that now with regard to the multi to the practice called switching from option one option two which is described in paragraph sixty eight  yeah this is one of them they say it started after two thousand and seven when the complaint says paragraph sixty eight beginning in two thousand and six office depot created an option to purchase seventy one says they did it because aid agencies were coming to them saying you've been ripping us off from two thousand and one through two thousand and six you haven't been offering the best price guarantee that's prior to two thousand and seven using materials catalog pricing so they created another option discount from the website switch the agencies from option one option to from then on it was required and they had to keep track if you couldn't spend catalogs catalogs and website pricing according office depot those are sufficient in the manufacture suggested list price made cereals discount off of office depot zone wholesale catalog for proprietary products materials this counts off of their frequently ordered products catalogs materials paragraph forty two dollars of the complaint says from at least two thousand and one office depot knowingly violated its contract and it lays out all the ways they did it not applying manufacturing rebates to its list price materials thereby causing real cordy's to pay a higher price the  the benchmarks the catalogue pricing were supposed to be reliable benchmarks or providing the best price guarantees for the coins as of last most commercially beginning office depot increase its prices at any time parents because in none of these alleged wrongful acts caused harm through the creation or publication of the materials themselves that's critical in the definition of the media module but we're we're moving past that office depot ignores that and they say well these were used to perpetrate the contract violations and they're wrongful acts to trigger coverage on to the media much will work something out for purposes of replying to prior acts exclusion if any of these are alleged wrongful acts that all of them are because they all involve the use of these catalogues priceless websites internet sites best pricing discounts etc before this appeal in fact office depot argued the entire complaint alleged wrongful acts in their motion for summary judgment of page seven there argued that the use of bitch feeds to promote sales to san francisco and berkeley were wrongful acts the san francisco a bit was in two thousand and four the contract was two thousand and five the center of the berkeley contract was two thousand and six these all predated the policy when they sought coverage their global risk manager said the entire premise of the show  case is based on allege wrongful acts drawing on the definition even in their brief in this case they go back and forth at pages seventy eight dollars and again to twenty three dollars they argue sure when so claim for relief included the core allegation that office depot use false records and statements which also made of material facts in order to induce real parties to proven pay false and fraudulent claims he had a duty to defend based on these allegations alone because the act they were arguing the entire complaint allege wrong well x from two thousand and one forward the prior act exclusion clearly applies there option one option two they focus on out ramped up in two thousand and seven but the exclusions s violation that they rely on it involves a move from a discount off a wholesale catalog to a discount off of the commercial website pricing which was available to consumers off the street those are the wrong kind of pricing that prevailed from two thousand and one it was simply discounts from published list prices and the problem was they kept shifting them around in fact that the complaint alleges that from the beginning the catalogs weren't stable citing master agreement starting in two thousand and one as well as the master agreement beginning in two thousand and six they were contractually limited to changing it no more than twice a year they were changing it daily from the beginning from two thousand and one is all file a to their contractual obligation and out but all of the allegations about wrongful acts are similar and valving a failure to get the best price guarantees using the catalogues and price list the office depot concedes constitutes materials within the meaning of the definition of wrongful act now to the contract exclusion the policy says it shall not cover any claim alleging arising out of a resulting directly or indirectly from any liability or obligation under any contract or agreement or out of any breach or contract office depot relies on the claw back line which was says it is it does not apply if there be liability the absence of such agreement or contract this entire case would not exist in the absence of a contract that sherman complaint was very straightforward had five roman numerals introduction parties jurisdiction and venue the u s c contract and misconduct paragraph forty two dollars alleging contract violations it's all predicated on contract violations comparison was between the us he contracted rice and and the pricing it actually provided to san francisco and endorses the plaintiffs explained in their motion that they settle the case based on the plane as the man discounted eighty nine percent of that for the risk of litigation contract pricing contract damages finally the district court relied on the agency exclusion the policy says it shall not apply to any claim brought by or on behalf of any federal state or local government agency that as agencies and we decided a number of statutes well if we're looking for a source of definition it's one source but there's another right under our noses and that is the u s c contract at issue in this case office depot contends no lay person would construe agency to apply to these parties well the u s econ track which is exhibit three to the manage their own complaint refers to these contracting parties as agencies throughout for example contract says u communities contract suppliers primary offering to state and local government agencies nationwide the pricing is the lowest available pricing that to the buyer the state and local public agencies nationwide having lived under this contract for six years they were clearly  notice when they took out this insurance policy that exclusion would apply to these parties we've briefed the other defenses and our answer brief will rest on the briefing as to those there are no further questions will time your honor just very briefly with respect to the again the switch the option to allegations this is really important that the issues here have to be analyzed in the context of duty to defend law in california which requires  catalogs in the summer of two thousand and seven in order to attempt to confuse potential purchasers as to what you know that they were buying and what they were going to watch question how connected this that for example has to be to other earlier wrongful acts like this is priceless and so on or do we view it separately they're there they're separate i mean there has to be the use of is defined as you know contents in books brochures except for a oh yeah but same thing in a brochure and on a website and that's the same wrongful act or an orang prior act that counts but if you have different correct and what i think is really significant here as well is when you look at the blog and the only cases i just cited here are trademark infringement cases where there's just no dispute that the infringement occurred before the policy and continued thereafter means the same publication of material is the same book it's the same slander what whatever it is here again applying california duty to defend the law and i really take issue with counsel's contention that w cherry picking allegations made to telephone a duty to the fellas is that if there is a remote sliver of an allegation buried anywhere in the complaint it might potentially give rise to coverage then there's a duty to defend it in here