please the court the birth of freedom or craig on behalf of maricopa county i'd like to reserve five minutes for a bottle here is the district court's ruling on the motion to dismiss that there was no contract between maricopa county and office depot despite the fact that maricopa county purchased twenty two point five million dollars in office supplies from office depot was plainly erroneous and that error infected the rest of the rulings in the case at first glance at first glance it seems i think part of what makes this case seem complicated is the volume and perhaps complexity of the of the agreements involved but if you start with the simple proposition that my client by purchasing twenty two point five million dollars of goods had to have a contract with a person from whom they were purchasing then that fundamental error or that you're by the district court not fundamental in legal sense but fundamental in the practical sense of underlying everything else you mean a direct contract with status as a third party going to fishery of a country runner i think we are we are we have three clear three potential contract claims here based on the master agreement one is that we were a direct party to the master agreement by virtue of opting in under paragraph thirty six of that agreement so we have a contract we are a contracting party to the master agreement with office depot the second would be that we're a third party beneficiary if you don't view us as having rights as a direct party by opting in pretty clearly paragraph thirty six gave us third party beneficiary rights under that master agreement including most favored nation clause in paragraph twenty three of that agreement the third third way we get there is to say that under the u c see if you to dash tool forward which embodied in both the arizona commercial law in the california commercial law by virtue of the fact that maricopa county purchased goods from office people over a period of five years they have a contract whether or not there was ever a signed agreement between the two of them and i think in any of those three ways judge turns we have a contract and the district court with all due respect simply got it wrong by dismissing our direct contract claim and on that basis excluded from the contract no no your honor i think i think it's a question of the u c c of did the parties intend to have a contract and clearly i think where there are significant other purchases it doesn't actually have to be twenty two million it could be one hundred thousand where the parties engage in in commercial transactions particularly over a period of time like five years the parties clearly have a contract it's related to go right to the issue of the case does the record show whether at that office depot had with the county of san francisco there is nothing in the record that reflects that the l a county people knew about the san francisco contract it is clear that office depot knew about the contract because it was office depot's contract clear that u s communities knew about it as well i don't believe so your honor there's nothing in the record that i know of that reflects that that us committee knew but but more to the point there's certainly nothing that reflects that maricopa county no and if we're talking about here is a contract between maricopa county and office depot it would be america counties knowledge that would be relevant if in the in the case of the direct contract  potentially third party beneficiaries of two different contracts or i thought so the first one is the master agreement and under that one we would be a third party beneficiary by virtue of paragraph thirty six of the master as well as a number of provisions we cited in our brief there were contained in the master agreement in the attachments to the master agreement the second claim the one that the judge didn't dismiss but granted summary judgment against us on was a claim that under the administration agreement of the pricing commitment of the administration agreement we were a third party beneficiary of that contract and were entitled to enforce that to the tune of of being be able to benefit by the prices that were ultimately charge san francisco ruled against you on that on summary judgment and so you just interpret english not to include you yes he i think the district judge there were three step process the district judge followed and he got the first two steps correct from our point of view and missed the third one the first one was he concluded that the pricing commitment was ambiguous right that was correct second he concluded that he should consider extrinsic evidence the me and stop you for a second  you can take a moment to consider your words is that the position of the appellant this district court was correct in finding that the pricing commitment is ambiguous number one there are you taking the position that the pricing commitment was unambiguous and in your favor your honor that was a position we took in the district court and it's not that we have argued in the briefs to you but certainly it would be our extrinsic evidence and then concluded that it was a correct interpretation was inconsistent with ours we appealed that judgment of the district court we did not specifically argue to this court i don't believe in our briefs that summary judgment should have been entered in our favor certainly that's a remedy the if a court were to look at the agreement and conclude it was an ambiguous and it was in our favor i think it's within this court's authority to grant us under the arguments that have been made but our arguments we made to you in the finder yes your honor our view our our fundamental argument on the summary judgment is that there was conflicting evidence from the u s communities folks and from the office depot folks and then as a result of that the district court could not itself decide that issue it had to submit it to the trier of fact which in this case would have been a jury when you think of the end for jury trial i'm sorry when you say conflicting evidence what you're pointing to there's certainly no confusion on the part of u s communities as i understand the they  e they were concerned did not believe that america was eligible for the san francisco prices your honor i do keep in our dismay faced with the conflicting evidence you're pointing to is lower level personal of office depot the great weight of the u s community's testimony supports office depot's interpretation i'm not here telling you something different what we relied on was the testimony of our witnesses and predominantly the testimony of the office depot witnesses who were not in my judgment at least low level salespeople you had mistresses tina who signed the master agreement he was the person office depot designated to sign the master agreement and he testified that his understanding was similar to ours what did the testimony of the office depot people specifically referenced the pricing commitment as opposed to the transaction as a whole the district court concluded it didn't need to consider that evidence so it ignored mr city in his statement the person who signed the agreement statement it ignored the state in the end what rank did mr issa tina have your honor i don't have that title right in front of me i know it's in our brief and i know that it was a senior executive of the company he was a senior executive of the country company and he was their designated thirty six witness also i believe so he clearly wasn't not to denigrate salesman but he clearly wasn't somebody that they sent out on the road with a package full full or brushes to sell he was a high executive in the in the  your position is that this is conflicting evidence with the evidence we've heard were there with that was in the record with which might support the office depot view and therefore it should have gone to a jury or at least would not have been decided in the summary judgment yes your honor as to the as to our claim under the under the administrate of agreement the pricing commitment that's exactly correct we believe that there was a genuine issue of disputed material fact based on the collect on the conflicting evidence of the of the two parties offer us communities and office depot and that creates a genuine issue of material fact that the district court should not have decided we he got to the correct point of of admitting the extrinsic evidence even recognized the two interpretations were unreasonable to a certain extent recognize they were conflicting but then simply ignored a significant body of evidence and that violates the rule fifty six standard in in federal courts including that which says when we're being moved when we're the party the nonmoving party on a motion for summary judgment inferences should be drawn in our favor and clearly whatever else the court did it didn't draw inferences in our favor on that issue the los angeles county never expressed the belief that it was in total francisco prices there is nothing in the record that indicates anybody offered any witnesses from los angeles county your honor i don't i don't have an answer as to why but but the witnesses that were offered in our case again are basic and front line theory was that we had an agreement between maricopa county and office depot so we thought that the testimony of those two parties if you look at paragraph twenty three of the master agreement what it says is that if office depot sells at lower prices to any other governmental entity in california says i'm paraphrasing i'm going to give you the exact should have had those prices extended to them without regard to whether they asked for them frankly the contract says you're going to extend the price to us not that los angeles county has a right to ask for it not that maricopa county has a right to ask for it but simply at the obligation under the under paragraph twenty three of the master agreement was we were supposed to be charged with those prices and there is nothing in the record that ever indicates that that was done w honor you're talking about two different contracts in two different clauses the master agreement simply says that they represent that the prices are going to charge the county in this case l a county and then ultimately us by virtue of paragraph thirty six don't they don't have anything that the prices that they're charging don't exceed existing prices and that if they lower prices those prices will be extended automatically the eligible in available languages in the in the pricing commitment in the administrative agreement we disagree with there's conflicting extrinsic evidence as to what that language meant in the administrative agreement but it has nothing to do with the rights that you would have under the master agreement under paragraph twenty three and thirty six i say because there are so many documents here gets a little can little challenging to keep them separate but but there are two cut two distinct claims one is under the master agreement and the other is under the and with respect to the master review in which the district court dismissed what is the county's position with respect to why it should not have been dismissed it should not have been dismissed because that contract contained a most favored public entity cla and by virtue of paragraph thirty six of the of that master agreement maricopa county was permitted to opt in and have an purchase at prices stayed in this agreement or lower it had the lake county had and either as a direct party or third party beneficiary we were entitled to enforce that and certainly the district court should not have dismissed that at the dismissal stage before we had a we had a chance to develop a further record on the very least the claim was pled sufficiently to survive a twelve b six motion i see i have a few minutes left i'm going to reserve that for a bottle thank you very  much thank you your honor this may it please the court julianne londe on behalf of office depot incorporated before i turn to office depot's arguments i would like to clean up the record i think there were several statements that were made in response to questions from the court that did not accurately reflect the state of the record the first is that in fact there is evidence in the record that both los angeles county and u s communities were fully aware of both the existence of the san francisco contract and of the allegation that its pricing violated the contracts that were in existence at that time by being lower than the l a county master agree no excuse me can i ask you to bring the microphone closer to you are having difficulty hearing you i apologize is that better you're on as much of what i write thank you so that e mail which reflects that corporate express which was a competitor of office depot for the san francisco contract had raised this allegation that the san francisco pricing was lower than the at that time two thousand and one master agreement pricing for los angeles county it raised it with us communities and us communities then raise that concern with office depot and expressly said it needed to be discussed with joe joe is a reference to joe sand of all who is in charge of purchasing at los angeles county and you can find that email communication at our supplemental excerpts pages two thirty through two thirty one so it's absolutely clear that both u s communities and los angeles county were aware in two thousand and five of the allegedly lower san francisco pricing neither of them chose to take any action with regard to it and in fact there is testimony in the record by steven hammell who is the founder and at that time general manager of u s communities who testified that he viewed the san francisco contract as a one off and therefore not covered by the price and commitment that investigating whether it should bring this lawsuit it reached out to us communities and made the notation that it believed the san francisco contract entitled it to lower pricing and what us communities told mark coppa count apply because no one else was eligible to purchase under it that is it was a standalone contract it did not have any piggy backing provisions what is the role of in some of these observations that you're making well i think what's critical is that markup a county here is trying to shift the gameboard and say what we're really talking about is not contracts between office depot and us communities our office depot and los angeles county we're talking about contract between office depot and markup a county and that means marco counties intent matters i'll address in a moment why that's absolutely wrong there's no direct contract but more critically when u s communities before this suit was brought told mark coppa county you are wrong about the pricing commitment it is limited to eligibility market account his response was not wait a second that's not our understanding it in fact echoed and adopted that statement it said the question to me is whether we were eligible to purchase under the san francisco contract but the question in front of us is it not whether the it with respect to the master agreement the district court properly dismissed the claim in other words were there other reasonable interpretations that could have gone before a jury or at least been subject to  also twenty three and thirty six taking togethers and not your honor those actually have completely separate purposes so yeah but it's the same document it is absolutely and it's important to understand what the purpose of the piggybacking was that's set forth in section twenty three excuse me section thirty six if you look at section thirty six it indicates that the county which has been defined in the master agreement to mean los angeles county is enabling other agencies such as marco county to piggyback on its contract and what it says is participating public agencies may acquire items listed in this agreement such acquisitions shall be at the prices stated in this agreement or lower there is no statement in section twenty three that says you are entitled to assume the contract you are entitled to use or los angeles county's role as the controller and administrator of the contract there is no statement in section twenty excuse me section thirty six that would permit a particular backing agency like marco to affirmatively assert those rights which are reserved to the county county the same rights as the l a county and nothing more no absolutely not your honor our position is as with any third party beneficiary contract the right the rights that are given to the third party beneficiary are expressly limited to those rights agreed to by the parties what los angeles county and office depot agreed to in the master agreement was that piggybacking agencies such as mark would have a very narrow section of rights under the agreement they are entitled to one purchase items at the prices stated in the contract two they are entitled to receive price lists and three they are entitled to receive something known as a usage report it is essentially a listing of structured data that shows everything they purchased and sixty two of your brief where you say if washington county received lower prices for the operation of section twenty three maricopa were there after be entitled to purchase products under these prices and to enforce those prices pursu to section thirty six absolutely your honor and i apologize if i have not been clear there are two different levels of contract operation here at the top level there is contract administration the master agreement makes it clear that everything to do with contracted ministration is solely reserved to los angeles county that means extending the contract terminating the contract altering prices whether through operation of section twenty three or otherwise but once those prices are set once they are adopted in the amendment and put out in a price list every piggybacking agency is absolutely guaranteed those prices and if those prices are provided to them they of course have the right to sue that is their right as a third party beneficiary to say this box of pencils is listed as a dollar you charge me a dollar fifty that is no there's no dispute that that is their right the question is whether they are entitled to irrigate the responsibilities the los angeles county reserved to itself in terms of administering the contract and there is no language in the entire master agreement that would support that reading well i'm looking at the administrative agreement at the moment in the pricing commitments section a commitment that suppliers us communities pricing is the lowest available pricing that the buyer to state and local public agencies nationwide isn't that inconsistent with what you've just been telling us no your honor and that's because it's critical to remember that we're prices for all of the piggybacking agencies what the administration agreement does is provide the administrative structure and marketing support and so on that is used by the suppliers to help get the word out and the purpose of the pricing commitment along with the other two commitments in the supplier commitments the corporate commitment and the sales commitment is the foundation of the relationship between us communities and its suppliers it is intended to grow the u s communities customer base so that both the supplier and us communities benefit and as us communities has consistently stated the way that it does that is by ensuring that there are no barriers to entry for any public agency that is if i have a contract that i view is better for me for my personal purchasing habits and i look at the l a county contract available through us communities and say i'd love to be a part of us communities but i don't want to give up this better pricing what pricing commitment says is don't worry about that you can obtain all the benefits of being a u s communities member which means not only access to office depot's contract but access to all of our other supplier contracts without having to give up this pricing that you our briefing of some of the elements of observed that would come in if every piggybacking agency was allowed to enforce the administrative price in terms of the master agreement and that same problem applies equally to the pricing commitment in fact the way that it's been rewritten by market accounting it applies even more because essentially what marco county says is that the pricing commitment is not as you as communities  office depot always said a single commitment it's two separate commitments the first of which requires office depot to match lower pricing of any contract it held and the second of which requires office depot to match competitors  pricing it is difficult to imagine any rational actor that would agree to that second component but even as to the first component if it's little limited to eligibility as we believe the language shows that office depot has a very minimal additional administrative requirement it has to ensure that for those handful of agencies who may be eligible for one or two additional contracts that the pricing that is being provided through us communities is the lowest if it is unlimited and there's no eligibility requirement then suddenly office depot is required to take hundreds of contracts and tens of thousands of customers and to compare the pricing millions of difference of pricing commit comparisons to determine whether for any particular agency as to their own market basket of goods that net to buyer language whether they would be doing better under a different contract that's just administratively impossible within the confines of the relationship  suspect a straw man here because i don't think that's what maricopa county is asking it isn't fact your honor they are saying that the most fair our customer clause apparently by its plain language means that office depot has to give the lowest pricing to everyone but what net to buyer means and recognizes is the different pricing the pricing is better for different people in different ways take a very simple example imagine that you are san francisco you're very focused on environmentally friendly purchasing what you want is printer paper that has a certain amount of post consumer waste and so you negotiate strenuously for heavy discounts on green printer paper los angeles county by contrast might just want whatever papers cheapest not necessarily focused on the green benefits of it as a result there might be no discount on green paper through the l a county contract but a very steep discount on non recycled paper depending on what kind of paper you buy you may prefer san francisco pricing versus los angeles pricing that's one product imagine a contract that literally contains thousands of different products with different discount structures both core and catalog and non catalog and all the different items that might be bought depending on whether you're say a school district or a municipal board or a control district all of those will have a different net to buy or result in terms of their unique market basket and so the complications just expand ever outward if you interpret the pricing commitment as market the does so finally i wanted to with regard to this issue to address one other statement that i don't believe was accurate with regard to the record and that is that marco but county's counsel suggested that the district court simply ignored mr city as testimony in fact if you look at excerpts forty seven you will see that the district court squarely confronted the lack of knowledge that mr city now had admittedly that he  with regard to the pricing commitment what mr stitching a said and what all of office depot sales force when they were deposed was that they were not in charge of contracted ministration they were not trained on the unique provisions of the two different contracts the master agreement and the administration agreement that made up the u s communities program they were instead trying to sell the program if they had a question about the meaning of a provision they would look to the legal counsel and in fact that is what mr sixteen a testified what he would do and it's what the record reveals he did and that's if you look at his testimony at our supplemental excerpts at six forty three through six forty five client would be assured that their market basket would be the lowest price available to government and local public agencies from hawaii to puerto rico and new york to san diego he's the person that signed the contract he has your honor but he had absolutely by his own sworn testimony no role in administering it no understanding of the contracts he testified he never sat down and parsed out on what is and isn't that create an issue of fact at that point it does not your honor for two reasons first i think because mr sixteen to himself acknowledged the that his understanding could easily have been drawn regarding the most favored customer clause in the master agreement section twenty three that's further in his testimony a find it in our supplemental excerpts but also because under clear california law mr city in a statement is simply irrelevant and inadmissible and that is because california follows the objective idea of contract interpretation which means that subject of undisclosed intent is simply not admissible as evidence and we set this out in the ruby arrow case in our briefing which presented a situation on all fours that is there was the defendant attempted to cross examine the plaintiff on an undisclosed subjective intent regarding the contract the court said that was absolutely not admissible the sole exception is where that undisclosed commitment is not in most favored customer clause it is absolutely quired to be limited to eligible agencies and then also the other important point is that under susa markup a county as a third party beneficiary is standing in the shoes of the promise see hear us communities in seeking to enforce its rights under the pricing commitments what that means is that it takes both the benefits and the detractions of that relationship because u s communities drafted the pricing commitment all ambiguity is are construed against us communities and that means they're construed against market a county market a county cannot argue for a broader understanding of the pricing commitment than us communities itself has consistently repeatedly and publicly articulated i just wanted finally to address the direct contract issue that mark up a county council began with and that is that it's certain that there are twenty two million dollars approximately of sales involved here but that's not the same as saying there must be a direct contract instead there is also indisputably a third party beneficiary relationship that created the ability for mark up a county to make those purchases under which market the county in fact did make those purchases and therefore to the extent that mark hope the market county wants to sue regarding the pricing it paid for those purchases it is bound by the terms of those two contracts if i can briefly address our fees argument their owners the district court here use what it described or what this court has described as a meat axe approach that is its last large swaths of our fees fifty to seventy five percent as to certain categories while this court has permitted that approach it does require that the district court provide a clear and concise explanation tied to the record both for why the cut was made and for why the percentage was selected the district court failed to do that here instead it simply reiterated again and again that it believed those fees were excessive but as this court has repeatedly held excessive is a conclusion it is not the clear and concise explanation that's required by precedent similarly when the district court did point to the record it repeatedly revealed that it had misapprehended the nature of the record in large part we believe because of a confusing an opaque expert report that was submitted by marco but now markup in its response on this issue has never argued that in fact those errors were not in the district court's decision and were not in its underlying report instead it asked the court to simply ignore that and to focus on the conclusory excessive but even under this this court's case law excessive standing alone is a basis for remand when there is no further explanation provided here where the court provided an explanation that is divorced from the record and cut of up to ten percent of our fees without any explanation at all but anything beyond that required explanation and substantiation in the record and neither one was included and then of course the court considered it impermissible factor the allocation of work by office depot in putting a twenty percent lodestar adjustment and that was additionally an abuse of discretion  anything more to say about that let's go back to what counsel for office depot said though she said to you when you look at the master agreement what what maricopa county is trying to do is take over l a county's role is the ministries are of that agreement and that isn't second paragraph twenty three says that if if office depot charges another government entity lower prices those prices are to be extended automatically to a county what is maricopa county asking for it's not asking to administer this agreement it's not asking to change the price list it's not asking to change the list of goods it can be bought it's asking for it's right under those two clauses it's entitle to the same prices l a county is entitled to and l a county was entitle to those lower prices automatically without doing any contract administration that's the nature of our direct claim under the master agreement and that should not have been dismissed by the district court we talked to you about a material genuine issue of material fact with respect to the price and commitment can office people want you to pay no attention to their own witnesses saying well these people didn't know what they were talking about they weren't qualified they were lawyers and office depot is certainly entitled to argue that to a jury there they're entitled to say the person in our in our company who signed the contract who is our face president of government and education services didn't know what the contract meant when he signed but that's for the trier of fact to determine his testimony about what he understood and the testimony of all of the other office depot witnesses and materials that office people have that are set forth  our brief are at very least genuine evidence of evidence material evidence of a genuine issue of material fact that should have precluded summary judgment on the price and commitment issues and that is all we need we need show her the next argument office depot makes as well mr sixteen is undisclosed to ten intent doesn't matter first of all your honor there is testimony from the maricopa county witnesses that they were told by office depot that they were going to get the best price given to any governmental entity if you look at the materials as a whole including all of the attachments to the master agreement the same thing was told the l a county and in fact the most favored nation clause in the master agreement and the l a county are of p both say that they get the best prices they charge any other governmental entity in the state which would at least last time i looked at the map of california included san francisco it isn't  undisclosed intent and it's certainly again if office depot wants to argue a trial not only did these folks not know what they were doing that wasn't what we were telling people that's for the trier of fact determine based on the evidence in this record there is simply sufficient evidence to create a genuine issue of material fact in addition the ribeiro case they rely on if you look at our brief and i don't have a page cite i apologize undisclosed intent can be used against the party whose and disclosed intended use i can't testify that i had a had a a contract with judge stearns and i didn't tell him something but he's bound by my undisclosed intent i think it's different to say what judge turns into judge stern's statements of his intent disclosed to me or not or probative if i'm trying to get of i'm trying to enforce his promise against him that's a different proposition but again it doesn't matter here all of that goes to the weight of the evidence and there is a very least a genuine issue of material fact i have just a few seconds trial court should reverse a judgment and remained it to the district court further proceedings both on our claims that were dismissed in the motion to dismiss including the statutory fraud claim i haven't had a chance to talk about and vacate the summary judgment and reverse that also this matter should be tried to a jury to decide with these agreements me thank you all very much