Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-01372/USCOURTS-azd-2_14-cv-01372-6/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Maricopa County, et al.,

Plaintiff,

v. 

Office Depot Incorporated,

Defendant.

No. CV-14-01372-PHX-DWL

ORDER 

Pending before the Court are the parties’ cross-motions for summary judgment 

concerning the statute of limitations. (Docs. 208, 213.) For the following reasons, both 

motions will be denied.

BACKGROUND

I. Relevant Procedural History

On May 1, 2014, Maricopa County brought this action in state court. (Doc. 1-1 at 

4-19.) On June 19, 2014, Office Depot removed it to federal court. (Doc. 1.) The 

complaint alleged two contract-related claims (breach of contract and breach of the implied 

covenant of good faith and fair dealing) and claims for negligent misrepresentation, 

common law fraud, and violation of the Arizona Consumer Fraud Act (“ACFA”). (Id. at 

15-19.) Essentially, Maricopa County alleged that a “bundle of interrelated documents and 

contractual agreements” between various parties comprised a contract that Maricopa 

County was “free to enforce . . . against Office Depot.” (Id. at 12 ¶ 39.) 

This “bundle” included a 2006 Master Agreement between Los Angeles County and 

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Office Depot, as well as various provisions included in or incorporated into Los Angeles 

County’s Request for Proposal (“RFP”). (Id. at 8 ¶ 20, 9-11 ¶¶ 26-33.) It also included an 

Administration Agreement between U.S. Communities and Office Depot. (Id. at 8 ¶ 21.) 

The complaint alleged that the “contract terms and representations by Office Depot” led 

Maricopa County to “reasonably believe[] that under the 2006 Master Agreement Office 

Depot did in fact guarantee, and did provide, its best government pricing, without 

qualification.” (Id. at 11 ¶ 36.) Yet, the complaint alleged, “[w]hile the 2001 and 2006 

Master Agreements were in effect, Office Depot chose to violate its low price guarantee 

and sold office supplies to other governmental entities at prices materially lower than those 

offered to [Maricopa County] under the 2006 Master Agreement.” (Id. at 12 ¶ 42.) 

In June 2014, Office Depot moved to dismiss the complaint. (Doc. 10.) This motion 

was granted in part and denied in part. (Doc. 24.) The Court dismissed with prejudice the 

negligent misrepresentation, common law fraud, and ACFA claims because they were not 

pleaded with sufficient particularity and failed as a matter of law. (Id. at 17-19.) The Court 

also limited the contract-based claims. First, the Court found that Maricopa County did 

not have a direct contractual relationship with Office Depot. (Id. at 11 [“Although plaintiff 

alleges that it had a direct contractual relationship with defendant, plaintiff has not cited to 

any contract to which both it and defendant were parties. Plaintiff is not a party to the 

Master Agreement and plaintiff was not a party to any of the other agreements attached to 

the RFP or defendant’s response to the RFP.”].) The Court further found that Maricopa 

County failed to allege it was an intended beneficiary of the Master Agreement and thus 

dismissed the contract-based claims premised on an alleged breach of the Master 

Agreement. (Id. at 13-14.) However, the Court found that Maricopa County was a thirdparty beneficiary of the Administration Agreement and therefore could proceed on the 

contract-based claims premised on an alleged breach of the Pricing Commitment in the 

Administration Agreement. (Id. at 15-16.) 

Maricopa County moved for reconsideration as to its ACFA claim and as to the 

ruling that Maricopa County had no direct contractual relationship with Office Depot. 

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(Doc. 26.) This motion was denied. (Doc. 27.)

In June 2016, the parties cross-moved for summary judgment on the remaining 

contract-based claims. (Docs. 90, 91.) The Court granted summary judgment to Office 

Depot, accepting Office Depot’s interpretation of the Pricing Commitment and finding 

there was no breach under that interpretation. (Doc. 105.) Office Depot had also moved 

for partial summary judgment under the theory that most of Maricopa County’s alleged 

damages fell outside the statute of limitations (Doc. 91 at 16-17), but the Court declined to 

address that argument in light of the determination that Office Depot was entitled to 

summary judgment on other grounds.

In December 2016, Maricopa County appealed. (Doc. 109.) 

In December 2018, the Ninth Circuit issued a memorandum decision that affirmed 

in part, and reversed in part, the Court’s earlier decisions. (Doc. 136-1.) Because the 

parties now dispute the scope of the Ninth Circuit’s ruling—and how it affects the scope 

of the mandate—it is important to be precise when summarizing its contents. In the first 

portion of its decision, the Ninth Circuit upheld the dismissal of the negligent 

misrepresentation, fraud, and ACFA claims. (Doc. 136-1 at 4-5.) In the second portion 

of its decision, the Ninth Circuit upheld the dismissal of Maricopa County’s “contract 

claims based on the Master Agreement.” (Id. at 5.) Specifically, the court held that 

Maricopa County “lack[ed] standing” to enforce the price guarantee contained in Section 

23 of the Master Agreement because (1) “[t]hat right vested solely in LA County,” (2) 

“[t]he Agreement did not authorize piggybacking agencies such as Maricopa to enforce the 

price guarantee secured to LA County in Section 23,” and (3) “the implicit contract created 

by the business relationship between Maricopa and Office Depot, to the extent that any 

such contract existed, does not empower Maricopa to enforce the provisions of contracts 

executed by other parties.” (Id.) In support of these conclusions, the court cited an Arizona 

case that applied Arizona substantive law. (Id., citing Nahom v. Blue Cross & Blue Shield 

of Arizona, Inc., 885 P.2d 1113, 1117 (Ariz. Ct. App. 1994).) Finally, in the third portion 

of its decision, the Ninth Circuit reversed the grant of summary judgment in Office Depot’s 

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favor on Maricopa County’s claim for breach of the Pricing Commitment within the 

Administration Agreement “because material disputes of fact remain . . . as to whether the 

Administration Agreement required Office Depot to provide piggybacking entities with the 

lowest pricing that Office Depot offered to any state or local government entity nationwide, 

including San Francisco (Maricopa’s position), or whether ‘available’ meant the price the 

public agency would actually receive under another cooperative purchasing agreement for 

which it was eligible to participate (Office Depot’s position).” (Id. at 6-7.) In support of 

this conclusion, the court cited a case that applied California substantive law. (Id., citing 

Cachil Dehe Band of Wintun Indians v. California, 618 F.3d 1066, 1077 (9th Cir. 2010).)

In April 2019, after the Ninth Circuit issued its mandate, this case was reassigned 

to the undersigned judge. (Docs. 136, 145.) Afterward, the parties filed an array of pretrial 

motions.

On October 9, 2019, the Court issued a 48-page order resolving seven motions in 

limine (Docs. 155, 156, 157, 158, 159, 160, 161), two motions to exclude expert opinions 

(Docs. 171, 172), supplemental briefs regarding whether Maricopa County is entitled to a 

jury trial (Docs. 193, 195, 196), and supplemental briefs concerning the applicability of the 

Uniform Commercial Code (Docs. 198, 199). (Doc. 203.) 

One of Office Depot’s motions in limine sought to exclude all evidence barred by 

the statute of limitations. (Doc. 157.) The Court denied this motion without prejudice and 

instead authorized Office Depot to file a motion for partial summary judgment limited to 

the statute of limitations. (Doc. 203 at 15.) Afterward, Office Depot timely filed a motion 

for partial summary judgment (Doc. 208), Maricopa County filed a cross-motion for partial 

summary judgment and a response to the motion (Doc. 213),1 Office Depot filed a reply 

(Doc. 218), and Maricopa County filed a reply (Doc. 223). 

 

1 The Court did not authorize Maricopa County to cross-move for summary 

judgment. Nevertheless, because the issue on which Maricopa County’s cross-moves—

whether “Arizona law provides the statute of limitations governing this dispute” (Doc. 213 

at 1)—is bound up with the issues raised by Office Depot, the Court will consider (and 

deny) Maricopa County’s cross-motion on the merits. Maricopa County also requested 

oral argument, but that request is denied because the issues have been fully briefed and oral 

argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b); LRCiv. 7.2(f).

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II. Relevant Factual Background

The Administration Agreement between Office Depot and U.S. Communities took 

effect on January 2, 2006. (Doc. 209 at 2.) The Pricing Commitment is one of three 

Commitments set forth in the Supplier Commitments, a single-page document incorporated 

by reference in the Administration Agreement. (Doc. 193-1 at 2 § 8 [incorporation 

provision]; id. at 6 [Supplier Commitments].) The Pricing Commitment provides:

A commitment that supplier’s U.S. Communities pricing is the lowest 

available pricing (net to buyer) to state and local public agencies nationwide 

and a further commitment that, if a state or local public agency is otherwise 

eligible for lower pricing through a federal, state, regional or local contract, 

the supplier will match the pricing under U.S. Communities.

(Id. at 6.) 

As noted in the Ninth Circuit’s order, one of the key disputes in this case concerns 

the meaning of the Pricing Commitment. Maricopa County contends the Pricing 

Commitment “require[d] [Office Depot’s] U.S. Communities pricing to be . . . the lowest 

available pricing (net to buyer) to state and local public agencies nationwide, and that if 

[Office Depot] offered lower pricing to public agencies outside of U.S. Communities then 

that lower pricing bec[ame] [Office Depot’s] U.S. Communities price.” (Doc. 186 at 11.) 

Maricopa County further contends that Office Depot violated this provision by entering 

into a contract with the City and County of San Francisco (“CCSF”) that offered lower 

pricing than the U.S. Communities contract. (Notably, Maricopa County isn’t arguing it 

should have been charged the same prices CCSF actually paid under that contract. Instead, 

Maricopa County’s theory is that it was entitled to the prices Office Depot should have

been charging CCSF under the other contract, even though CCSF was actually charged and 

paid higher prices.) Meanwhile, Office Depot’s position is that the Pricing Commitment 

simply required it to offer its lowest available pricing to the subset of state and local public 

agencies who were members of U.S. Communities, “such that, if a U.S. Communities 

member was ‘otherwise eligible’ for lower pricing, Office Depot would offer that member 

that lower pricing under the aegis of U.S. Communities.” (Doc. 199 at 2. See also Doc. 

186 at 11-12 [“The second clause of the Pricing Commitment . . . sets out how to address 

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those occasional instances when an Office Depot contract potentially had lower pricing: if, 

based on the agency’s usage, it would save money purchasing under a different contract 

held by Office Depot that the agency was eligible to use, Office Depot would treat that 

pricing as U.S. Communities’ pricing.”].)

In 2008, a former Office Depot salesman, David Sherwin, began sending faxes and 

emails to government agencies in which he alleged that Office Depot was engaging in 

various forms of pricing misconduct, including violations of the “best pricing” guarantees 

provided in the U.S. Communities contract. (Doc. 209 ¶ 11; Doc. 214 ¶ 11.) 

In April 2008, in part in response to these allegations, Maricopa County requested 

that U.S. Communities conduct “a contract pricing review of [its] entire 2007 purchases 

[from Office Depot] of more than $4.6M.” (Doc. 209-1 at 110.) 

On May 21, 2008, U.S. Communities sent an email to a host of individuals, 

including Maricopa County representatives, that addressed Maricopa County’s audit 

request and Mr. Sherwin’s allegations. (Doc. 209 ¶ 12-23; Doc. 209-1 at 110-31; Doc. 214 

¶ 12-23, 192.) The email concluded that Maricopa County had not been overcharged. 

(Doc. 209-1 at 110.) The email also contained some forwarded materials from Mr. 

Sherwin, which contained references to Office Depot’s contracts with Georgia, California, 

Nebraska, and North Carolina but no reference to Office Depot’s contract with CCSF. (See 

also Doc. 214 ¶ 200.) 

On June 4, 2008, U.S. Communities forwarded Office Depot’s response to 

Sherwin’s allegations to a host of individuals, including Maricopa County representatives. 

(Doc. 209 ¶ 24; Doc. 209-1 at 137-40; Doc. 214 ¶ 24.) In the response letter, which 

contained no mention of the CCSF contract, Office Depot stated in relevant part that “Mr. 

Sherwin’s allegations are generally based on erroneous or distorted facts (if they are based 

on facts at all)” and “we have reviewed Mr. Sherwin’s allegations, and we believe they are 

wholly without merit.” (Doc. 209-1 at 138.)

On September 26, 2008, a Maricopa County representative received an email from 

Mr. Sherwin. (Doc. 209 ¶¶ 28-31; Doc. 209-2 at 7-16; Doc. 214 ¶¶ 28-31.) Although this 

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email alleged that Office Depot had entered into a contract with the state of North Carolina 

that offered lower pricing than the U.S. Communities contract, it contained no mention of, 

or allegations concerning, the CCSF contract. (Id. See also Doc. 214 ¶ 200.) 

Between October 13-22, 2008, a Maricopa County representative received a series 

of additional emails from Mr. Sherwin. (Doc. 209 ¶¶ 32-40; Doc. 209-2 at 18-36; Doc. 

214 ¶¶ 32-40.) Although these emails identified additional Office Depot contracts that 

purportedly offered lower pricing than the U.S. Communities contract, it contained no 

mention of, or allegations concerning, the CCSF contract. (Id. See also Doc. 214 ¶ 200.) 

On October 28, 2008, a U.S. Communities representative sent an email to a host of 

individuals, including Maricopa County representatives, addressing “Mr. Sherwin’s most 

recent round of allegations” concerning the pricing available under Office Depot’s 

contracts with California, North Carolina, and the city of Berkeley. (Doc. 209-2 at 38.) 

This email concluded that, “[a]s with Mr. Sherwin’s prior allegations, his current 

allegations contain numerous errors and misleading statements.” (Id.) Additionally, the 

email included, as an attachment, an email from Office Depot averring that any pricing 

difference between those contracts and the U.S. Communities contract was 

“inconsequential.” (Id. at 40.) 

Between November 2008 and July 2009, Mr. Sherwin kept sending emails to 

Maricopa County representatives in which he alleged that Office Depot was engaging in 

pricing-related misconduct. (Doc. 209 ¶¶ 47-88; Doc. 214 ¶¶ 47-88.) None of these emails 

mentioned, or contained allegations concerning, the CCSF contract. (Id. See also Doc. 

214 ¶ 200.) 

On December 18, 2009, CCSF issued an audit report concerning its contract with 

Office Depot, which concluded that CCSF had been overcharged by several million dollars. 

(Doc. 214 ¶ 202; Doc. 214-1 at 43-89.) 

On December 22, 2009, the CCSF audit report was provided to U.S. Communities 

and Office Depot and otherwise became publicly available. (Doc. 214 ¶ 202; Doc. 214-1 

at 91-92.)

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By no later than January 4, 2011, Maricopa County became aware of the CCSF audit 

report. (Doc. 214 ¶ 203; Doc. 209-3 at 43-46 [January 4, 2011 email in which Maricopa 

County representatives were forwarded the summary of an upcoming web seminar 

concerning the CCSF audit].) Around that time, Maricopa County began conducting its 

own pricing review/audit. (Doc. 209 ¶ 150; Doc. 214 ¶ 150.)

On August 26, 2011, Maricopa County sent a letter to Office Depot explaining that 

“[w]e are conducting a review of Maricopa County’s participation in the Master 

Agreement” and requesting copies of certain materials. (Doc. 214 ¶ 205; Doc. 214-1 at 

98.) However, Office Depot did not provide all of the requested information. (Doc. 214 ¶ 

207.)

On October 8, 2012, Maricopa County completed its audit and concluded, “based 

on price lists approved by [CCSF],” that it had been overcharged by several million dollars 

“due to Office Depot’s failure to honor low price guarantees.” (Doc. 204 ¶ 151; Doc. 214 

¶ 151; Doc. 214-1 at 105.)

Office Depot and Maricopa County subsequently entered into a tolling agreement 

that tolled claims for the period commencing on August 23, 2013. (Doc. 204 ¶ 152; Doc. 

204-4 at 42-44; Doc. 214 ¶ 152.)

ANALYSIS

I. Legal Standard

A party moving for summary judgment “bears the initial responsibility of informing 

the district court of the basis for its motion, and identifying those portions of ‘the pleadings, 

depositions, answers to interrogatories, and admissions on file, together with the affidavits, 

if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “In order to carry its burden of 

production, the moving party must either produce evidence negating an essential element 

of the nonmoving party’s claim or defense or show that the nonmoving party does not have 

enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” 

Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). “If . . . 

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[the] moving party carries its burden of production, the nonmoving party must produce 

evidence to support its claim or defense.” Id. at 1103.

“Summary judgment is appropriate when ‘there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law.’” Rookaird v. BNSF 

Ry. Co., 908 F.3d 451, 459 (9th Cir. 2018) (quoting Fed. R. Civ. P. 56(a)). “A genuine 

dispute of material fact exists if ‘there is sufficient evidence favoring the nonmoving party 

for a jury to return a verdict for that party.’” United States v. JP Morgan Chase Bank 

Account No. Ending 8215 in Name of Ladislao V. Samaniego, VL: $ 446,377.36, 835 F.3d 

1159, 1162 (9th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-

50 (1986)). The court “must view the evidence in the light most favorable to the 

nonmoving party and draw all reasonable inference in the nonmoving party’s favor.” 

Rookaird, 908 F.3d at 459. Summary judgment is also appropriate against a party who 

“fails to make a showing sufficient to establish the existence of an element essential to that 

party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 

U.S. at 322.

II. The Applicable Choice-Of-Law Provision

The underlying contracts in this case contain several different choice-of-law clauses 

and the parties’ first disagreement concerns which clause should be deemed applicable.

Office Depot argues the relevant clause is paragraph 22 of the Administration 

Agreement, which provides that “[t]his Agreement shall be governed exclusively by and 

construed in accordance with the applicable laws of the State of California as a contract 

executed and delivered within the State of California and to be fully performed within the 

State of California.” (Doc. 208 at 2 & n.3, citing Doc. 209-1 at 12.) Maricopa County 

disagrees, arguing in its response/cross-motion that because the Administration Agreement 

“incorporates by reference” the Master Agreement and the Master Intergovernmental 

Cooperative Purchasing Agreement (“MICPA”), both of which contain clauses stating they 

should be construed in accord with the law of the state of purchase (Doc. 209-3 at 32; Doc. 

214-1 at 2), and because Office Depot and Maricopa County became “direct” bilateral 

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contractual partners at some point after the Administration Agreement was executed, the 

relevant contractual clauses from the Master Agreement and MICPA mandate the 

application of Arizona law. (Doc. 213 at 2-3, 6-7, 14 n.4.) In its reply, Office Depot argues 

that Maricopa County’s “direct contract” theory is barred by the mandate rule and by the 

law of the case. (Doc. 218 at 2-3.) Finally, in its reply, Maricopa County argues the law 

of the case arguably supports its position (because the Court stated, in a 2014 order, that 

Arizona law controlled the statute of limitations), that the Court retains discretion in any 

event to revisit the law of the case, and that the mandate rule is inapplicable because the 

Ninth Circuit’s memorandum decision doesn’t contain any discussion of statute-oflimitations or choice-of-law issues. (Doc. 223 at 1-6.)

Under the law of the case doctrine, “a court is generally precluded from 

reconsidering an issue previously decided by the same court, or a higher court in the 

identical case.” Milgard Tempering, Inc. v. Selas Corp. of Am., 902 F.2d 703, 715 (9th

Cir. 1990). “Law of the case directs a court’s discretion, it does not limit the tribunal’s 

power.” Arizona v. California, 460 U.S. 605, 618 (1983). The mandate rule, on the other 

hand, provides that when a case has been appealed and remanded, “whatever was before 

[the appellate court], and disposed of by its decree, is considered as finally settled.” United 

States v. Thrasher, 483 F.3d 977, 981 (9th Cir. 2007) (quoting In re Sanford Fork & Tool 

Co., 160 U.S. 247, 255-56 (1895)). 

In the Ninth Circuit, the mandate is “jurisdictional” rather than an iteration of the 

law of the case doctrine, meaning that a district court has no authority to depart from 

matters settled by appellate decision. Id. at 982. However, the “rule of mandate allows a 

lower court to decide anything not foreclosed by the mandate.” Herrington v. Cty. Of 

Sonoma, 12 F.3d 901, 904 (9th Cir. 1993). “[I]n construing a mandate, the lower court 

may consider the opinion the mandate purports to enforce as well as the procedural posture 

and substantive law from which it arises.” United States v. Kellington, 217 F.3d 1084, 

1093 (9th Cir. 2000). “[T]he ultimate task is to distinguish matters that have been decided 

on appeal, and are therefore beyond the jurisdiction of the lower court, from matters that 

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have not.” Id.

Here, the mandate rule compels the conclusion that paragraph 22 of the 

Administration Agreement is the applicable choice-of-law provision. The starting point 

for the analysis is the December 2016 summary judgment order. There, the Court 

specifically rejected Maricopa County’s theory that it could assert a direct breach-ofcontract claim against Office Depot premised on the Master Agreement or the MICPA and 

concluded that Maricopa County could only assert a breach of the Administration 

Agreement under a third-party beneficiary theory. (Doc. 105 at 8 [“Plaintiff’s remaining 

contract claims are not based on allegations that defendant breached the Master Agreement 

or the MICPA. Rather, plaintiff’s remaining contract claims are based on allegations that 

defendant breached the Pricing Commitment in the Administration Agreement.”].) After 

reaching those conclusions, the Court further held that Maricopa County’s claims under 

the Administration Agreement were governed by California law. (Id. [“The Administration 

Agreement plainly provides that California law applies to any disputes as to the 

interpretation of that agreement.”].)

The Ninth Circuit did not reverse any of these conclusions in its December 2018 

memorandum decision. To the contrary, the appellate court affirmed the dismissal of 

“Maricopa’s contract claims based on the Master Agreement,” holding that Maricopa 

County wasn’t entitled to assert any claims premised on an alleged breach of the Master 

Agreement’s price guarantee and that “the implicit contract created by the business 

relationship between Maricopa and Office Depot, to the extent that any such contract 

existed, does not empower Maricopa to enforce provisions of contracts executed by other 

parties.” (Doc. 136-1 at 5.) Finally, as for Maricopa County’s claims arising from the 

Administration Agreement, although the appellate court reversed the grant of summary 

judgment, it did so only due to the presence of disputed issues of fact concerning how the 

Pricing Commitment within that contract should be interpreted. (Id. at 7-8.) The appellate 

court did not discuss—and, thus, did not overrule—the Court’s determination that 

California law governs the interpretation of the Administration Agreement. Moreover, the 

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case cited by the appellate court in support of its determination that disputed issues of fact 

remain—Cachil Dehe Band of Wintun Indians v. California, 618 F.3d 1066 (9th Cir. 

2010)—is a case applying California law. Id. at 1073 (“In practical terms, we rely on 

California contract law . . . .”). This, if anything, was an implicit affirmation of the Court’s 

determination that the Administration Agreement is governed by California law.

Given this backdrop, Maricopa County’s attempt to argue that the choice-of-law 

provisions within the Master Agreement and MICPA are the applicable provisions here, 

because it had a “direct” contractual relationship with Office Depot under those contracts, 

necessarily fails. As noted, the Ninth Circuit affirmed the Court’s determination that 

Maricopa County cannot assert contractual claims against Office Depot under the Master 

Agreement or the MICPA, affirmed the Court’s determination that Maricopa County’s 

contractual claims arise only under the Administration Agreement, and implicitly affirmed 

(or, at a minimum, didn’t overrule) the Court’s determination that the Administration 

Agreement is governed by California law. Under the mandate rule, these matters must be 

“considered as finally settled.” Thrasher, 483 F.3d at 981 (citation omitted). 

Finally, it is true that, in November 2014, the Court rejected Office Depot’s 

argument that “[Maricopa County’s] breach of contract claims in Count II are barred by 

the statute of limitations” because the Court determined that “pursuant to A.R.S. § 12-510, 

plaintiff is exempt from the statute of limitations.” (Doc. 24 at 10-11.) However, the 2014 

order did not address the threshold choice-of-law question. (Id.) That issue was raised and 

decided for the first time as part of the summary judgment briefing in 2016. (Doc. 105 at 

7.) Moreover, the Court emphasized in its summary judgment order that its prior 

application of the Arizona statute of limitations did not pertain to the Administration 

Agreement, the only contract that remained at issue. (Id. at 6-7.) In short, the choice-oflaw discussion the Ninth Circuit’s decision left undisturbed—the message sent by its 

silence—is that California law governs disputes arising from the Administration 

Agreement. The Court cannot vary from that mandate.

...

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III. Whether The Administration Agreement’s Choice-Of-Law Provision Governs The 

Statute Of Limitations

Maricopa County next argues that, even assuming “the California choice of law 

provision in the Administration Agreement controls here . . . [t]his nonetheless leaves open 

the issue of whether that choice of law extends to the statute of limitations.” (Doc. 213 at 

3-4.) According to Maricopa County, the rule in the Ninth Circuit, as established by Des 

Brisay v. Goldfield Corp., 637 F.2d 680 (9th Cir. 1981), is that unless a contractual choiceof-law provision expressly states that it governs the statute of limitations, the clause should 

be narrowly construed to govern only “the choice of substantive law.” (Id.) In its reply, 

Office Depot argues that Des Brisay is an “outdated authority that applies a nowsuperseded version of the Restatement” and that subsequent cases, including Hambrecht 

& Quist Venture Partners v. Am. Med. Int’l, Inc., 38 Cal. App. 4th 1532 (1995), confirm 

that a contractual choice-of-law provision “is operative as to all issues, including the statute 

of limitations.” (Doc. 213 at 2-3.) In its reply, Maricopa County argues that Des Brisay

remains binding law and that Hambrecht is distinguishable. (Doc. 223 at 6-7.)

As an initial matter, Maricopa County’s reliance on Des Brisay is misplaced. There, 

the plaintiff asserted a “federal securities fraud” claim in federal court. 637 F.2d at 681-

82. Although the forum state (Washington) applied a three-year statute of limitations to 

securities claims, the plaintiff argued his claim was subject to a longer limitations period 

because the underlying contract included a clause providing that it “shall be governed and 

interpreted according to the laws of the [Canadian] province of British Columbia,” which 

applies a six-year limitations period to such claims. Id. The Ninth Circuit rejected this 

argument, holding that “the intention of the parties to contractually agree upon a limitations 

period should be clearly expressed before we consider whether it is permissible to do so in 

a federal securities case.” Id. at 682 (emphasis added). Notably, the court did not address 

whether the statute of limitations applicable to the plaintiff’s separate state-law claim for 

breach of contract should be governed by the law of British Columbia—it simply affirmed 

the dismissal of that claim for lack of pendent jurisdiction. Id. 

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Since Des Brisay was decided in 1981, multiple courts, including the Ninth Circuit, 

have recognized that its holding was a narrow one that addresses only when a contractual 

choice-of-law provision may be used to extend the statute of limitations for a federal claim. 

See, e.g., In re Sterba, 852 F.3d 1175, 1178-79 (9th Cir. 2017); Hatfield v. Halifax PLC, 

564 F.3d 1177, 1183 (9th Cir. 2009) (rejecting defendants’ argument that the choice-oflaw provision in the underlying contract “never intended . . . to include the statute of 

limitations” and holding that Des Brisay was inapplicable because it was “a federal 

securities law case . . . [whereas] this is a diversity action, [so state] law, not federal law, 

controls”); In re W. United Nurseries, Inc., 2000 WL 34446155, *8 n.8 (D. Ariz. 2000) 

(“The bankruptcy judge relied on [Des Brisay] for the proposition that limitations periods 

usually are not included in general choice-of-law clauses. However, the Des Brisay court 

was considering the narrow issue of the proper limitations period under federal securities 

law.”).

2

 Thus, Des Brisay does not control the issue presented here—how to determine the 

statute of limitations applicable to Maricopa County’s state-law claims for breach of 

contract and breach of the implied covenant of good faith and fair dealing.

To resolve that issue, the Court must apply Arizona’s choice-of-law rules. See, e.g., 

Patton v. Cox, 276 F.3d 493 (9th Cir. 2002) (“When a federal court sits in diversity, it must 

look to the forum state’s choice of law rules to determine the controlling substantive law.”). 

The parties agree that Arizona follows the Restatement (Second) of Conflict of Laws. See 

generally Cardon v. Cotton Lane Holdings, Inc., 841 P.2d 198, 202 (Ariz. 1992); In re W. 

United Nurseries, Inc., 2000 WL 34446155 at *7 (“Arizona has followed the Restatement 

(Second) of Conflict of Laws in determining choice-of-law issues since its initial 

publication.”). The parties disagree, however, as to which provision of the Restatement 

 

2

In an unpublished decision, the Ninth Circuit affirmed the district court’s choice-oflaw analysis. In re W. United Nurseries, Inc., 338 Fed. App’x 706, 708 (9th Cir. 2009) 

(“In a thorough and accurate ruling, the District Court . . . held that the New York statute 

of limitations applies, because the Limited Partnership Note and Security Agreement, 

containing or incorporating New York choice of law provisions, are the relevant 

contractual documents, and thus control under the analysis required by the Restatement 

(Second) of Conflict of Laws. We cannot improve on the District Court’s discussion. This 

court has recognized that federal choice of law rules follow the modern version of the 

Restatement. The district court properly applied New York’s statute of limitation.”) 

(citations omitted).

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provides the starting point for the analysis—Maricopa County points to Section 142 (Doc. 

213 at 4) while Office Depot points to Section 187 (Doc. 208 at 1-2; Doc. 218 at 2-3).

Office Depot has the better side of this argument. Comment c to Section 142 

specifically notes that “[t]he validity of a contractual provision limiting the time in which 

an action may be brought under the contract is determined by the law selected by 

application of the rules of §§ 187-188.” Id. Put another way, “where a contract includes a 

choice of law provision, ‘[t]he validity of a contractual provision limiting the time in which 

an action may be brought under the contract is determined by the law selected by 

application of’ Restatement sections 187 and 188, not section 142.” Izquierdo v. Easy 

Loans Corp., 2014 WL 2803285, *3 (D. Nev. 2014). See also Rindlisbacher v. Steinway 

& Sons Inc., 2019 WL 1932113, *6 (D. Ariz. 2019) (“While Plaintiffs are correct that 

Arizona applies § 142 to the choice of law analysis where the limitations period is at issue, 

that analysis is appropriate only if § 187 does not apply.”); Swanson v. Image Bank, Inc., 

77 P.3d 439, 441 (Ariz. 2003) (“If a contract includes a specific choice-of-law provision, 

we must determine whether that choice is ‘valid and effective’ under Restatement § 187.”). 

The Court will therefore begin with Section 187.

Section 187(1) provides that “[t]he law of the state chosen by the parties to govern 

their contractual rights and duties will be applied if the particular issue is one which the 

parties could have resolved by an explicit provision in their agreement directed to that 

issue.” However, comment c to Section 187 further provides that “[w]hether the parties 

could have determined a particular issue by explicit agreement directed to that issue is a 

question to be determined by the local law of the state selected by application of the rule 

of § 188.” Thus, “the Court must determine under the factors set forth in Section 188, 

which state’s law would control the instant dispute absent the choice-of-law clause, and 

whether under that state’s law, the parties could validly [alter] the statute of limitations 

period by contract.” Nexus Solutions Grp., Inc. v. Parametric Tech. Corp., 2005 WL 

8165550, *7 (D. Idaho 2005).

Section 188(2) identifies five factors that courts must consider when determining

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which state has the “most significant relationship to the transaction and the parties”: (1) the 

place of contracting, (2) the place of negotiation of the contract, (3) the place of 

performance, (4) the location of the subject matter of the contract, and (5) the domicile, 

residence, nationality, place of incorporation, and place of business of the parties. As 

Office Depot correctly argues in its motion (Doc. 208 at 3-4 & n.5), these factors show that 

California has the most significant relationship here. Maricopa County’s arguments to the 

contrary (Doc. 213 at 5-7) are based on the mistaken belief that it was Office Depot’s 

contractual counterparty. In fact, the parties to the Administration Agreement were U.S. 

Communities and Office Depot—Maricopa County is simply a third-party beneficiary and, 

as discussed in the preceding section, is no longer asserting any direct contractual claims—

and Maricopa County doesn’t dispute that U.S. Communities is based in California, that 

the contract became effective upon U.S. Communities’ execution of it in California, and 

that U.S. Communities performed its obligations under the contract in California. (Doc. 

209 ¶¶ 2-4; Doc. 214 ¶¶ 2-4.) Moreover, the choice-of-law clause itself states that the 

Administration Agreement was “executed and delivered within the State of California and 

[will] be fully performed within the State of California.” (Doc. 209-1 at 12.)

Turning back to Section 187(1), the question is thus whether, under California law, 

it is permissible for parties to alter the statute of limitations by contract. The answer is yes. 

Atkins v. Calypso Sys., Inc., 2015 WL 5856881, *8-9 (D. Ariz. 2015) (“[T]the parties could 

have explicitly agreed to apply California’s statute of limitations. California law allows 

such an agreement . . . . Therefore, the parties’ contractual choice of law operates to apply 

California’s statute of limitations to Atkins’s contract-based claims. Such claims include 

breach of contract as well as breach of covenant of good faith and fair dealing.”). 

Furthermore, the rule in California is that “a standard choice-of-law provision (which states 

that a contract shall be governed by the ‘laws’ of a particular jurisdiction) incorporates the 

statutes of limitations of the chosen state.” Hambrecht, 38 Cal. App. 4th at 1536. 

Accordingly, the choice-of-law provision in the Administration Agreement requires 

the application of California law concerning the statute of limitations.

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IV. Applicability Of The Discovery Rule To Third-Party Beneficiaries

California law provides a four-year statute of limitations for both of Maricopa 

County’s remaining claims, breach of contract and breach of the implied covenant of good 

faith and fair dealing. Cal. Civ. Proc. Code § 337; Krieger v. Nick Alexander Imports, Inc., 

234 Cal. App. 3d 205, 220 (1991) (noting that “[a]n allegation of breach of the implied 

covenant of good faith and fair dealing is an allegation of breach of an ‘ex contractu’

obligation, namely one arising out of the contract itself.”). 

Office Depot asserts, and Maricopa County does not appear to dispute, that the 

breach giving rise to the present claim began occurring in 2006. (Doc. 208 at 6-7; Doc. 

213 at 13.) The parties entered into a tolling agreement on August 23, 2013. (Doc. 203 at 

14.) Thus, for Maricopa County’s suit to be timely, some of the actions giving rise to 

liability must have occurred after August 23, 2009 (four years before entering into the 

tolling agreement) or the accrual of the cause of action must have been delayed. 

Maricopa County relies upon the so-called “discovery rule” to argue that its claims 

did not accrue until after August 2009. (Doc. 213 at 10-16.) In general, “[t]he discovery 

rule postpones accrual of a cause of action until the plaintiff discovers, or has reason to 

discover, the cause of action.” NBCUniversal Media, LLC v. Super. Ct., 225 Cal. App. 4th

1222, 1232 (2014). Under the discovery rule, the cause of action accrues when “the

plaintiff has information of circumstances sufficient to put a reasonable person on inquiry, 

or has the opportunity to obtain knowledge from sources open to his or her investigation.” 

Graham v. Hansen, 128 Cal. App. 3d 965, 972 (1982).

Office Depot argues that Maricopa County’s reliance on the discovery rule is 

misplaced for several reasons. The first is a pure legal argument—Office Depot contends 

that, under California law, the discovery rule cannot be invoked by a third-party 

beneficiary. (Doc. 208 at 8-10; Doc. 218 at 4.) To support this contention, Office Depot 

cites two cases. First, in Skylawn v. Super. Ct., 88 Cal. App. 3d 316 (1979), the court 

addressed whether a third-party beneficiary’s cause of action accrued at the time the 

contract was made or whether the third party had to assent to the contract before the cause 

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of action could arise. Id. at 318. The court held that the cause of action accrued

immediately upon execution of the contract and that the plaintiffs’ suit was therefore timebarred. Id. at 320. Second, in Sanders v. Am. Cas. Co. of Reading, Pa., 269 Cal. App. 2d 

306 (1969), the court analyzed whether a contractual provision agreeing to a one-year 

statute of limitations bound a nonparty plaintiff or whether the plaintiff could avail himself 

of the longer, default statute of limitations. Id. at 308. The court held that the plaintiff was 

bound by the shorter statute of limitations specified in the contract. Id. at 310. 

Neither Skylawn nor Sanders establishes that third-party beneficiaries are 

categorically barred from invoking the discovery rule in California. Neither case even 

mentioned the discovery rule. Moreover, the common holding of these cases is that a third 

party seeking to enforce a contract is bound by the terms of the contract, should be treated 

no differently than the contracting parties, and need not separately assent to be bound. 

Skylawn, 88 Cal. App. 3d at 319 (“The general rule is that . . . the beneficiary has no rights 

greater than those of the promisor or promisee.”); Sanders, 269 Cal. App. 2d at 310 (“When 

plaintiff seeks to secure benefits under a contract as to which he is a third-party beneficiary, 

he must take that contract as he finds it.”). See also Perez-Encinas v. AmerUs Life Ins. 

Co., 468 F. Supp. 2d 1127, 1134 (N.D. Cal. 2006) (citing Skylawn and Sanders for the 

proposition that “[a] third-party beneficiary is subject to the same limitations period as the 

promisee to the contract that created the rights of the beneficiary”). That holding does not 

compel the conclusion that the discovery rule is inapplicable to third parties. To the 

contrary, it suggests that if a party to a contract might be entitled to invoke the discovery 

rule, a third-party beneficiary should be, too. Cf. Mills v. Forestex Co., 108 Cal. App. 4th

625, 638, 642 (2003) (applying the discovery rule to a breach of warranty claim brought 

by a third-party warranty beneficiary). Accordingly, Maricopa County, as a third-party 

beneficiary of the Administration Agreement, is not precluded as a matter of law from 

using the discovery rule to delay the accrual of the statute of limitations.

...

...

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V. Application Of The Discovery Rule To Maricopa County’s Claims

Office Depot next argues that, even if a third-party beneficiary might theoretically 

be entitled to invoke the discovery rule, Maricopa County cannot prevail on a delayedaccrual claim under the facts of this case. (Doc. 208 at 101-15.) Specifically, Office Depot 

argues that (1) Maricopa County received actual notice of its potential claim by no later 

than 2008, when Maricopa County representatives began receiving emails from Mr. 

Sherwin accusing Office Depot of overcharging on government contracts, and (2) 

alternatively, Maricopa County “had the opportunity” to discover its claims by 2008 

because it could have obtained access to the CCSF contract at that time, conducted an 

investigation, and learned enough to file suit. (Id.) Maricopa County, in contrast, argues 

that Mr. Sherwin’s emails didn’t provide sufficient notice because they didn’t contain any 

allegations concerning the CCSF contract, that the CCSF pricing information wasn’t 

available to it in 2008, and that it “had no specific information about potential overcharges 

to CCSF until the CCSF audit issued in December of 2009.” (Doc. 213 at 10-16.) In its 

reply, Office Depot argues that Maricopa County should not be allowed to 

“compartmentaliz[e] its suspicion of wrongdoing” to the CCSF contract and that, because 

Maricopa County generally suspected in 2008 that Office Depot may have breached the 

Pricing Commitment, it should have filed suit at that time (or, at least, within four years) 

and then used the discovery process to obtain the facts necessary to establish its claim 

pertaining to the CCSF contract. (Doc. 218 at 6-8.) 

As noted, the discovery rule “postpones accrual of a cause of action until the 

plaintiff discovers, or has reason to discover, the cause of action.” Fox v. Ethicon EndoSurgery, Inc., 35 Cal. 4th 797, 807 (2005). “A plaintiff has reason to discover a cause of 

action when he or she has reason at least to suspect a factual basis for its elements.” Id. 

“If a person becomes aware of facts which would make a reasonably prudent person 

suspicious, he or she has a duty to investigate further and is charged with knowledge of 

matters which would have been revealed by such an investigation.” McCoy v. Gustafson, 

180 Cal. App. 4th 56, 108 (2009). Knowledge of “the specific facts” supporting a claim is 

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unnecessary; a “suspicion of wrongdoing” is what causes a claim to accrue under the 

discovery rule. Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1111 (1988) (quotation marks 

omitted). 

Given these principles, the Court concludes that disputed issues of material fact 

preclude the entry of summary judgment in either party’s favor concerning when Maricopa 

County’s claims accrued.3 Although Office Depot has presented an array of evidence 

establishing that, beginning in 2008, Maricopa County should have suspected (and did

suspect) that Office Depot was engaging in some form of pricing-related misconduct, the 

emails from Mr. Sherwin did not contain any allegations concerning the CCSF contract. 

Instead, the emails alleged that Office Depot was offering lower pricing under certain other 

contracts, and Office Depot and U.S. Communities responded to Mr. Sherwin’s allegations 

by forcefully and repeatedly declaring that he was wrong. Reasonable jurors could 

disagree about whether this state of affairs should have put Maricopa County on notice that 

an entirely different contract of which Maricopa County was unaware—Office Depot’s 

contract with CCSF, which was apparently one of innumerable contracts Office Depot had 

with government agencies around the country—actually offered lower pricing. Reasonable 

jurors also could disagree about whether the terms of the CCSF contract were simply “the 

specific facts” Maricopa County needed to establish its suspected claim (in which case the 

discovery rule would not apply, see Jolly, 751 44 Cal. 3d at 1111). Finally, even if the 

CCSF contract was theoretically available to Maricopa County upon request in 2008, 

California courts “have found no case suggesting the existence of public records precludes 

the application of the delayed discovery doctrine as a matter of law.” Prudential Home 

Mortgage Co. v. Super. Ct., 66 Cal. App. 4th 1236, 1247 (1998).

...

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3 This conclusion makes it unnecessary to resolve Maricopa County’s alternative 

argument that Office Depot should be equitably estopped from asserting a statute-oflimitations defense. (Doc. 213 at 16-17.)

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Accordingly, IT IS ORDERED that:

(1) Office Depot’s motion for summary judgment (Doc. 208) is denied; and 

(2) Maricopa County’s cross-motion for summary judgment (Doc. 213) is 

denied.

Dated this 13th day of January, 2020.

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