Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_08-cv-02921/USCOURTS-cand-5_08-cv-02921-16/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California 

** E-filed April 26, 2010 ** 

NOT FOR CITATION 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 

CRYOTECH INTERNATIONAL, INC., a 

Delaware Corporation, fka VBS 

INDUSTRIES INCORPORATED, 

 Plaintiff, 

 v. 

TECHNIFAB PRODUCTS, INC., an Indiana 

Corporation; and DOES 1–50 inclusive, 

 

 Defendant. 

____________________________________/

No. C08-02921 HRL 

ORDER DENYING THE PARTIES’ 

MOTIONS FOR SUMMARY 

JUDGMENT 

[Re: Docket Nos. 159, 164] 

Cryotech International, Inc. (“Cryotech”) and Technifab Products, Inc. (“Technifab”) are 

competing companies in the cryogenic industry. They signed a contract obligating Technifab to 

exclusively produce certain products that Cryotech agreed to exclusively purchase and sell. 

Cryotech later sued Technifab for allegedly using Cryotech’s confidential information to bypass 

Cryotech and sell products directly to Cryotech’s customers in violation of the contract. Technifab 

then countersued Cryotech for allegedly outsourcing to others the production of products for which 

Technifab was to be the sole source, and for failing to use best efforts to sell Technifab’s products. 

Both parties now move for partial summary judgment, and each side opposes the other’s 

motion. Upon consideration of the moving and responding papers, as well as the arguments 

presented at the motion hearing, this court DENIES the parties’ motions.1

 

1

 In Technifab’s motion, both parties object to some of the other side’s evidence. For purposes of 

this motion only, the parties’ objections are sustained. 

Case 5:08-cv-02921-HRL Document 220 Filed 04/26/10 Page 1 of 9
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LEGAL STANDARD 

A court may grant a motion for summary judgment when the pleadings and discovery 

material on file show no genuine issue of any material fact. Fed. R. Civ. P. 56(c). Material facts 

include those that could affect the outcome of the litigation, as identified by the substantive law. 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When deciding a motion for summary 

judgment, the court views the facts in the light most favorable to the nonmoving party. Leisek v. 

Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). 

The moving party has the initial burden of demonstrating “the absence of a genuine issue of 

material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party does not 

meet its initial burden, then “the nonmoving party has no obligation to produce anything” and the 

court must deny summary judgment. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 

1102–03 (9th Cir. 2000). But if the moving party does meet its initial burden, then the nonmoving 

party must “produce[] enough evidence to create a genuine issue of material fact” to defeat the 

motion. Id. at 1103.

DISCUSSION 

A. Background 

Cryotech and Technifab entered into a seven-year, renewable, Exclusive Manufacturing and 

Distributor Agreement (the “Agreement”) in 2001. (Compl. Ex. A.) Section 1 of the Agreement 

establishes that with some exceptions, Technifab would “act as the exclusive manufacturer” and 

Cryotech would “act as the exclusive distributor” of two schedules of products (“Scheduled 

Products”). Schedule 1-A includes the “current form” of Dynaflex, Polyflex, Phase Separators, 

“LCIs” (injectors), and Statiflex, while Schedule 1-B includes the current form of standard transfer 

hoses. (Compl. Ex. A. at 8.) Section 3 of the Agreement outlines the parties’ responsibilities 

concerning new products, improvements to existing products, and joint patents. (Id. at 2.) 

The relationship between the two companies deteriorated over the years, culminating in the 

early termination of the Agreement. Cryotech filed the instant lawsuit in June 2008, alleging four 

claims for relief: (1) breach of contract, (2) interference with prospective economic advantage, (3) 

misappropriation of trade secrets, and (4) unfair competition. (Docket No. 1.) Technifab answered 

Case 5:08-cv-02921-HRL Document 220 Filed 04/26/10 Page 2 of 9
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United States District Court

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and counterclaimed for breach of contract. (Docket No. 12.) Fact and expert discovery closed in 

December 2009 and February 2010, respectively, and both parties now seek partial summary 

judgment. 

B. Technifab’s Motion (Docket No. 159) 

1. Choice of Law 

Technifab first moves for summary judgment as to the choice of law that applies to 

Cryotech’s second and fourth claims. Cryotech is a Delaware corporation, but nobody thinks 

Delaware law should apply. Instead, Cryotech argues for California law while Technifab, an 

Indiana corporation, argues for Indiana law. The Agreement lacks a choice-of-law provision. As 

this action is here in federal court based on diversity jurisdiction, Technifab argues for the 

application of California’s “governmental interest” choice-of-law test. Under this approach, the 

court first considers if “the two states’ laws actually differ; if so, [it] must examine each state’s 

interest in applying its law to determine whether there is a ‘true conflict’; and if each state has a 

legitimate interest [it] must compare the impairment to each jurisdiction under the other’s rule of 

law.” Arno v. Club Med., Inc., 22 F.3d 1464, 1467 (9th Cir. 1994). 

Applying this test, Technifab argues that Indiana law should apply to Cryotech’s second and 

fourth claims. It asserts that California law “clearly and substantially differs” from Indiana law 

because (1) for count two Indiana requires an additional element (absence of any justification); and 

(2) for count four Indiana lacks anything comparable to California’s broad unfair competition 

statute. (Mot. 11.) It also argues that there is a “true conflict” between these laws and that Indiana’s 

interest “far outweighs” California’s interests. (Mot. 12.) Finally, Technifab claims that Indiana’s 

interests would be substantially impaired if California law were to apply because Cryotech’s 

requested injunctive relief would affect negatively Technifab’s ability to compete as an Indiana 

corporation. 

Cryotech seems to agree to apply California’s “governmental interest” choice-of-law test, 

but it comes up with a different result. First, it claims that California and Indiana law are similar for 

both counts. For count two, it asserts that Indiana’s “absence of any justification” requirement 

“simply grafts California’s general defense of justification into the elements of the Indiana law.” 

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(Mot. 10.) As for count four, Cryotech argues that the absence of a statute in one state does not 

automatically preclude application of the forum state’s law—but that, in any case, its allegations fit 

within Indiana common law. It submits that even if the states’ laws were different, California has a 

greater interest in applying its law in this dispute. (Opp’n 11.) 

It is well established that a motion for summary judgment is not the place for a court to 

weigh the evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249. Yet Technifab’s motion 

invites the court to do just that. To determine whether California or Indiana law applies to these 

counts, this court would be required to “examine[] each jurisdiction’s interest in the application of 

its own law under the circumstances of the particular case to determine whether a true conflict 

exists” and also to “evaluate[] and compare[] the nature and strength of the interest of each 

jurisdiction in the application of its own law ‘to determine which state’s interest would be more 

impaired if its policy were subordinated to the policy of the other state.’ ” Kearney v. Salomon Smith 

Barney, Inc., 137 P.3d 914, 922 (Cal. 2006) (quoting Bernhard v. Harrah’s Club, 546 P.2d 719, 723 

(Cal. 1976)). Such an evaluation requires the court to weigh the parties’ disputed facts. Therefore, 

Technifab has failed to meet its initial burden for summary judgment. 

Although the court ultimately will make a determination as to choice of law, it is more 

appropriate to do so at a time when it may weigh the appropriate evidence. (Indeed, at oral 

argument, both sides agreed that in undertaking a choice-of-law analysis the court would necessarily 

weigh the relevant facts.) The court does not find that waiting until a later date will prejudice either 

party in their preparation for trial. Accordingly, the court DENIES Technifab’s motion for 

summary judgment as to choice of law. 

2. Damages 

Technifab also moves for summary judgment concerning Cryotech’s request for 

compensatory damages. Technifab argues that “Cryotech’s claimed compensatory damages are 

utterly speculative” because, supposedly, Cryotech has not presented an appropriate damage 

calculation or provided an expert to address damages. (Mot. 2.) As a result, it says, Cryotech 

cannot prove that it has been harmed “with any degree of reasonable certainty” as required by 

California law. (Id. at 2, 14–15.) Cryotech counters that it has provided its estimated damages 

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through its responses to interrogatories and deposition questions. It says that it has compiled 

hundreds of Technifab’s invoices to show specific dollar amounts of lost revenues and lost profits. 

Viewing the facts in the light most favorable to Cryotech, the court finds that Technifab has 

not met its initial burden for summary judgment. Despite what Cryotech may have presented thus 

far, Technifab points to no evidence that would make it impossible for Cryotech to prove its 

damages with reasonable certainty at trial. See Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 

F.3d 1099, 1102 (9th Cir. 2000). Expert testimony is not always necessary to establish damages; in 

the proper case, the court may rely on reasoned estimates. Technifab’s argument really goes to the 

weight of the evidence. At this point, the court is not prepared to hold as a matter of law that 

Cryotech fails. As a result, the court DENIES Technifab’s motion for summary judgment as to 

Cryotech’s damages. 

C. Cryotech’s Motion (Docket No. 164) 

1. Breach of Contract Claim and Counterclaim 

Cryotech moves for summary judgment on both its own breach of contract claim and 

Technifab’s breach of contract counterclaim. In California, a party asserting a breach of contract 

claim must plead “(1) the contract, (2) plaintiff’s performance or excuse for non-performance, (3) 

defendant’s breach, and (4) damage to plaintiff therefrom.” Acoustics, Inc. v. Trepte Constr. Co., 92 

Cal. Rptr. 723, 740 (Ct. App. 1971).2

 In this case, the parties have accused each other of violating 

the Agreement; therefore, who breached the contract first may be dispositive of both claims. 

Cryotech submits that there is no genuine dispute of material fact that Technifab first 

breached the Agreement. It claims that Technifab began breaching Section 1 of the Agreement as 

early as April 2005 when Technifab began selling “substantially similar” products in competition 

with Cryotech. It also asserts that Technifab breached Section 3 of the Agreement when Technifab 

failed to notify Cryotech that it modified Scheduled Products. 

Technifab counters that the Agreement did not prevent it “from selling products in 

competition with Cryotech, as long as such products were not substantially similar to a Scheduled 

Product, in its current form.” (Opp’n 3.) It notes that it could even sell Schedule 1-A products in 

 

2

 The parties do not dispute that California law applies to their breach of contract claims. 

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competition with Cryotech if Cryotech was already obtaining a substantially similar product from 

someone else. To that end, Technifab claims that Cryotech purchased a manufacturing plant in May 

2005 to make Scheduled Products or those substantially similar, and that this facility manufactured 

such products for Cryotech even before Cryotech acquired it. In addition, Technifab denies that the 

Agreement required it to inform Cryotech of developments to products it made for other customers. 

To address Cryotech’s assertion that Technifab breached Section 1 of the Agreement, the 

court turns to the language of the Agreement itself. For Schedule 1-A products, Section 1 of the 

Agreement states: 

[Technifab] agrees not to sell the Items listed in Schedule 1-A in their currently configured 

form or items that are substantially similar to these products to others, in competition with 

the business of [Cryotech] provided that [Cryotech] is not obtaining a substantially similar

product from a source other than [Technifab]. [Technifab] reserves the right to continue 

unrestricted selling of products substantially similar to Statiflex without [Cryotech] style 

bayonets provided those sales are not to [Cryotech] customers. 

(Compl. Ex. A. at 2 (emphasis added).) 

As is readily apparent, whether Technifab breached Section 1 (or, for that matter, whether 

Cryotech breached Section 1) turns on the definition of “substantially similar.” Yet this term is not 

defined anywhere in the Agreement. Nor did Cryotech submit any parole evidence as to the 

expressed intent at the time of contracting or any evidence how this term might be customarily 

understood in the cryogenics industry. Instead, all it provides is its own expert’s interpretation. 

Without first deciding what “substantially similar” means, the court cannot possibly determine as a 

matter of law that Technifab breached Section 1 of the Agreement. And, whether a particular 

product at issue is “substantially similar” to a Scheduled Product is inherently a fact-intensive 

inquiry. As a result, Cryotech has failed to establish that there is no genuine issue of material fact 

that Technifab violated Section 1 of the Agreement. 

The court reaches a similar conclusion concerning Technifab’s alleged violation of Section 3 

of the Agreement. Cryotech’s argument focuses on Section 3(b), which reads: “[Technifab] agrees 

that it shall notify [Cryotech] promptly of any material modifications, revisions (to the extent such 

modification or revision changes the functionality of or adversely affects the quality of the Product) 

or discontinuances of a Product supplied by [Technifab] to [Cryotech].” (Compl. Ex. A. at 2.) Just 

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as with Section 1, the parties have wildly different ideas of what products are included within the 

scope of Section 3. Yet even if they did so agree, Cryotech has not provided this court with 

uncontroverted evidence that there is no genuine dispute about what the individual terms within this 

section mean. For example, there are material disputed facts with respect to whether there were 

“material modifications” or whether any of them impacted “functionality” or “quality.” 

Accordingly, the court DENIES Cryotech’s motion for summary judgment as to both its own breach 

of contract claim and as to Technifab’s breach of contract counterclaim. 

2. Intentional Interference with Prospective Economic Advantage 

Finally, Cryotech moves for summary judgment on its claim for intentional interference with 

prospective economic advantage. Cryotech alleges that Technifab intentionally interfered with 

Cryotech’s business relationship with Novellus. Cryotech claims that Technifab knew of this 

relationship but nevertheless acted to disrupt it, causing Cryotech economic harm. Citing California 

law,3

 Cryotech asserts that there is no genuine issue of material fact as to any of these factors. 

In addition, Cryotech submits that there is no genuine dispute that Technifab “engaged in an 

independently wrongful act” as required by California law. San Jose Const., Inc. v. S.B.C.C., Inc., 

37 Cal. Rptr. 3d 54, 68 (Ct. App. 2007). Cryotech argues that Technifab acted wrongfully when it 

sold to Novellus products that were substantially similar to Scheduled Products and when it used its 

knowledge of Cryotech’s pricing structure to bid against Cryotech for Novellus’s business. 

Technifab counters that its sales to Novellus did not violate the Agreement because the products it 

sold to Novellus were not substantially similar to Scheduled Products, and that it was allowed to 

compete for customers after Cryotech—contrary to its contractual obligation—allegedly began 

outsourcing Scheduled Products. 

Just as with the breach of contract claims, Cryotech has failed to show that there is no 

genuine dispute of material fact as to whether Technifab wrongfully interfered with its relationship 

with Novellus. First, as discussed above, Cryotech has failed to establish as a matter of law that 

Technifab breached the Agreement. Second, Cryotech did not submit any uncontradicted evidence 

 

3

 As already discussed in this order concerning Technifab’s motion for summary judgment, whether 

California law applies to this claim has not yet been established. For purposes of this motion, 

however, the court will address Cryotech’s arguments as presented. 

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to support its allegation that Technifab was otherwise engaged in improper conduct. Consequently, 

the court DENIES Cryotech’s motion for summary judgment as to its second count. 

 IT IS SO ORDERED. 

Dated: April 26, 2010

HOWARD R. LLOYD 

UNITED STATES MAGISTRATE JUDGE

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United States District Court

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C 08-02921 HRL Notice will be electronically mailed to: 

Arthur J. Casey ajc@robinsonwood.com, kkn@robinsonwood.com 

David Richard Johanson drj@esop-law.com, msshelli@esop-law.com 

Douglas Andrew Rubel dar@johansonberenson.com, msshelli@esop-law.com 

Mark Douglas Hassler hassler@huntlawfirm.net 

Counsel are responsible for distributing copies of this document to co-counsel who have not 

registered for e-filing under the court’s CM/ECF program. 

Case 5:08-cv-02921-HRL Document 220 Filed 04/26/10 Page 9 of 9