Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_13-cv-08043/USCOURTS-azd-3_13-cv-08043-0/pdf.json

Parties Involved:
Deborah Caldwell
Plaintiff
J & J Rocket Company
Defendant
JP Consultants
Defendant

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1

Although both parties have requested oral argument, the Court

concludes that none is necessary because the parties have had an adequate

opportunity to provide the Court with evidence and legal memoranda supporting their

respective positions and oral argument would not significantly aid the decisional

process. See Partridge v. Reich, 141 F.3d 920, 926 (9th Cir.1998).

The Court notes that there is apparently an issue between the parties

as to whether any part of Count One remains to be resolved.

 WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Deborah Caldwell,

 Plaintiff,

vs.

J & J Rocket Company dba JP

Consultants,

 Defendant.

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No. CV-13-08043-PCT-PGR 

 ORDER

 

 

Pending before the Court is Plaintiff’s Motion for Summary Judgment on Count

Two (Doc. 36), which is the plaintiff’s Breach of Contract claim in her First Amended

Complaint. Having considered the parties’ memoranda and the evidence of record

submitted by the parties, the Court finds that there are no genuine issues of material

fact and that plaintiff Deborah Caldwell’s summary judgment motion should be

granted as a matter of law pursuant to Fed.R.Civ.P. 56.1

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2

The facts relevant to the breach of contract claim referred to in this

section are those that the Court deems to be undisputed based on the parties’

statements of facts. 

The Court notes that in reviewing Defendant’s Controverting Statement

of Facts in Opposition to Plaintiff’s Motion for Summary Judgment on Count Two

(“CSOF”) (Doc. 40), it discovered that JP Consultants at some point, apparently

around its responses to Caldwell’s Statement of Facts (“SOF”) 35-37 (Doc.37)

inadvertently left out a response to one of Caldwell’s statement of facts, thus leading

it to misnumber its remaining controverting responses (numbers 37-63), e.g. JP

Consultants’ CSOF 37, which is supposed to be a response to Caldwell’s SOF 37,

is actually JP Consultants’ response to the Caldwell’s SOF 38. The Court has taken

JP Consultants’ numbering mistakes into account in determining which of Caldwell’s

statements of fact JP Consultants does not controvert. 

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 Background2

Defendant J & J Rocket Company dba JP Consultants (“JP Consultants”) is

a consulting company that provides training, teaching and coaching on various

leadership topics; its principal is Jo Ann Panke. JP Consultants had a contract with

the Center for Drug Evaluation and Research (“CDER”), a subunit of the United

States Food and Drug Administration (“FDA”), to provide a leadership course

curriculum called Preceptor for a Change (“PAC”). The PAC curriculum was taught

to separate consecutive small groups of students referred to as Cohorts. In October

2010, JP Consultants, through Panke, entered into a Professional Services

Agreement (“PSA”) with plaintiff Deborah Caldwell, an experienced professional

instructor and coach, whereby she was to work as an independent contractor for a

one-year period providing instruction services to JP Consultants’ clients; the PSA

provided that it was to be construed and interpreted under Arizona law. The primary

work done by Caldwell was teaching and coaching the PAC course at CDER. The

PSA recognized that Caldwell’s work with the PAC program would bring her into

contact with JP Consultants’ clients, clients’ employees and management.

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 After the PSA ended by its own terms in October 2011, Caldwell continued

teaching the PAC cohorts at CDER for JP Consultants despite the lack of any written

contract. On August 27, 2012, Panke emailed Caldwell a new draft agreement for

her signature because Panke desired Caldwell to continue her relationship with JP

Consultants. On September 5, 2012, Caldwell sent Panke an email rejecting the

draft agreement and proposing a revised agreement. On September 7, 2012, Panke

notified Caldwell through an email that she was rejecting Caldwell’s counteroffer and

that JP Consultants was terminating its relationship with her in October 2012. That

same day, Panke sent an email to Janice Newcomb, the director of CDER’s Office

of Executive Programs Division of Training and Development, informing her that

Caldwell was leaving JP Consultants in order to pursue her own independent

contacts; at that time, Panke intended that Caldwell’s last day at CDER would be

October 26, 2012, and she then believed that it was permissible for Caldwell to seek

independent consulting contracts outside of CDER and JP Consultants’ current client

pool. 

On September 9, 2012, Panke sent Caldwell a formal notice of termination.

The termination letter gave Caldwell eight weeks notice of termination because

Panke did not believe she then had cause to terminate Caldwell notwithstanding her

suspicions that Caldwell, without Panke’s knowledge or permission, had been

improperly communicating for several weeks directly with both Janice Newcomb and

Virginia Giroux, CDER’s deputy director for training, that Caldwell was improperly

withholding information from Panke, and that she had been communicating about

competing with JP Consultants. Panke’s suspicions regarding Caldwell’s

communications were based solely on her perception of the breakdown in

communications between her and Newcomb and how Newcomb and Giroux were

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3

Panke’s email stated in relevant part that “[i]n the best interests of the

PAC program, I will agree to have you finish teaching and coaching PAC C9. In

exchange for your work, I will compensate you at $1,500/day, $125/day per diem

and $500/month airfare.”

4

What Panke stated in her email regarding professionalism was:

As you continue to be a representative of JP Consultants while working

at CDER I trust you will conduct yourself in the same professional

manner as you have shown in the past. I also trust that you will

continue to deliver the PAC C9 program with the same high level of

instruction.

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treating her at that point and not on anything anybody had told her about any

improper communications on Caldwell’s part with Newcomb and Giroux.

Although she no longer had a written contract with JP Consultants, Caldwell

began teaching and coaching PAC Cohort 9 at CDER for JP Consultants in

September 2012. Despite her continuing suspicions about disloyalty on Caldwell’s

part, Panke approached Caldwell on October 10, 2012 about the possibility of

Caldwell continuing to work for JP Consultants through the completion of PAC

Cohort 9, and on October 18, 2012, Panke sent Caldwell a draft contract. Caldwell

made a final counteroffer to JP Consultants on October 22, 2012. On October 23,

2012, Panke sent Caldwell an email stating that she would agree to have Caldwell

finishing teaching and coaching PAC Cohort 9 with the specific compensation terms

that Caldwell had proposed the day before3

; Panke added a term to the effect that

Caldwell was to act with a high degree of professionalism.4

 Later that same day,

Caldwell emailed Panke that “[w]e are in agreement that I will finish PAC C9 which

ends in June 2013.” Both parties believe that the October 23rd emails constituted

a binding agreement. 

On January 8, 2013, Caldwell and Panke had a meeting regarding the status

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5

In an order entered on July 2, 2013, the Court granted Caldwell’s Motion

for Partial Judgment to the extent that the Court declared that the three-year noncompete covenant in the parties’ October 12, 2010 PSA was unenforceable under

Arizona law.

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of the PAC Cohort 9 that Caldwell was still teaching for JP Consultants; during that

meeting, Caldwell informed Panke that she was looking into working with several

FDA sub-organizations other than CDER. On January 13, 2013, Panke sent

Caldwell a letter claiming that she was prohibited from competing with JP

Consultants until at least November 2014. Panke included the November 2014 date

because it was three years after the expiration of the October 2010 PSA which

contained a three-year non-compete provision. Panke informed Newcomb and

Giroux at CDER that Caldwell could not perform any program instruction for FDArelated agencies on her own until October 2014.

Caldwell filed this action on March 4, 2013. The single claim in the original

complaint sought to have the three-year non-compete provision in the expired PSA

declared unenforceable.5

 When Panke learned the next day that Caldwell had sued

JP Consultants, she decided to terminate Caldwell. Early on March 9, 2013, Panke

telephoned Giroux to inform her that Caldwell’s relationship with JP Consultants was

being terminated as a result of her lawsuit. Later that same day, Panke emailed a

termination notice to Caldwell; the notice informed Caldwell that her services were

no longer needed by JP Consultants “effective immediately” and that the noncompete provision of the October 2010 PSA survived her termination and would be

enforced. On April 4, 2013, Caldwell filed an amended complaint in this action

adding a breach of contract claim based on JP Consultants’ early termination of the

parties’ October 23, 2012 email agreement. JP Consultants, while raising affirmative

defenses, has not filed a counterclaim against Caldwell for breach of contract or for

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

Discussion

Caldwell has moved for summary judgment on her breach of contract claim.

In order to prove her claim, she has the burden of establishing the existence of a

contract, its breach, and resulting damage. Graham v. Asbury, 540 P.2d 656, 657

(Ariz.1975). The Court concludes that Caldwell has met her initial burden of proof

in that JP Consultants does not dispute that the parties entered into a binding email

contract in October 2012, that its termination of Caldwell in March 2013 was prior to

the June 2013 expiration of the parties’ email agreement, and while JP Consultants

disputes that it owes Caldwell any damages, it does not controvert Caldwell’s

contention that she lost the amount of $31,100 as a result of JP Consultants’ early

termination of the parties’ contract. 

Since Caldwell has furnished undisputed proof of the parties’ contract and the

fact of her dismissal, the burden is on JP Consultants to prove its affirmative defense

that it terminated Caldwell’s services for cause because she breached the parties’

October 2012 email agreement. See Palicka v. Ruth Fisher School District No. 90

of Maricopa County, 473 P.2d 807, 811 (Ariz.App.1970) (In an action by a teacher

suing the school board for breach of contract, the court, relying on “the general rule

that the party asserting the affirmative of an issue has the burden of proving it[,]”

stated that “after the teacher had established her teaching contract and the fact of

dismissal, both of which the Board admitted, the burden of establishing good cause

as a defense rested with the Board.”) JP Consultants’ specific allegation as to this

affirmative defense, as set forth in its First Amended Answer to First Amended

Complaint (Doc. 29), and reiterated in its CSOF 83 and in its response to Caldwell’s

summary judgment motion, is that Caldwell “violated her express and implied

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obligations under the Agreement, including her duty of good faith and fair dealing,

by acting disloyally and insubordinate as a result of her efforts to repudiate her

contractual obligations to Defendant, and her efforts to compete against and take

clients - namely CDER and IHS - of JP Consulting [sic].” 

The issue before the Court is whether JP Consultants has submitted evidence

of sufficient quantum and quality to create a genuine issue of material fact as to

whether Caldwell’s conduct after the formation of the October 2012 email agreement

justified her termination because it amounted to a material breach of certain

expressed and implied duties owed to JP Consultants pursuant to the parties’ email

agreement and the covenant of good faith and fair dealing implied in that agreement.

Zancanaro v. Cross, 339 P.2d 746, 750 (Ariz.1959) (“Ordinarily the victim of a minor

or partial breach must continue his own performance, while collecting damages for

whatever loss the minor breach has caused him; the victim of a material or total

breach is excused form further performance.”); Murphy Farrell Development, LLLP

v. Sourant, 272 P.3d 355, 364 (Ariz.App.2012) (“[A]n uncured material breach of

contract relieves the non-breaching party from the duty to perform and can discharge

that party from the contract.”) Under Arizona law, a material breach of a contract

occurs when (1) a party fails to perform a substantial part of the contract or one or

more of its essential terms or conditions, or (2) when it fails to do something required

by the contract which is so important to the contract that the breach defeats the very

purpose of the contract. Dialog4 System Engineering GmbH v. Circuit Research

Labs, Inc., 622 F.Supp.2d 814, 822 (D.Ariz.2009). Similarly, under Arizona law, a

party breaches the covenant of good faith and fair dealing by denying the other party

the reasonably expected benefits of the contract. FL Receivables Trust 2002-A v.

Arizona Mills L.L.C., 281 P.3d 1028, 1037 (Ariz.App.2012). Caldwell argues, and the

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None of JP Consultants’ arguments concerning Caldwell’s conduct are

directed at the manner in which she taught and coached the PAC course at CDER

and there is no evidence that she did not do so competently in compliance with her

contract with JP Consultants.

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Court agrees, that JP Consultants has not met its burden of showing that Caldwell

breached her express or implied duties arising from the October 2012 contract in any

material manner.6

The parties agree that Caldwell’s relationship to JP Consultants was one of

agency as an independent contractor, and as such she owed JP Consultants a

fiduciary duty, which included a duty of loyalty. See McCallister Co. v. Kastella, 825

P.2d 980, 982 (Ariz.1992) (“[I]n Arizona, an employee/agent owes his or her

employer/principal a fiduciary duty.”) 

A. Duty Not to Compete With JP Consultants 

JP Consultants argues that Caldwell’s conduct violated her duty of loyalty in

several aspects as a result of her endeavors to remain in the same teaching and

coaching business after the end of PAC Cohort 9, i.e., that she violated her duty not

to compete with JP Consultants while working for it, that she violated her duty to

keep JP Consultants informed of its business opportunities, and that she violated her

duty to act for JP Consultants’ benefit and not her own. 

Given her duty of loyalty, Caldwell was precluded from actively competing with

JP Consultants concerning the subject matter of her agency while working for it. Id.

She was, however, clearly permitted by Arizona law to take action during the period

of her agency to prepare for competing with JP Consultants after the termination of

her agency relationship with it, so long as that preparation did not take the form of

acts directly competing with JP Consultants. Id., at 982-83; Taser International, Inc.

v. Ward, 231 P.3d 921, 926 (Ariz.App. 2010).

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The Court notes that in determining whether JP Consultants has

submitted evidence of a sufficient caliber and quantity to support a verdict in its favor

on its affirmative defense, the Court has relied on those portions of the submitted

evidence specifically cited to by the parties in their statements of facts. See Keenan

v. Allan, 91 F.3d 1275, 1279 (9th Cir.1996) (noting that it is not the district court’s task

to “scour the record in search of a genuine issue of triable fact” since it is the

obligation of the nonmoving party “to identify with reasonable particularity the

evidence that precludes summary judgment.”)

Because neither party has objected to their introduction, the Court also notes

that it has considered the portions of Panke’s and Caldwell’s depositions specifically

cited to by the parties notwithstanding that neither party has properly authenticated

those depositions. See Orr v. Bank of America, NT & SA, 285 F.3d 764, 773-74 (9th

Cir.2002).

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In its basically conclusory arguments that Caldwell improperly solicited for

work in competition with it prior to being terminated, JP Consultants relies on its

CSOF 78, which, referencing Caldwell’s deposition, states in toto: “Caldwell emailed

or called at least four individuals at either CDER or NIH to ‘gauge interest’ in having

Caldwell perform instruction services apart from JP Consultants. [Ex. 17 at 76, lns.

7-23; 78, lns. 8-14; 79[,] lns. 8-24; 81 ln. 4 to 82. ln. 18].”7

 JP Consultants does not,

however, set forth in its statements of facts or in its response who these individuals

were or what Caldwell communicated to them. That information, however, is crucial

because the determination of the line separating mere preparation from active

competition depends on the nature of the preparations to compete. Taser

International, 231 P.3d at 926.

According to the specific deposition citations noted, but not set forth, by JP

Consultants, it is relying on the following testimony by Caldwell to support its

defense that she was properly terminated due to her pre-termination attempts to

compete with it: (1) that prior to her termination, Caldwell emailed Mr. Pucino, who

used to work at the National Institutes of Health, to find out if he knew someone at

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NIH that Caldwell “might contact there to gauge interest” because she “was getting

information so that [she] could prepare to see if there was an opening where [she]

might make a marketing call, but [she] had not made one[;]” (2) that Caldwell

emailed Marjorie Shapiro, a former student who was a leader in a PAC cohort prior

to Cohort 9, to make a request similar to the one that she made to Pucino; (3) that

at some point in March 2013, Caldwell telephoned Donna Lipscomb, one of the

names given to her by Shapiro, and left a message but never spoke to her, and that

the purpose of her call was “[t]o inquire if they currently ran a leadership program or

team program[;]” and (4) that at that point in time she made phone calls or sent

emails to other people “along the same lines” as she described for Lipscomb.

The Court is not persuaded that JP Consultants has met its burden of showing

that there is a disputed issue of material fact as to this aspect of its affirmative

defense inasmuch as it fails to discuss in its response, and thus fails to provide any

cogent argument supported by legal authority, how any of this limited evidence

amounts to something other than legally permissible preparations to compete by

Caldwell, i.e., how this evidence sufficiently establishes that Caldwell was soliciting

work as opposed to seeking information about future work. JP Consultants does not

cite to any evidence that Caldwell, prior to her termination, directly solicited as a

future client any entity that JP Consultants currently had a contract with or any entity

that it had an interest in obtaining as a client, or that she even learned of any

business opportunity that she might obtain to compete with JP Consultants. For

example, while JP Consultants has cited to Caldwell’s testimony that she sought to

obtain some contact information at NIH prior to her termination, there is no evidence

of record that NIH was a client of JP Consultants or that it was interested in obtaining

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8

The Court notes that NIH is not mentioned in JP Consultants’ affirmative

defense, which states that Caldwell violated her duty not to compete by her efforts

to take CDER and IHS [Indian Health Service] as her own clients.

9

JP Consultants’ reliance on its uncontroverted CSOF 90, which cites to

Caldwell’s testimony that she did not have a contractual duty of loyalty under her

understanding of the email agreement, does not amount to significant probative

evidence that she committed any disloyal acts while she was teaching Cohort 9,

much less that she materially breached her duty of loyalty.

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NIH as a client.8

 

JP Consultants also relies on its uncontroverted CSOF 79, wherein it cites to

Caldwell’s testimony that she did not believe that she had a contractual or legal

obligation to refrain from competing with JP Consultants during the time she was

teaching Cohort 9. The Court is also not persuaded that Caldwell’s cited testimony

amounts to significant probative evidence that she materially breached the October

2012 email agreement because her testimony was based on her understanding as

a layperson that the agreement did not contain a provision banning competition and,

more importantly, because JP Consultants does not provide any cogent argument

as to why Caldwell’s claimed ability to compete with it amounts to evidence that she

actually competed with it or even attempted to compete with it in a way that

materially breached the parties’ agreement. 

B. Duty of Professionalism

JP Consultants also contends in its response that Caldwell breached her duty

of loyalty and her contractual duty of professionalism by disclosing too much

information to CDER-related personnel, i.e., “she exceeded her contractual terms

by disclosing more information to CDER than agreed, and by disclosing her

termination to those who had no reason to be in the loop.”9

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Underlying JP Consultants’ contention is its unsupported belief that Caldwell

contractually agreed to limit her communication to JP Consultants’ clients according

to her proposal in her October 22, 2012-email counteroffer to Jo Ann Panke. See

CSOF 70 (“In addition to agreeing to perform under the highest professional

standards, Caldwell further agreed to limit her communications to JP Consultants’

clients according to the terms of the agreement she proposed. [Ex. 17 at 54, lns. 1-

4].”) JP Consultants’ contention is based ¶ 4 in Caldwell’s counteroffer, wherein she

proposed:

4. I will tell Janice [Newcomb] (and anyone else whom I need to

inform) that we were not able to work out an agreement on other work,

so I will no longer be working under JP Consultants’ contract other than

to complete teaching and coaching Cohort 9, and JP Consultants will

be making other arrangements for any other projects, and that she

should discuss that with you.

This proposed term, however, did not become part of the parties’ email agreement

because Panke did not include that part of Caldwell’s proposal in her October 23,

2012 responsive email wherein she, on behalf of JP Consultants, agreed to

Caldwell’s financial terms for completing Cohort 9. Panke’s deposition testimony

makes it clear that she intentionally did not accept all of the terms proposed in

Caldwell’s October 22nd counteroffer and what terms she did not accept she left out

of her October 23rd acceptance email (Panke’s depo., Pltf’s Ex.2, at 57 ln. 24 to 58

ln. 19), and Panke specifically stated in this regard that she “did not agree to

[Caldwell’s] number 4.” (Panke’s depo. at 59, lns. 21-22). For this reason, JP

Consultants’ arguments that Caldwell’s communications to Janice Newcomb and

other CDER employees, such as Brenda Pillari (CSOF 77, noting Caldwell’s

deposition testimony that Pillari as not a CDER employee who needed to known

about Caldwell’s job status) “far exceeded her contractual authority” are unsupported

to the extent they are based on Caldwell’s proposed ¶ 4 being a term of the parties’

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10

For example, Caldwell’s SOF 62, which JP Consultants specifically

admitted in its misnumbered CSOF 61, states: 

Neither Ms. Giroux, Ms. Newcomb nor anyone else from CDER ever

told Ms. Panke that Ms. Caldwell said anything negative about JP

Consultants or that Ms. Caldwell made any proposal or suggestion that

she replace JP Consultants as a consultant to CDER. [Panke Dep.,

Exh. 2, at 80:1-9.] Ms. Panke never even asked Ms. Newcomb or Ms.

Giroux whether Ms. Caldwell had engaged in any such communication.

[Panke Dep., Exh. 2, at 48:3-13,]

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contract.

JP Consultants also argues that Caldwell, through her communications with

Janice Newcomb concerning her contractual dispute with JP Consultants, violated

her duty of professionalism because she failed to maintain JP Consultants’ friendly

relationship with CDER. While there is evidence from Jo Ann Panke that her

relationship with Newcomb deteriorated prior to Caldwell’s termination, JP

Consultants does not cite to, or even discuss, any non-speculative evidence in the

record that Caldwell’s conduct was responsible for any rift between JP Consultants

and CDER. The evidence of record specifically cited to by Caldwell, and admitted

by JP Consultants, is that Panke merely suspected that her deteriorating relationship

with Newcomb was due to Caldwell’s communications with Newcomb and Virginia

Giroux at CDER, and that no one connected to CDER informed her that Caldwell

had made any negative comments about JP Consultants or that any of Caldwell’s

communications with them adversely affected CDER’s relationship with JP

Consultants. See Caldwell’s uncontroverted SOF 60-62.10

But in any case, even if Caldwell’s comments to CDER employees about the

status of her relationship with JP Consultants and her desires to continue teaching

and coaching courses similar to the PAC course amounted to disloyal or

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unprofessional acts contrary to her duty of loyalty to JP Consultants, JP Consultants

has failed to discuss, and certainly has not established, how these acts amounted

to a material breach of Caldwell’s express or implied duties arising from the October

2012 agreement. 

 While normally the issue of whether a fiduciary duty of loyalty has been

breached is a question of fact to be determined by the trier of fact, McCallister Co.

v. Kastella, 825 P.2d at 984, JP Consultants, as the party with the burden of proof

on this issue, has the obligation to submit more than a “scintilla of evidence” in

support of its affirmative defense because evidence that is “merely colorable” or “not

significantly probative,” as is the case here, is not sufficient to present a genuine

issue of material fact for the trier of fact to resolve. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 254 (1986); Nelson v. Pima Community College, 83 F.3d 1075, 1081-

82 (9th Cir.1975) (“The mere existence of a scintilla of evidence is not enough to

create a genuine issue of material fact in order to preclude summary judgment.

Likewise, mere allegation and speculation do not create a factual dispute for

purposes of summary judgment.”) (internal quotation marks and citations omitted).

The Court, without weighing the evidence and without making any credibility

determinations, concludes as a matter of law that the evidence specifically relied on

by JP Consultants and the justifiable inferences arising from that evidence, all

viewed in JP Consultants’ favor, is simply insufficient to create a triable issue as to

whether Caldwell, prior to her termination, materially breached any express or

implied duty owed to JP Consultants. See McCallister Co., at 985 (Court granted

summary judgment to employee sued for breach of the duty of loyalty because the

evidence presented by the employer failed to raise a factual issue that the employee,

while still employed, had attempted to solicit the employer’s clients or employees so

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that she could start a rival business.) Therefore,

IT IS ORDERED that Plaintiff’s Motion for Summary Judgment on Count Two

(Doc. 36) is granted.

IT IS FURTHER ORDERED that the parties, after reasonable consultation,

shall no later than October 31, 2014, file either a joint report setting forth what

remains to be decided in this action and a proposed schedule for resolving the

remainder of the action, or a stipulation dismissing any remaining claims or issues

and a proposed form of judgment. 

DATED this 30th day of September, 2014.

Case 3:13-cv-08043-PGR Document 45 Filed 09/30/14 Page 15 of 15