Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-00817/USCOURTS-cand-3_18-cv-00817-5/pdf.json

Parties Involved:
Judy Codding
Plaintiff
Pearson Education, Inc.
Defendant

Document Text:

ORDER – No. 18-cv-00817-LB

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

San Francisco Division

JUDY CODDING,

Plaintiff,

v.

PEARSON EDUCATION, INC.,

Defendant.

Case No. 18-cv-00817-LB

ORDER GRANTING DEFENDANT’S 

MOTION FOR SUMMARY 

JUDGMENT, DENYING PLAINTIFF’S 

MOTION FOR SUMMARY 

JUDGMENT, AND DENYING OTHER 

MOTIONS AS MOOT

Re: ECF No. 149, 150, 151, 156

INTRODUCTION

This is a breach-of-contract case regarding bonus payments under an employment agreement.

In 2010, plaintiff Judy Codding, an education professional, began employment with defendant 

Pearson Education, Inc., pursuant to a written employment agreement (“Employment 

Agreement”), which was later amended in 2012 by a written exchange of emails (“Email 

Amendment”). The Employment Agreement provided that Dr. Codding would develop educationcourse offerings that came to be known as the “Pearson System of Courses” or “PSoC.” It also

provided that Dr. Codding would receive an initial bonus of $1 million upon her delivery of PSoC 

to Pearson Education. Dr. Codding developed and delivered PSoC, and Pearson Education paid 

Case 3:18-cv-00817-LB Document 189 Filed 11/08/19 Page 1 of 30
ORDER – No. 18-cv-00817-LB 2

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her that initial $1 million bonus. The Employment Agreement (as amended) set forth an additional 

bonus structure if PSoC sales met or exceeded certain dollar amounts. Specifically:

1. Dr. Codding would receive a $3 million lump-sum bonus if PSoC sales exceeded $75 

million.

2. Dr. Codding would receive a 2% royalty for PSoC sales beyond the initial $75 million 

sales threshold. The Agreements provided that Dr. Codding could accrue royalties up 

to a ceiling of $3 million but provided that her initial bonus of $1 million would count 

against her royalties, thus allowing her to accrue up to a net $2 million in royalties.

Dr. Codding thus was eligible to receive a maximum bonus of up to $5 million if PSoC sales 

were $225 million (in addition to the initial bonus of $1 million that she previously received).

1

Dr. Codding was not eligible to receive any additional bonuses or royalties if PSoC sales did 

not reach the initial $75 million sales threshold

In 2016, the parties negotiated Dr. Codding’s departure from Pearson Education, which 

cumulated in a written agreement and release (“Agreement and Release,” and together with the 

Employment Agreement and the Email Amendment, “Agreements”). Among other things, the 

Agreement and Release provided that Pearson Education would extend the time period for 

calculating PSoC sales for the purposes of Dr. Codding’s bonuses through the 2019 calendar year.

PSoC sales have fallen well short of the initial $75 million sales threshold (much less the 

maximum $225 million sales threshold).

Dr. Codding sued Pearson Education for breach of contract, claiming that Pearson Education 

owes her a $5 million bonus. Dr. Codding argues that the implied covenant of good faith and fair 

dealing that applies to all contracts required Pearson Education to use “best efforts” to market and 

 

1 At a 2% royalty rate, Dr. Codding needed $150 million in PSoC sales beyond the initial $75 million 

sales threshold to receive her maximum $2 million in royalties ($150 million in sales × 2% = 

$3 million in gross royalties, minus her $1 million initial bonus = $2 million in net royalties). $75 

million + $150 million = $225 million. Accord Codding Dep. – ECF No. 187-5 at 36 (p. 239). 

Citations refer to material in the Electronic Case File (“ECF”); pinpoint citations are to the ECFgenerated page numbers at the top of documents.

Case 3:18-cv-00817-LB Document 189 Filed 11/08/19 Page 2 of 30
ORDER – No. 18-cv-00817-LB 3

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sell PSoC. Dr. Codding claims that Pearson Education failed to use best efforts, thereby breaching 

its Agreements with her and wrongfully depriving her of her bonuses.

The parties each filed motions for summary judgment. Dr. Codding argues that Pearson 

Education “completely abandoned” any effort to sell PSoC as early as 2016, thereby breaching its 

purported contractual obligation to use “best efforts” to sell PSoC. Pearson Education argues that 

(1) the Agreements do not require it to use best efforts (or any efforts) to sell PSoC, (2) it 

nonetheless expended significant efforts to sell PSoC and thus did not breach any duty to try to 

sell PSoC that it may have had, and (3) Dr. Codding cannot establish causation or damages 

because she fails to show that any efforts by Pearson Education would have caused PSoC sales to 

reach the initial $75 million sales threshold (much less the maximum $225 sales threshold).

The court held a hearing and now rules as follows. Dr. Codding’s claims fail because she 

presents no evidence that PSoC sales would have reached the initial $75 million sales threshold 

even if Pearson Education had used best efforts to sell PSoC, and thus presents no evidence that 

she would have been entitled to any additional bonuses. Dr. Codding thus fails to show causation 

or damages, essential elements of her breach-of-contract claim. The court grants Pearson 

Education’s motion for summary judgment and denies Dr. Codding’s motion for summary 

judgment.2

STATEMENT

1. The Parties

Dr. Codding served as Chief Operating Officer and Vice President of the National Center on 

Education and the Economy (“NCEE”), a nonprofit policy and school reform company.3In 1998, 

 

2 The parties also filed ancillary motions. Dr. Codding filed a motion for summary judgment with 

respect to Pearson Education’s affirmative defenses. ECF No. 151. Pearson Education filed a motion 

to exclude certain of Dr. Codding’s witnesses from offering expert testimony. ECF No. 149. Dr. 

Codding also filed objections to “new evidence” that Pearson Education submitted with its reply brief 

in support of summary judgment and asks the court to strike the evidence. ECF No. 169. In light of the 

court’s decision on the main summary-judgment motions, the court denies these ancillary motions as 

moot.

3 Answer – ECF No. 62 at 3 (¶ 6).

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ORDER – No. 18-cv-00817-LB 4

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in her capacity as COO and Vice President of NCEE, Dr. Codding co-founded America’s Choice, 

Inc., as a nonprofit subsidiary of NCEE that later became a for-profit entity, and served as its 

Chief Executive Officer and President.4

Pearson Education, Inc. is an indirect wholly owned subsidiary of Pearson plc and sells and 

distributes educational products.5

On August 3, 2010, Pearson plc acquired America’s Choice for $80 million in cash.6

2. The Employment Agreement

In December 2010, following Pearson plc’s acquisition of America’s Choice, Pearson plc and 

Dr. Codding entered into a letter Employment Agreement.

7

In December 2012, Pearson plc and 

Dr. Codding amended the Employment Agreement by a written exchange of emails.8

In relevant part, the Employment Agreement described Dr. Codding’s duties as follows: “For 

comprehensive K–10/12 mathematics and literacy courses designed to apply the philosophy of the 

Common Core State Standards: These courses will cover approximately 150 days of instruction, 

use multi-media delivery platforms, and have the distinction of being a system of learning through 

the grades, of engaging students and of being easy for teachers to use.”9 These courses were 

referred to as the “Pearson System of Courses,” or “PSoC.”10 Pearson Education paid Dr. Codding 

a salary and employment benefits for her services.11

 

4

Id. (¶ 7).

5

Id. at 4 (¶ 11).

6

Id. at 4–5 (¶ 12); Defs. Resp. to Pl. 2d Set of Interrogs. – ECF No. 187-4 at 6.

7 Answer – ECF No. 62 at 5–6 (¶ 13); Employment Agreement – ECF No. 187-3 at 59–61. 

8 Answer – ECF No. 62 at 7 (¶ 20); Email Amendment – ECF No. 187-3 at 62.

9 Employment Agreement – ECF No. 187-3 at 59 (¶ 1.b).

10 Second Amend. Compl. (“SAC”) – ECF No. 187-3 at 28 (¶ 25); accord Answer – ECF No. 62 at 8 

(¶ 25).

11 Answer – ECF No. 62 at 8 (¶ 24); accord Employment Agreement – ECF No. 187-3 at 60 (¶ 2.a). 

While the Employment Agreement was signed by Pearson plc, the parties agree that Pearson 

Education employed Dr. Codding and paid Dr. Codding’s salary, bonuses, and employment benefits 

and that PSoC was to be a Pearson Education product. Answer – ECF No. 62 at 5–8 (¶¶ 13–14, 16–19, 

24), 10 (¶ 32).

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ORDER – No. 18-cv-00817-LB 5

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The Employment Agreement, as amended by the Email Amendment, provided that, in addition 

to her salary and other bonuses she received for other work, Dr. Codding would be eligible for 

bonuses based on PSoC sales, as follows:

For doing all this work, you’ll receive the following (less taxes of all kinds, of 

course):

. . . .

i. On delivery and acceptance of all the courses, $1m in cash or stock (your choice). 

This payment will count against the royalty you’ll get for future sales . . . .

ii. $2m in cash and $1m in stock once the sales exceed $75m.

iii. a 2% royalty for all sales over that number described above, paid in cash to a 

ceiling of $3m (which includes the $1m you’ve already received). Thus, if royalties 

earned pursuant to this paragraph equals $3m, you shall be entitled to receive up to 

$2m ($3m less the $1m received pursuant to paragraph (i) above).12

Dr. Codding affirms that Pearson Education paid her the initial $1 million bonus.13

3. The September 2015 KPCC Article

In September 2015, the Southern California public-radio station KPCC issued an article 

regarding the Los Angeles Unified School District (“LAUSD”) and PSoC.14 KPCC reported that:

Los Angeles Unified Superintendent Ramon Cortines told board members this 

week he’s negotiated a $6.4 million settlement with Apple Inc. and tech company 

Lenovo to resolve a dispute over faulty software on the tablets they sold to the 

district.

 

12 Employment Agreement – ECF No. 187-3 at 60–61 (¶ 2.c.i–iii) (emphasis in original), as amended 

by Email Amendment – ECF No. 187-3 at 62.

13 SAC – ECF No. 187-3 at 30 (¶ 32); accord Answer – ECF No. 62 at 10 (¶ 32).

14 Adolfo Guzman-Lopez, LAUSD Board to Vote on $6.4 Million Settlement Proposal with Apple Over 

iPad Software, KPCC (Sept. 25, 2015), available at https://www.scpr.org/news/2015/09/25/54648/

lausd-board-to-vote-on-6-4-million-settlement-prop (last visited Nov. 8, 2019) (“KPCC Article”). The 

parties did not attach the KPCC Article to their summary-judgment filings, but they attached letters 

they exchanged in 2016 discussing, among other things, the KPCC Article and the Article’s impact on 

their relationship. The court therefore addresses the KPCC Article for context. The court does not 

evaluate or assume the truth of any of the contents of the KPCC Article. Cf. Von Saher v. Norton 

Simon Museum of Art, 592 F.3d 954, 960 (9th Cir. 2010) (taking judicial notice of news articles “to 

‘indicate what was in the public realm at the time, not whether the contents of those articles were in 

fact true’”) (quoting Benak ex rel. Alliance Premier Growth Fund v. Alliance Capital Mgmt. L.P., 435 

F.3d 396, 401 n.15 (3d Cir. 2006)).

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ORDER – No. 18-cv-00817-LB 6

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. . . .

The settlement covers problems with the software created by Apple 

subcontractor Pearson Education. The software wasn’t ready when the district 

began distributing the iPads to students two years ago and teachers complained of 

missing math problems and other issues.

Meanwhile, a Pearson spokeswoman confirmed to KPCC this week that the 

company is laying off the people who developed the software for LAUSD’s iPad 

program.

That team included Judy Codding, Sherry King, and Susan Sclafani, three 

people who had email exchanges with top LAUSD officials about Pearson’s 

software before Apple and Pearson submitted their proposal to L.A. Unified. Those 

exchanges raised questions about whether the bid process for the iPads were 

appropriately conducted.

A Pearson spokeswoman said the disbanding of the development team was not 

related to LAUSD’s trouble with the company’s software on the iPads.

“The core development team has completed the work that we hired them to do. 

Unfortunately, there are not comparable roles for them available within Pearson,” 

said Laura Howe, Pearson vice president for media and communities, by email.15

4. 2016 Discussions Between Dr. Codding and Pearson Education

At some point before 2016, Dr. Codding and Pearson Education entered into discussions 

regarding the future of their relationship.

4.1 The January 2016 Codding Letter

On January 8, 2016, Dr. Codding’s husband Richard Codding, who is an attorney who 

represented Dr. Codding, wrote a letter to George B. Costello, Associate General Counsel at 

Pearson Education (the “January 2016 Codding Letter”).16 Among other things, the Coddings

 

15 KPCC Article.

16 January 2016 Codding Letter – ECF No. 187-5 at 3–8 (COD-00117302–07). Dr. Codding argues 

that the court should ignore the January 2016 letter, and other letters between the parties, because they 

have not been authenticated. Pl. Opp’n to Def. Mot. for Summary Judgment (“MSJ”) – ECF No. 161

at 13. Dr. Codding makes this argument despite the fact that she herself produced these letters in 

discovery. Revised Marston Decl. – ECF No. 164 at 2–3 (¶¶ 9–10). (Both sides produced the letters to 

each other, and Pearson Education attached its version to its motion for summary judgment because 

Dr. Codding did not bates-stamp her version, but that does not diminish the fact that Dr. Codding 

produced the letters too. Id. at 3 (¶ 10).) Additionally, to close the loop, Pearson Education submitted a 

declaration from George Costello authenticating the letters. Costello Decl. – ECF No. 167-1 at 2 (¶¶ 5–

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ORDER – No. 18-cv-00817-LB 7

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raised issues regarding PSoC sales for the purpose of calculating Dr. Codding’s bonuses. Mr. 

Codding wrote that because Pearson Education had not meaningfully marketed PSoC, the time 

period in the Employment Agreement for calculating PSoC sales for the purposes of Dr. 

Codding’s bonuses — “over the four years from when [Pearson] start[s] selling them (i.e., 2012)” 

— should extend through the 2019–2020 school year.17 He wrote that Pearson Education had no 

plans to market PSoC for the 2016–2017 school year and questioned whether PSoC’s reputation 

was so tarnished by the technical issues that arose with LAUSD that PSoC might never be widely 

sold.18 He wrote that the Employment Agreement did not require Dr. Codding to market or sell 

PSoC but that Dr. Codding nonetheless had been the one to line up potential clients and to respond 

 

10). Dr. Codding objects, arguing that Mr. Costello’s authentication constitutes “new evidence” that 

Pearson Education cannot submit on reply. Pl. Objs. to New Reply Evid. – ECF No. 169 at 3. Dr. 

Codding does not dispute the authenticity of the letters that Pearson Education submitted. There is no 

material dispute that the letters are genuine, and the court can consider them for whatever value they 

may have. Cf. Fraser v. Goodale, 342 F.3d 1032, 1037 (9th Cir. 2003) (“Because the [document]’s

contents could be presented in an admissible form at trial, we may consider the [document]’s contents 

in the [defendant]’s summary judgment motion.”).

17 January 2016 Codding Letter – ECF No. 187-5 at 4 (COD-00117303) (“It is true that Dr. Codding’s 

agreement with Pearson alludes to 2012 as the year in which it was anticipated that sales of the courses 

would begin. However, that agreement is dated December 16, 2010, so the 2012 date was clearly 

nothing more than a guesstimate of when the courses might go on sale. In December of 2010, 

development of the courses had not even begun in earnest. In fact, it cannot be argued that Pearson 

began selling the courses until 2013 when Pearson responded to the LAUSD’s RFP [request for 

proposal]. Thus, without any extension of the four year period, pursuant to the terms of the 

agreement[,] the sales period would run through at least mid 2017. In view of Pearson’s inability to 

develop the technology necessary to implement the courses on the iPad and its consequent inability to 

meaningfully market the courses during 2014, 2015 and at least early 2016, the sales period should be 

extended through the 2019–2020 school year.”).

18 Id. (“In the draft statement attached to your letter to me of December 16, 2015, you state that 

Pearson intends to re-launch the courses into the marketplace in the fall of 2016. However, as far as 

Dr. Codding is aware[,] no marketing plan has been finalized for the PSoC. If the courses were going 

to be re-introduced in the fall of 2016, because of the selling cycle for school materials, a marketing 

plan should have been prepared in mid 2015. Accordingly, a full scale marketing of the PSoC in late 

2016 appears doubtful and any “re-launching” would likely be limited to small scale pilot programs, 

hardly calculated to produce any meaningful sales. Indeed, it is our understanding that Pearson has no 

plans to market the courses for the 2016–2017 school year. Moreover, in view of the widely publicized 

debacle in LA resulting from Pearson’s complete failure to fix the technology in-house or to retain the 

outside resources necessary to fix the technology (as it is now doing with Accenture), there is a 

substantial question as to whether the product’s reputation is so tarnished that it may never be widely 

sold.”).

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ORDER – No. 18-cv-00817-LB 8

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to LAUSD’s request for proposal, which led to clients’ adopting PSoC.19 Mr. Codding concluded 

by writing:

We have now gone back and forth a couple of times on these issues. We hope that 

this matter can be resolved amicably and without litigation. To do so, we have the 

following proposal. In view of the facts:

• that the LAUSD iPad program collapsed because Pearson failed to take 

appropriate steps to develop the technology necessary to fulfill its 

obligations to LAUSD notwithstanding repeated warnings and notifications 

from Dr. Codding that the technology was not performing properly;

• that the Pearson technology group consistently and repeatedly made false 

and misleading statements regarding the status and functionality of the 

technology;

• that, had Pearson delivered on its commitments to LAUSD to make the 

technology work, the program would have gone through phrase 3 which 

would have resulted in far more than the [REDACTED] in sales required to 

reach the threshold necessary for additional bonus payments under Dr. 

Codding’s agreement;

• that Pearson has made no efforts to sell the PSoC during 2014 and 2015 and 

appears to have no intention of trying to sell the courses for the 2016–2017 

school year;

• that Pearson’s egregious failure to develop the technology to make the 

product work as designed and to fulfill the commitments made to LAUSD 

and others may have so tainted the product that it may never sell;

• that Pearson’s extensive and inexcusable delay in addressing the problems 

with the technology has so delayed the marketing of the product that 

Pearson may have missed the market window for the product even if it is 

ultimately able to fix the technology;

 

19 Id. at 5 (COD-00117304) (“Dr. Codding’s agreement with Pearson dated December 16, 2010 

contemplated that, after she completed her work assisting with the integration of America’s Choice 

into Pearson, she would develop mathematics and literacy courses aligned with the Common Core 

State Standards and provided a compensation plan for that work. The agreement did not contemplate 

or require Dr. Codding to do any other work. In particular, the agreement did not contemplate or 

require that Dr. Codding engage in sales of the courses[,] which in fact she did[,] being largely 

responsible for lining up most of the First Implementers. It did not contemplate or require her to be 

responsible for developing the substantive response to the LAUSD’s RFP[,] which she did[,] resulting 

in Pearson’s content being selected by many of the bidders on the RFP[,] including all three of the 

finalists for the project. The agreement also did not contemplate or require Dr. Codding to lead 

Pearson’s math and literacy course adoption efforts in California[,] which she did[,] resulting in 

Pearson’s PSoC based courses being adopted[,] notwithstanding the opinions of many in Pearson’s 

management that it could not be done.”).

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• that Dr. Codding performed substantial services on Pearson’s behalf far 

beyond those contemplated by her agreement[,] which services were 

instrumental in setting up the initial potential successes of the PSoC but for 

which she was neither evaluated nor compensated; and

• that the statements to KPCC by a Pearson spokeswoman as reported in the 

article by Mr. Guzman-Lopez were inaccurate, embarrassing and 

defamatory;

Pearson should pay Dr. Codding the additional [$5 million] that, under the long 

term bonus plan, would have been paid to her already had Pearson fulfilled its 

obligations and theoretically will be paid to her under the agreement if Pearson 

fixes the technology and actively markets PSoC either as a whole or in component 

parts. In addition, Pearson should pay $1 million to Dr. Codding for the damage to 

her personal and professional reputation resulting from the comments made to 

KPCC[,] which surely violated Pearson’s policies with respect to the discussion of 

confidential personnel matters. Also, Dr. Codding should receive the one year’s 

severance salary provided for in her agreement.20

4.2 The February 2016 Pearson Letter

On February 19, 2016, Mr. Costello wrote a letter responding to Mr. Codding (the “February 

2016 Pearson Letter”).21 He rejected Mr. Codding’s demand that Pearson Education pay Dr. 

Codding $6 million and instead reiterated an offer to pay her one year of severance in exchange 

for her release.22 He additionally offered to extend the time period for calculating PSoC sales for 

the purposes of Dr. Codding’s bonuses through 2019.23 He wrote:

It is clear that your client is not now entitled to any payment under the longterm bonus plan contained in her employment agreement with Pearson (“Long-term 

Bonus Plan” or “Plan”) under any legal theory whatsoever. The Long-term Bonus 

Plan is still in force and your client’s right to payment is governed by the terms of 

the Plan and by actual sales of PSoC.

We do not agree with your position that the sales performance of PSoC is at its 

current level because of “Pearson’s failures”. Specifically, we do not agree with the 

“facts” that you allege in the bullet points appearing in the last two pages of your 

 

20 Id. at 7–8 (COD-00117306–07) (redactions in letter as filed with court).

21 February 2016 Pearson Letter – ECF No. 187-5 at 10–11 (COD-00117311–12).

22 Id. at 10 (COD-00117311).

23 Id. at 11 (COD-00117312).

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letter. There are many reasons why sales of PSoC are at their current level, and it is

just not the case that Pearson is solely at “fault” for the actions of LAUSD with 

regard to the PSoC courses. This will become quite clear in any litigation you 

choose to commence.

More importantly for our discussions, however, it is clearly not true that the 

PSoC product is “tainted” to the point where it “may never sell”. As I shared in my 

email to you last week, Pearson is updating the product and will be relaunching it 

later this year. We certainly anticipate further sales of the courses.

Regarding the KPCC article, we have already stated our position on your claims 

for damages related to the article, and it is not necessary for us to repeat them here, 

except to reiterate that even if the facts regarding Ms. Howe’s statements to the 

KPCC reporter were as you allege them, your client would still have no valid claim 

against Pearson as a result of such alleged statements.

Offer of Resolution

Despite our differences, however, and in an effort to reach an amicable 

resolution of your dispute with Pearson, we are prepared to offer another significant 

concession in the terms of the Long-term Bonus Plan: we would agree to further 

toll the period during which your client would be eligible to earn compensation 

under the Plan (we had previously offered to extend the period through 2017). 

Subject to your client’s signing her release, we would be willing to extend the 

period during which PSoC sales would be credited to her account under the Longterm Bonus Plan for two additional years, through the 2019 calendar year. (We note 

that we are under no obligation to offer this concession: the terms of the Long-term 

Bonus Plan clearly state that the earnings period under the Plan expires in 2016.)24

4.3 The March 2016 Codding Letter

On March 18, 2016, Mr. Codding wrote a letter responding to Mr. Costello (the “March 2016 

Codding Letter”).25 He wrote that Dr. Codding was prepared to accept Mr. Costello’s proposal 

“with a few modifications and clarifications.”26 With respect to the calculation of Dr. Codding’s 

bonus, Mr. Codding wrote:

As for the sales period for the payments under the agreement, Dr. Codding 

appreciates Pearson’s agreement to extend the cutoff. However, as a point of 

clarification, under the agreement[,] the expiration of the earnings period would not 

have expired in 2016 as suggested in your letter. The agreement specifically states 

 

24 Id. at 10–11 (COD-00117311–12).

25 March 2016 Codding Letter – ECF No. 187-5 at 13–15 (COD-00117313–15).

26 Id.

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that the period extends for four years from when Pearson starts selling the courses. 

Although at the time the parties entered the agreement they anticipated that Pearson 

would begin selling the courses in 2012 as suggested in the agreement, Pearson did 

not, in fact, begin selling the courses until 2013. Consequently, the four year sales 

period provided for in the agreement would expire in 2017, not 2016. Dr. Codding 

is prepared to accept the three year extension of the sales period under the 

agreement but, in view of the uncertainty regarding when Pearson will actually 

begin selling the courses again (we understand that Pearson is still having trouble 

making some of the important features of the courses work on the app), proposes 

that the sales period be extended for three years from the time when Pearson 

commences a bona fide commercial effort to sell courses which are substantially 

functional. If Pearson commences such an effort during 2016 as you suggest it will, 

then the sales period will expire at the end of 2019 as proposed in your letter. 

However, if Pearson’s sales efforts are delayed because of technical difficulties or 

some other reason, then the sales period under the agreement will be extended 

accordingly.

. . . .

If this matter can be resolved as proposed here, Dr. Codding and her team, 

pursuant to mutually agreeable terms, would be willing to assist Pearson in 

marketing and selling the PSoC.27

Mr. Codding additionally proposed several other modifications and clarifications to Pearson 

Education’s proposal.28

4.4 The April 2016 Pearson Letter

On April 29, 2016, Mr. Costello wrote a letter responding to Mr. Codding (the “April 2016 

Pearson Letter”).29 Mr. Costello sent Mr. Codding a draft of a proposed Agreement and Release 

that he said “reflects, in Paragraph 2, the clarifications and amendments to the Employment 

Agreement to which we have already agreed in previous letters, and also our agreement on certain 

of the additional clarifications and amendments that you requested in your March 18 letter.”30 Mr. 

Costello summarized Mr. Codding’s requests from the March 2016 Codding Letter as:

1. A clarification of the rules relating to the sale of identifiable “component 

parts” of the PSoC courses in other Pearson products.

 

27 Id. at 14–15 (COD-00117314–15).

28 Id. at 13–15 (COD-00117313–15).

29 April 2016 Codding Letter – ECF No. 187-5 at 17–18.

30 Id. at 17.

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ORDER – No. 18-cv-00817-LB 12

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2. Agreement that your client would receive credit for shipments to certain 

“First Implementers” for which Pearson did not receive payment, but for 

which you believe that the materials were provided “with the clear 

understanding that the course materials would be paid for”.

3. An agreement that Pearson would credit your client with sales of 

identifiable Professional Development services that are related to PSoC.

4. An agreement to leave open the possibility of extending the earnings period 

described in Paragraph 2(c) of the Employment Agreement.

5. An updated statement of sales through December 31, 2015. (We wil1 send 

this to you shortly)31

Mr. Costello responded that Pearson Education rejected Dr. Codding’s proposal to extend the 

period for calculating PSoC sales for the purposes of Dr. Codding’s bonuses beyond 2019 but 

agreed to the rest of Dr. Codding’s proposals.32 Mr. Costello concluded, “If the Agreement and 

Release as amended is acceptable to you and your client, please have your client sign two originals 

of the Agreement and Release and return them to me for countersignature and implementation of 

the settlement terms.”33

4.5 The June 2016 Codding Letter

On June 24, 2016, Mr. Codding wrote a letter responding to Mr. Costello (the “June 2016 

Codding Letter”).34 Mr. Codding said that Dr. Codding had signed Pearson’ Education’s proposed 

Agreement and Release. Mr. Codding nonetheless raised objections to the Agreement and 

Release’s calculation of Dr. Codding’s bonus:

Finally, although the Agreement and Release has been executed and Dr. Codding 

has agreed to proceed under its terms, Dr. Codding continues to be disappointed 

with Pearson’s position with respect to the time for counting sales. In your most 

recent email, you state that Dr. Codding has already received credit for one year’s 

 

31 Id. at 18.

32 Id. (“I believe that the amendments to the Employment Agreement that appear in Paragraph 2 of the 

Agreement and Release are self-explanatory (we have agreed to all of the requests except number 4 

above).”).

33 Id.

34 June 2016 Codding Letter – ECF No. 167-1 at 22–23 (COD-00117339–40).

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sales and will receive credit for three more. If that turns out to be the case, that is 

fine. The problem is with when full blown commercial sales will actually begin. 

The original agreement clearly contemplated that PSoC would go on sale and 

continue on sale for a period of at least four years. As things turned out, that is not 

exactly how things went. Following the debacle in LA, the products were taken off 

the market while the technical problems were being addressed. It remains unclear 

when those problems will be resolved so that the products function as intended 

allowing the products to be sold. To give Dr. Codding credit for a real three years 

of sales rather than the appearance of three years of sales, the start date should be 

tied to the actual start of full commercial sales.35

4.6 The July 2016 Pearson Letter

On July 15, 2016, Mr. Costello wrote a letter responding to Mr. Codding (the “July 2016 

Pearson Letter”).36 Mr. Costello enclosed a copy of the Agreement and Release countersigned by 

Pearson Education. With respect to Mr. Codding’s comments about Dr. Codding’s bonus 

calculation, Mr. Costello wrote, “With regard to the comments in the third paragraph of your letter 

about the earnings period: we understand your concern, but we are proceeding in reliance on the 

signed Agreement and Release and your statement that Dr. Codding ‘has agreed to proceed under 

[the Agreement and Release’s] terms’, notwithstanding those concerns.”37

5. The Agreement and Release

The first paragraph of the parties’ signed Agreement and Release states that it “set[s] forth the 

agreement between you [Dr. Codding] and Pearson Education, Inc. and its affiliates (collectively, 

the ‘Company’) regarding your separation from the Company.”38 It states, “[a]s an initial matter, 

we acknowledge that you and Pearson are parties to an employment agreement dated December 

16, 2010, as amended on December 21, 2012 (the ‘Employment Agreement’).”39 It recites that it 

 

35 Id.

36 July 2016 Codding Letter – ECF No. 167-1 at 25 (COD-00117341).

37 Id. (brackets in original).

38 Agreement and Release – ECF No. 187-3 at 64.

39 Id.

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“contemplates the survival of certain terms under the Employment Agreement, and [] amend[s] 

certain terms of the Employment Agreement, as . . . described . . . below.”40

Among other things, the Release Agreement provided:

[1.]a. In accordance with the Employment Agreement, the Company will pay you 

an amount equal to one year of your pay at your most recent annual salary with the 

Company, minus applicable payroll taxes and withholding. The Company will 

make this payment in a lump sum, minus applicable payroll taxes and withholding, 

within 21 days after your sign and return this Agreement and Release to the 

Company (provided you have not revoked the Agreement and Release).

. . . .

[1.]d. Further, you will continue to be eligible to receive bonuses that may be 

earned in the future under Paragraph 2(c) of the Employment Agreement, subject to 

and in accordance with the terms of the Employment Agreement . . . .

. . . .

[2.]c. The time period described in the first sentence of the first subparagraph of 

Paragraph 2(c) of the Employment Agreement for crediting ‘performance of the 

courses’ shall be extended to include performance through the 2019 calendar year.

. . . .

[7.]a. The consideration you receive under this Agreement and Release is in 

complete discharge, release, and satisfaction of all obligations and liabilities 

(except as otherwise described in this Agreement and release [sic]) of Pearson 

Education, Inc. and its affiliates, including but not limited to Pearson, Inc., 

Pearson plc, Pearson Education Holdings, Inc., Pearson Education and 

Assessment, Inc., The Pearson Charitable Foundation, NCS Pearson, Inc., and 

all of their respective officers, directors, employees, bonus and/or 

compensation plans (collectively, the ‘Released Parties’) with regard to any 

matter or event whatsoever that occurred or happened up to the date of this 

Agreement and Release, including but not limited to matters regarding your

employment with the Company and its termination. . . .

. . . .

[7.]c. This release does not apply to any rights or claims that arise after the 

date you sign this Agreement and Release.

[7.]d. This release does not apply to any rights you may otherwise have to 

receive bonuses that may be earned in the future under the terms of 

Paragraph 2(c) of the Employment Agreement, as amended and clarified by 

Paragraph 2 of this Agreement and Release, above, and any such rights to

 

40 Id.

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ORDER – No. 18-cv-00817-LB 15

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earn such bonuses, in accordance with the terms of the Employment 

Agreement, survive the termination of your employment with Pearson.41

From 2010 (the time Dr. Codding joined Pearson Education) through the end of 2015, lifetime 

PSoC sales totaled $6,002,972.42 Under the Agreement and Release, Pearson Education 

additionally credited Dr. Codding with certain “sales” where Pearson Education later provided 

refunds to customers and other sales that had been invoiced but not collected.43 Taking all of these 

together, through the end of 2015, there had been a total of $16,415,376 in PSoC sales for the 

purposes of calculating Dr. Codding’s bonuses.

44 As such, for Dr. Codding to receive her initial $3 

million bonus, there would have to be an additional $58,584,624 in PSoC sales before the end of 

2019; for Dr. Codding to receive her maximum $5 million bonus, there would have to be an 

additional $208,584,624 in PSoC sales.

6. What PSoC Sales Would Have Been Had Pearson Education Used Best Efforts

6.1 Actual PSoC Sales

Pearson Education attached to its motion for summary judgment a spreadsheet listing PSoC

profit and loss (“P&L”) from 2011 through 2018.45 The P&L chart states that there were $12,000 

in PSoC bookings in 2016, $1,406,733 in 2017, and $327,290 in 2018, before taking into account 

offsets for paying returns to customers and other changes to deferred revenue.

46 The chart does not 

break down 2016 into the period before July 2016 (when the parties signed the Agreement and 

Release) versus after; if one were to credit all 2016 bookings to the post-July period, the chart 

 

41 Id. at 42 (¶ 1.a), 43 (¶ 1.d), 45 (¶ 2.c), 46–47 (¶ 7.a, c–d) (emphasis in original).

42 Id. at 74.

43 Id. at 65–66 (¶ 2.a).

44 Id. at 74.

45 PSoC P&L Chart – ECF No. 187-4 at 14 (COD-00000018).

46 Id.

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indicates that there were a total of $1,746,023 in PSoC bookings between 2016 and 2018, before 

taking into account offsets for paying returns to customers and changes to deferred revenues.47

Dr. Codding attached to her motion for summary judgment excerpts from a deposition of one 

of her former colleagues, Deborah Rives, a member of the PSoC services team at Pearson 

Education until she left Pearson Education in 2019.48 (Dr. Rives was not a member of the PSoC 

sales team.49) Dr. Rives reviewed Pearson Education’s P&L chart and agreed that PSoC sales were 

“very bad” and that “there were no sales of PSoC.”50

6.2 Pearson Education’s Efforts to Sell PSoC

The parties submit various documents that they say are relevant to Pearson Education’s efforts 

or lack of efforts to sell PSoC.

Dr. Codding relies primarily on the deposition testimony of her former colleague Dr. Rives. 

Dr. Rives testified that she never saw a sales budget for PSoC.51 She testified that Pearson 

Education made no efforts to sell PSoC in 2016, 2017, or 2018.52 She also testified, however, 

about some of Pearson Education’s efforts with respect to PSoC. According to Dr. Rives:

1. Pearson Education retained a technology expert to create a Chromebook app for PSoC

on the belief that most school districts were buying Chromebook devices (which were 

cheaper than other devices) and that there would be a better chance of selling PSoC if it 

had a Chromebook app.

53 The technology expert was supposed to complete the app by 

December 2016.54 It did not turn over an app to Pearson Education until the summer of 

 

47 Id.

48 Rives Dep. – ECF No. 187-3 at 10 (pp. 66–67); Rives Dep. – ECF No. 187-5 at 56 (p. 113).

49 Rives Dep. – ECF No. 187-5 at 56 (p. 113).

50 Rives Dep. – ECF No. 187-3 at 7 (pp. 53–54).

51 Id. (p. 54).

52 Id. at 11–12 (pp. 72–73).

53 Id. at 7 (p. 56).

54 Id.

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2017, and even at that point, the app was not viable — as Dr. Rives characterized it, 

“[i]t was still not a functional — for a classroom — app.”55

2. Pearson Education invested in search-engine optimization to boost PSoC sales and 

developed a pilot-and-demonstration process for school districts to run trials with 

PSoC.56

3. Pearson Education developed an email campaign to send out mass emails to school 

districts to try to sell PSoC.57

4. Pearson Education held a number of 30-minute webinars for its sales force to educate 

its sales force about PSoC.58

Dr. Codding’s counsel asked Dr. Rives about Pearson Education’s PSoC P&L chart.

59

Specifically, reading from Pearson Education’s responses to Dr. Codding’s interrogatories, 

counsel asked, “[Pearson Education said] ‘Pearson Education’s efforts to sell PSOC and its 

investments to support those efforts have continued since July 15, 2016. Indeed, since the start of 

2016, Pearson Education has made an additional cash contribution of $45.6 million to PSOC.’ Do 

you know whether that’s true or not?”60 Dr. Rives responded, “I don’t.”61

Pearson Education, for its part, maintains that it did in fact spend $45.6 million on PSoC since 

2016 and attaches to its motion for summary judgment a number of documents and presentation 

slides that it contends support its position that it spent considerable amounts and made efforts to 

try to sell PSoC.62

 

55 Id. at 7–8 (pp. 56–57).

56 Id. at 8 (p. 57).

57 Id. (p. 58).

58 Id. (p. 59).

59 Id. at 7 (p. 55–56).

60 Id.

61 Id. (p. 56).

62 Def. MSJ – ECF No. 187-6 at 14–20 (citing documents). Dr. Codding’s counsel submits a 

declaration stating that, “Using my firm’s document review system, I could find no document in PE 

[Pearson Education]’s document production that indicates that PE has made any effort to actually sell 

the Pearson System of Courses after July 15, 2016, and no document that indicates that, after January 

Case 3:18-cv-00817-LB Document 189 Filed 11/08/19 Page 17 of 30
ORDER – No. 18-cv-00817-LB 18

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6.3 What PSoC Sales Would Have Been

Dr. Codding does not offer evidence addressing the issue of what PSoC sales would have been 

had Pearson Education used additional efforts or “best efforts.” She argues instead that she has no 

obligation to offer affirmative evidence on this issue until trial.63

The only thing that Dr. Codding identifies that is even tangentially related to this issue is a 

snippet from Dr. Rives’s deposition testimony. At one point during Dr. Rives’s deposition, Dr. 

Codding’s counsel asked her to read pages two to four of the Second Amended Complaint

(“SAC”), and then to read paragraphs 13 to 42, 45 to 76, and 96 to 109, and then asked, “[a]nd 

from reading those, you find nothing inaccurate in the text you’ve just read?”64 Dr. Rives 

answered, “I won’t know about some of these numbers, but I don’t find anything inaccurate, no.”65

Dr. Codding argues that one of the paragraphs among the 70-plus paragraphs of the SAC that her 

counsel asked Dr. Rives to read alleges, “[t]he evidence is therefore overwhelming that, had 

Pearson Education used its best reasonable efforts after July 15, 2016 to sell PSoC, rather than 

abandoning it and selling other course products, it would have achieved PSoC sales levels 

 

1, 2018, PE has taken any steps to try to sell the Pearson System of Courses.” Kieve Decl. – ECF No. 

187-2 at 5 (¶ 35). Counsel’s conclusory declaration that he could not find certain documents is not 

evidence that such documents do not exist (as opposed to, e.g., Dr. Codding’s possibly failing to 

request the right documents or her counsel’s possibly failing to search his document-review system 

thoroughly). Dr. Codding also argues that many of Pearson Education’s documents are inadmissible. 

Pl. Opp’n to Def. MSJ – ECF No. 161 at 11–14. Because the court’s decision on the parties’ summaryjudgment motions does not turn on the admissibility or inadmissibility of Pearson Education’s 

documents, it declines to address Dr. Codding’s objections here.

63 Pl. Opp’n to Def. MSJ – ECF No. 161 at 16–17 (“Second, the issue is not what PE did (and we know 

it has no evidence that it did anything). It is whether, had PE used its best and reasonable efforts, it 

would have sold enough PSoC to meet Dr. Codding’s bonus level. At the summary judgment stage, 

Dr. Codding has no obligation to adduce this evidence. . . . Fifth, Dr. Codding’s trial witnesses, 

including Dr. Rives (in person or through her deposition testimony), will demonstrate that, with 

reasonable best efforts, PE could and would have sold enough PSoC to require the payment of Dr. 

Codding’s bonus. Sixth, because PE has failed to meet its burden of showing that Dr. Codding cannot 

prove this (and has offered no admissible evidence of it in its motion), Dr. Codding has no obligation 

to offer affirmative evidence on this issue until trial.”) (emphasis in original); Pl. Reply in Supp. of 

MSJ – ECF No. 187-8 at 9–10 (same). Dr. Codding did not submit any declarations or other evidence 

from any of her prospective trial witnesses other than Dr. Rives.

64 Rives Dep. – ECF No. 187-3 at 10–11 (pp. 67–70).

65 Id. at 11 (p. 70).

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sufficient to meet Dr. Codding’s entitlement to her contractually promised bonus.”66 Dr. Codding 

intimates that Dr. Rives endorsed that paragraph and thereby opined that PSoC sales would have 

reached the thresholds necessary for Dr. Codding to receive her bonuses if Pearson Education had 

used best efforts to sell PSoC.

Dr. Rives did not affirmatively testify about what PSoC sales would have been had Pearson 

Education used best efforts. Even if she had, Dr. Codding has not identified anything in the record 

that supports Dr. Rives’s competency to offer such an opinion.67

7. Pearson Education Sells the Division That Contains PSoC

Effective March 29, 2019, Pearson Education sold off its U.S. Learning Service Division —

the Pearson Education division that contained PSoC — to Nexus Capital Management LP.68 The 

business is now known as Pearson K12 Learning LLC.69 Pearson K12’s Senior Vice President, 

Finance, submitted a declaration stating that Pearson K12 is continuing the efforts of Pearson 

Education to market and sell PSoC and that Dr. Codding’s Employment Agreement and the 

Agreement and Release were assigned to Pearson K12.70

 

66 Pl. Opp’n to Def. MSJ – ECF No. 161 at 17 (quoting SAC – ECF No. 187-3 at 45 (¶ 109)).

67 Cf. Rives Dep. – ECF No. 187-5 at 61 (p. 129) (“Q. Okay. You were asked to read through a number 

of paragraphs. I don’t know if it was 50 or 100 or what, but of the Complaint that Ms. Codding has —

A. Right. Q. You remember doing that? A. Yes. Q. And then you were asked the question — was there 

anything in there you saw that was false, right? A. Right. Q. And as I understood the answer that you 

ultimately gave, there was a lot of stuff in there you didn’t know, right? A. Correct. Q. But the things 

you did know about, you didn’t see anything in there that was false; is that fair? A. Correct. Q. But 

there’s stuff in there that you wouldn’t know whether it was right or wrong because you didn’t know 

about it period? A. That’s correct.”); Rives Email – ECF No. 187-7 (“It came out in the deposition that 

I was not in sales and may not have known of other strategies to sell PS[o]C. So I suspect there will be 

other people deposed who were in sales.”).

68 Fletcher Decl. – ECF No. 156-1 at 1 (¶ 3).

69 Id. at 1–2 (¶ 3).

70 Id. at 2 (¶¶ 3–4).

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STANDARD OF REVIEW

The court must grant a motion for summary judgment if the moving party shows that there is 

no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter 

of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). 

Material facts are those that may affect the outcome of the case. Anderson, 477 U.S. at 248. A 

dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to 

return a verdict for the non-moving party. Id. at 248–49.

The party moving for summary judgment bears the initial burden of informing the court of the 

basis for the motion and identifying portions of the pleadings, depositions, answers to

interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material 

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To meet its burden, “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., Ltd. v. Fritz 

Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000); see Devereaux v. Abbey, 263 F.3d 1070, 1076 

(9th Cir. 2001) (en banc) (“When the nonmoving party has the burden of proof at trial, the moving 

party need only point out ‘that there is an absence of evidence to support the nonmoving party’s 

case.’”) (quoting Celotex, 477 U.S. at 325).

If the moving party meets its initial burden, the burden then shifts to the non-moving party to 

produce evidence supporting its claims or defenses. Nissan Fire & Marine, 210 F.3d at 1103. The 

non-moving party may not rest upon mere allegations or denials of the adverse party’s evidence, 

but instead must produce admissible evidence that shows there is a genuine issue of material fact 

for trial. Devereaux, 263 F.3d at 1076. If the non-moving party does not produce evidence to show 

a genuine issue of material fact, the moving party is entitled to summary judgment. Celotex, 477 

U.S. at 323.

In ruling on a motion for summary judgment, the court does not make credibility 

determinations or weigh conflicting evidence. Instead, it views the evidence in the light most

favorable to the non-moving party and draws all factual inferences in the non-moving party’s 

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favor. E.g., Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587–88 (1986); 

Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991).

ANALYSIS

1. Governing Law

Dr. Codding claims that Pearson Education breached the implied covenant of good faith and 

fair dealing in the parties’ Agreements.

“The covenant of good faith and fair dealing is implied in every contract and prevents one 

party from ‘unfairly frustrating the other party’s right to receive the benefits’ of the contract.” 

Codding v. Pearson Educ., Inc., No. 18-cv-00817-LB, 2018 WL 4501131, at *8 (N.D. Cal. Sept. 

18, 2018) (quoting Guz v. Bechtel Nat’l Inc., 24 Cal. 4th 317, 349 (2000)). “To allege a claim for 

breach of the covenant of good faith and fair dealing, a plaintiff must allege the following 

elements: (1) the plaintiff and the defendant entered into a contract, (2) the plaintiff did all or 

substantially all of the things that the contract required her to do or that she was excused from 

having to do, (3) all conditions required for the defendant’s performance had occurred, (4) the 

defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract, and 

(5) the defendant’s conduct harmed the plaintiff.” Id. (citing Qingdao Tang-Buy Int’l Import & 

Export Co., Ltd. v. Preferred Secured Agents, Inc., No. 15-cv-00624-LB, 2016 WL 6524396, at *5 

(N.D. Cal. Nov. 3, 2016); Oculus Innovative Scis., Inc. v. Nofil Corp., No. C 06-01686 SI, 2007 

WL 2600746, at *4 (N.D. Cal. Sept. 10, 2007)). “Regarding the last element — that the 

defendant’s conduct harmed the plaintiff — ‘[c]ausation of damages in contract cases, as in tort 

cases, requires that the damages be proximately caused by the defendant’s breach, and that their 

causal occurrence be at least reasonably certain.’” Id. (nested internal quotation marks omitted) 

(quoting Siqueiros v. Fed. Nat’l Mortg. Ass’n, No. EDCV 13-01789-VAP (DTBx), 2014 WL 

3015734, at *5 (C.D. Cal. June 27, 2014)). “‘The test for causation in a breach of contract action is 

whether the breach was a substantial factor in causing the damages.’” Id. (nested internal quotation 

marks omitted) (quoting Siqueiros, 2014 WL 3015734, at *5). “‘[M]ere conclusory statements do 

not suffice’ to sufficiently state a breach of contract cause of action.” Id. (nested internal quotation 

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marks omitted) (quoting Ketab Corp. v. Mesriani & Assocs., P.C., 734 F. App’x 401, 408 (9th Cir. 

May 2, 2018) and citing Low v. LinkedIn Corp., 900 F. Supp. 2d 1010, 1029 (N.D. Cal. 2012)).

The plaintiff bears the burden of “establish[ing] a causal connection between the breach and 

the damages sought.” Thompson Pac. Constr., Inc. v. City of Sunnyvale, 155 Cal. App. 4th 525, 

541 (2007) (quoting 1 Witkin, Summary of Cal. Law (10th ed. 2005) ch. I, § 870). Additionally, 

the plaintiff bears the burden of establishing damages with “reasonable certainty and probability.” 

Vestar Dev. II, LLC v. Gen. Dynamics Corp., 249 F.3d 958, 961 (9th Cir. 2001) (quoting 

Caminetti v. Manierre, 23 Cal. 2d 94, 101 (1943) (in bank)). As the Ninth Circuit held in a breachof-contract case, summary judgment in favor of defendants is appropriate where “[plaintiffs] 

submitted no specific facts on which a finder of fact could reasonably conclude that [plaintiffs] 

actually suffered damages, caused by [] defendants, in any quantifiable amount.” McGlinchy v. 

Shell Chem. Co., 845 F.2d 802, 809 (9th Cir. 1988).

2. Application

2.1 Dr. Codding Offers No Evidence With Respect to Causation or Damages

Dr. Codding cannot withstand Pearson Education’s motion for summary judgment because she 

has no evidence regarding causation or damages, essential elements of her breach-of-contract 

claim.

By her own admission, Dr. Codding submits no evidence establishing causation and damages. 

Instead, she takes the position that she “has no obligation to offer affirmative evidence on this 

issue until trial.”71 Dr. Codding contends that Pearson Education bears the burden of affirmatively 

showing that she cannot prove causation and damages at trial and that, because Pearson Education 

has not met this supposed burden, she need not offer any evidence regarding causation and 

damages at the summary-judgment stage.72

 

71 Pl. Opp’n to Def. MSJ – ECF No. 161 at 17; Pl. Reply in Supp. of MSJ – ECF No. 187-8 at 10.

72 Pl. Opp’n to Def. MSJ – ECF No. 161 at 17; Pl. Reply in Supp. of MSJ – ECF No. 187-8 at 9–10.

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Dr. Codding is wrong. Because Dr. Codding bears the burden of proof at trial in establishing 

causation and damages, Pearson Education “need only point out ‘that there is an absence of 

evidence to support [Dr. Codding]’s case’” to meet its initial burden on its summary-judgment 

motion. Devereaux, 263 F.3d at 1076 (quoting Celotex, 477 U.S. at 325). Pearson Education does 

not need to disprove Dr. Codding’s claims of causation or damages because Dr. Codding has no 

evidence of causation or damages. Cf., e.g., Hodes v. AMCO Ins. Co., No. 13-CV-0085 W (NLS), 

2014 WL 12531092, at *8 (S.D. Cal. Oct. 24, 2014) (“[B]ecause [plaintiff] bears the burden of 

establishing causation at trial, it is not enough for him to argue [defendant] has failed to provide 

evidence on causation. Rather, [plaintiff] bears the burden of producing actual evidence supporting 

an inference that [defendant] caused the damages . . . .”). Pearson Education has pointed out that 

there is an absence of evidence to support Dr. Codding’s causation and damages theories. The 

burden then shifts to Dr. Codding to produce some evidence from which a factfinder could 

reasonably conclude that Dr. Codding actually suffered damages, caused by Pearson Education, in 

a quantifiable amount. Cf. McGlinchy, 845 F.2d at 809.

As the court previously observed, Codding, 2018 WL 4501131, at *9, the parties’ agreements 

do not provide Dr. Codding with a straight commission or royalty from PSoC sales. Instead, they 

provide Dr. Codding with a bonus only if PSoC sales exceed an initial $75 million sales 

threshold.

73 If PSoC sales do not reach $75 million, Dr. Codding is not entitled to any bonus

(beyond the $1 million initial bonus she already received). Dr. Codding submits no competent 

evidence about what PSoC sales would have been if Pearson Education had used best efforts to 

sell PSoC, much less evidence that those sales would have exceeded $75 million.74 She thus 

 

73 Additionally, Dr. Codding claims as damages not just her initial bonus of $3 million but her 

maximum possible bonus of $5 million. SAC – ECF Nos. 49-4 (under seal), 50 (redacted version) at 

31–32 (¶¶ 148–53). Dr. Codding would have to show that PSoC sales would have exceeded not only 

$75 million but $225 million for her to be eligible for that maximum bonus.

74 Dr. Codding selectively quotes the court as saying at the pleading stage that “Pearson Education’s 

breach — limited to the conduct after July 15, 2016 — was the proximate cause of PSoC sales falling 

short of the Threshold Amount.” Pl. MSJ – ECF No. 150-3 at 9 (purporting to quote Codding, 2018 

WL 4501131, at *9). What the court actually said was that at the pleading stage, “Dr. Codding 

therefore must allege non-conclusory facts that plead that Pearson Education’s breach — limited to 

conduct after July 15, 2016 — was the proximate cause of PSoC sales falling short of the Threshold 

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submits no competent evidence she has been damaged, much less that Pearson Education caused 

this damage. Summary judgment for Pearson Education therefore is appropriate.75

2.2 Dr. Codding’s Arguments Do Not Excuse Her Lack of Evidence

Dr. Codding makes several arguments to address her lack of evidence regarding causation and 

damages. They do not change the outcome.

2.2.1 Burden-shifting

First, Dr. Codding argues that if she establishes that Pearson Education used no efforts to sell 

PSoC, then the burden then shifts to Pearson Education to prove that its efforts would not have led 

to sales sufficient to reach her bonus thresholds.76 She cites three cases to support this argument: 

Bloor v. Falstaff Brewing Corp., 601 F.2d 609 (2d Cir. 1979), Williams Companies, Inc. v. Energy 

Transfer Equity, L.P., 159 A.3d 264 (Del. 2017), and CKB & Associates, Inc. v. Moore 

McCormack Petroleum, Inc., 809 S.W.2d 577 (Tex. Ct. App. 1991).77 These cases do not support 

her argument.

Bloor addressed a contract where a buyer bought rights to a brewery’s labels, trademarks, and 

distribution system in exchange for expressly covenanting to use “best efforts” to promote and 

maintain a high volume of beer sales and to pay a royalty of $0.50 per barrel sold. Bloor, 601 F.2d 

at 610. The district court there concluded that the buyer had breached its best-efforts covenant. Id.

at 615. The district court then “was faced with a difficult problem in computing what the royalties 

on the lost sales would have been.” Id. The district court looked to the sales of two similar beers to 

 

Amount.” Codding, 2018 WL 4501131, at *9 (emphasis added). And now, at the summary-judgment 

stage, Dr. Codding must offer evidence that Pearson Education’s breach — limited to conduct after 

July 15, 2016 — was the proximate cause of PSoC sales falling short of the Threshold Amount. Dr. 

Codding’s quoting of the court’s prior order is misleading.

75 Dr. Codding also argues that Pearson Education breached its Employment Agreement by selling off 

its U.S. Learning Service division, thereby rendering it impossible for Pearson Education to sell any 

more PSoC, and Pearson Education thus has breached its Agreements with her. This argument fails. 

Even assuming Pearson Education breached the Agreements by selling off its U.S. Learning Service 

division, Dr. Codding’s claim would still fail due to her lack of evidence regarding causation or 

damages, i.e., evidence that Pearson Education’s selling its U.S. Learning Service division was the 

cause of PSoC sales falling below $75 million.

76 Pl. Reply in Supp. of MSJ – ECF No. 187-8 at 10–11 (same).

77 Id.

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compute what the beer-in-suit’s sales would have been. Id. The Second Circuit affirmed the 

district court’s damages calculation, holding that “in a situation like this, certainty is not required; 

‘[t]he plaintiff need only show a stable foundation for a reasonable estimate of royalties he would 

have earned had defendant not breached.’” Id. (nested internal quotation marks omitted) (quoting 

Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918,926 (2d Cir. 1977)). Two 

significant factors distinguish Bloor from this case. First, the royalty in Bloor was a straight 

royalty and was not subject to a sales threshold. Id. at 610. Every lost beer sale thus caused a loss 

in royalties and, hence, damages to the brewery. Here, by contrast, Dr. Codding’s bonuses are 

subject to a sales threshold. Dr. Codding is not entitled to any bonus unless PSoC sales reach an 

initial $75 million sales threshold. If, hypothetically, Dr. Codding were correct that by the start of 

2016, “[PSoC]’s reputation [wa]s so tarnished that it may never be widely sold,”

78 such that even 

Pearson Education’s best efforts would not have resulted in $75 million in sales, any failure to 

exert best efforts could not cause Dr. Codding any damages. Second, the plaintiff in Bloor offered 

evidence in support of its damages calculation, namely, the testimony of an expert witness who 

compared the sales of the beer-in-suit with six other groupings of beer to calculate what sales 

would have been had the defendant used best efforts. Bloor v. Falstaff Brewing Corp., 454 F. 

Supp. 258, 277–78 (S.D.N.Y. 1978), aff’d, 601 F.2d 609 (2d Cir. 1979). Here, by contrast, Dr. 

Codding offers no method to calculate what PSoC sales would have been had Pearson Education 

used best efforts, and she points to no evidence that could satisfy Bloor’s requirement that a 

plaintiff show “a stable foundation for a reasonable estimate of royalties [s]he would have earned 

had defendant not breached.” Cf. Bloor, 601 F.2d at 615.

CKB does not provide any better support for Dr. Codding’s arguments. CKB addressed a 

contract where a petroleum refiner expressly agreed to use its “best efforts” to refine 15,000 

barrels of crude oil into various refined products, including “JP-4 jet fuel,” for a petroleum seller. 

 

78 January 2016 Codding Letter – ECF No. 187-5 at 4 (COD-00117303). Dr. Codding cannot bring a 

claim for any pre-July 2016 tarnishing of PSoC’s reputation because she released all pre-July 2016 

claims against Pearson Education and its affiliates in the Agreement and Release. Agreement and 

Release – ECF No. 187-3 at 68–69 (¶ 7.a).

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CKB, 809 S.W.2d at 578. The refiner did not meet the contract targets for the various refined 

products; it refined higher quantities of certain lower-cost products and lower quantities of certain 

higher-cost products, including the JP-4 jet fuel. Id. at 579. The Texas Court of Appeals affirmed 

the trial court’s finding on summary judgment that it was undisputed that the refiner failed to use 

its best efforts to meet the contract targets. Id. at 582. (Among other things, the plaintiff submitted 

an unrebutted deposition of a manager at the refiner who testified that the refiner could have 

doubled its JP-4 production had it chosen to do so. Id.) With respect to damages, the plaintiff 

seller submitted affidavits and depositions that it could have sold more JP-4 (and thus made more 

money) if the refiner had not breached its obligation to refine a sufficient quantity of JP-4. Id. at 

583. The refiner introduced no summary-judgment evidence in response. Id. Here, unlike the 

plaintiff seller in CKB, Dr. Codding does not offer any evidence to support that Pearson Education 

could have made $75 million or more in PSoC sales, thereby requiring a bonus.79

Finally, not only does Williams fail to support Dr. Codding’s argument, it affirmatively 

undermines it. Williams addressed a merger agreement where the defendant agreed to acquire the 

assets of the plaintiff, conditioned on the defendant’s counsel issuing a legal opinion (“721 

Opinion”) that the transfer of the plaintiff’s assets to the defendant, in exchange for partnership 

interests in the defendant, would be a tax-free exchange under the Internal Revenue Code. 

Williams, 159 A.3d at 266. Counsel did not issue the 721 Opinion, and the defendant said that it 

would not proceed with the merger. Id. at 267. The plaintiff sought to enjoin the defendant from 

terminating the merger agreement, arguing that the defendant had breached the agreement by 

failing to use “commercially reasonable efforts” to obtain the 721 Opinion and failing to use 

“reasonable best efforts” to consummate the merger. Id. The Delaware Supreme Court held that 

there was evidence from which a court could have concluded that the defendant breached its 

obligation to use commercially reasonable efforts to obtain the 721 Opinion. Id. at 273. The court 

 

79 More applicable are two points the CKB court made (points that did not apply to that case but do 

apply here): that “[u]nder some circumstances, a party could use best efforts to achieve a contractual 

goal and fall well short,” CKB, 809 S.W.2d at 581, and that “[a plaintiff] must establish a causal link 

between [the defendant]’s breach and [the plaintiff]’s damages,” id. at 583.

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held that, in light of the defendant’s possible breach, the burden shifted to the defendant to show 

that the breach did not materially contribute to the failure of the transaction. Id. Significantly, the 

court held that the defendant could meet that shifted burden simply by pointing out “that the 

record is barren of any indication that the action or inaction of the [defendant] . . . contributed 

materially to [counsel]’s inability to issue the 721 Opinion.” Id. at 274. Similarly, even if the court 

were to adopt Dr. Codding’s argument that the burden shifted to Pearson Education with respect to 

causation, Pearson Education met that burden by pointing out that the record is barren of any 

evidence that Pearson Education’s action or inaction contributed materially to PSoC sales numbers 

that did not reach the initial $75 million sales threshold.

Dr. Codding’s arguments about burden-shifting do not excuse her lack of evidence regarding 

causation and damages and are insufficient to withstand Pearson Education’s motion for summary 

judgment. Cf. Devereaux, 263 F.3d at 1076 (“When the nonmoving party has the burden of proof 

at trial, the moving party need only point out ‘that there is an absence of evidence to support the 

nonmoving party’s case.’”) (quoting Celotex, 477 U.S. at 325); McGlinchy, 845 F.2d at 809 

(affirming summary judgment in favor of defendants where “[plaintiffs] submitted no specific 

facts on which a finder of fact could reasonably conclude that [plaintiffs] actually suffered 

damages, caused by [] defendants, in any quantifiable amount”).

2.2.2 Dr. Rives

Second, Dr. Codding argues that she has evidence establishing causation and damages because

(1) she pleaded in her SAC that “[t]he evidence is therefore overwhelming that, had Pearson 

Education used its best reasonable efforts after July 15, 2016 to sell PSoC, rather than abandoning 

it and selling other course products, it would have achieved PSoC sales levels sufficient to meet 

Dr. Codding’s entitlement to her contractually promised bonus,” (2) her counsel had her colleague 

Dr. Rives review the SAC during her deposition, and (3) “[u]pon her review, Dr. Rives could find 

nothing factually inaccurate in these paragraphs.”80

 

80 Pl. Opp’n to Def. MSJ – ECF no. 161 at 16–17; Pl. Reply Pl. Reply in Supp. of MSJ – ECF No. 

187-8 at 10.

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This is not evidence. Counsel asked Dr. Rives’s to read 70-plus paragraphs of the SAC and 

then asked whether there was anything factually inaccurate in those paragraphs. Dr. Rives did not 

adopt the SAC. Dr. Rives caveated her answer by saying, “I won’t know about some of these 

numbers” in the SAC.

81 Upon further questioning, Dr. Rives testified that there were many 

allegations in the SAC where she did not know, one way or the other, whether they were true or 

false.82 Additionally, there is nothing that supports the conclusion that Dr. Rives (who was not a 

member of the PSoC sales team and does not demonstrably have any expertise in sales) is 

competent to offer an opinion about what PSoC sales would have been if Pearson Education had 

exerted additional efforts, or whether those sales would have reached the thresholds necessary for 

Dr. Codding to receive her bonuses.

83 This deposition-testimony snippet does not raise a genuine 

dispute of material fact about whether Dr. Codding has evidence on causation or damages.

2.2.3 Other witnesses

Third, Dr. Codding claims that other witnesses will demonstrate at trial that Pearson Education 

would have been able to sell enough PSoC to reach the thresholds for Dr. Codding to receive her 

bonuses.84 This argument does not defeat Pearson Education’s motion for summary judgment.

Because Pearson Education pointed out that Dr. Codding did not have evidence with respect to 

causation or damages, Dr. Codding must produce admissible evidence now — not at trial — that 

shows there is a genuine dispute of material fact. Devereaux, 263 F.3d at 1076. She fails to do so.

Dr. Codding’s or her counsel’s conclusions about what some future witnesses might say do not 

raise a genuine dispute of material fact. Cf. Reyes v. Premier Home Funding, Inc., No. C 08-04606 

JW, 2010 WL 11442803, at *8 (N.D. Cal. Mar. 31, 2010 (granting summary judgment to the 

defendant where “Plaintiff contends that expert testimony will be required to determine what 

amount of compensation is ‘reasonable’ in light of the services provided to Plaintiff. However, 

 

81 See supra note 65.

82 See supra note 67.

83 See supra note 67.

84 Pl. Opp’n to Def. MSJ – ECF No. 161 at 17; Pl. Reply in Supp. of MSJ – ECF No. 187-8 at 10.

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Plaintiff offers no expert testimony on this issue. Plaintiff’s contention alone is not evidence, and 

therefore cannot create a dispute of material fact.”).85

* * *

Dr. Codding has no evidence regarding causation or damages, essential elements of her 

breach-of-contract claim. Her attempts to excuse her lack of evidence are meritless. Because Dr. 

Codding fails to meet her burden of producing competent evidence on causation and damages, 

summary judgment in favor of Pearson Education is appropriate.86

 

85 Dr. Codding does not identify who these trial witnesses are in her summary-judgment briefing. In a 

sur-reply that she filed without prior court approval, cf. N.D. Cal. Civ. L.R. 7-3(d) (“Once a reply is 

filed, no additional memoranda, papers or letters may be filed without prior Court approval, except [for 

exceptions not applicable here].”), Dr. Codding says that they include two of her former colleagues, 

Larry Singer and Susan Sclafani. Pl. Sur-Reply in Opp’n to Def. MSJ – ECF No. 178 at 2. She does 

not cite to anything to support that they are competent to offer an opinion about what sales Pearson 

Education would have been able to achieve. Indeed, Dr. Codding and her husband at one point asked 

Mr. Singer to submit a statement opining on what Pearson Education did or failed to do with respect to 

selling PSoC after Mr. Singer left Pearson Education in 2014, Codding Email – ECF No. 187-5 at 72, 

and Mr. Singer responded that he did not know what Pearson Education did after he left and did not 

feel comfortable in expressing such an opinion, Singer Text Message – ECF No. 187-5 at 76.

86 Pearson Education advances other arguments about why summary judgment in its favor is 

appropriate or, in the alternative, why summary judgment in Dr. Codding’s favor is inappropriate. 

Among other things, it argues that the Agreements do not in fact require it to use “best efforts” (or any 

efforts) to market or sell PSoC. Specifically, Pearson Education argues that Dr. Codding and her 

husband and attorney Mr. Codding knew (while they were negotiating the Agreement and Release in 

2016) that Pearson Education might not sell PSoC:

Dr. Codding knew — before she signed the [Agreement and Release] — that Pearson 

Education was not required to make any effort to sell PSoC, and that sales efforts could be 

“delayed because of technical difficulties or some other reason.” [March 2016 Codding 

Letter – ECF No. 187-5 at 15 (COD-00117315).] Dr. Codding knew that delays would not 

constitute a breach, and she tried to add a specific provision to the draft agreement to 

address any delays. Pearson Education rejected that proposal, however, and it was not 

incorporated into the Agreement and Release that Dr. Codding executed. [April 2016 

Costello Letter – ECF No. 187-5 at 18.]

These negotiations make clear that an implied covenant to make best or reasonable 

efforts to sell PSoC was never “within the contemplation of the parties.” Third Story Music 

[Inc. v. Waits,] 41 Cal. App. 4th [798,] 804 [(1995)]. It cannot be “rightfully assumed that 

[such an implied covenant] would have been made if attention had been called to it.” Id.

Indeed, Dr. Codding herself called attention to the fact that Pearson Education was not 

required to make any effort to sell PSoC by the end of 2019, and she tried to extend the 

earnings period “for three years from the time when Pearson commences a bona fide 

commercial effort to sell courses.” [March 2016 Codding Letter – ECF No. 187-5 at 15

(COD-00117315).] If the parties had contemplated an implied covenant for Pearson 

Education to make best or reasonable efforts to sell PSoC by the end of 2019 (as Dr. 

Codding claims), it would not have been necessary for Dr. Codding to propose extending 

the earnings period. The implied covenant would have already obligated Pearson Education 

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CONCLUSION

The court grants Pearson Education’s motion for summary judgment and denies Dr. Codding’s 

motion for summary judgment.

The court denies Dr. Codding’s motion for summary judgment with respect to Pearson 

Education’s affirmative defenses, Pearson Education’s motion to exclude certain of Dr. Codding’s 

witnesses from offering expert testimony, and Dr. Codding’s request to strike certain evidence that 

Pearson Education submitted with its reply brief, as moot.

IT IS SO ORDERED.

Dated: November 8, 2019 ______________________________________

LAUREL BEELER

United States Magistrate Judge

 

to “commence[] a bona fide commercial effort to sell courses.” Id. Given that Pearson 

Education rejected Dr. Codding’s proposal and it was not incorporated into the final 

Agreement and Release, it would be inappropriate — and entirely inconsistent with the 

parties’ agreement — to impose an implied covenant on Pearson Education to use best or 

reasonable efforts to sell PSoC. See Third Story Music, 41 Cal. App. 4th at 809 (holding 

that “a promise can be implied only where it can be rightfully assumed that it would have 

been made if attention had been called to it”).

Def. MSJ – ECF No. 187-6 at 11–12.

The court does not need to decide precisely what obligations Pearson Education did or did not have 

under the Agreements in light of Dr. Codding’s failure to present evidence on causation or damages, 

which dooms her claim regardless of Pearson Education’s obligations. The court does address one 

issue, however: Dr. Codding’s continued improper invocation of the “law of the case” doctrine.

At the pleading stage, when Pearson Education was limited to Dr. Codding’s SAC, it argued in its 

motions to dismiss that the Agreements required to use only “reasonable efforts” to sell PSoC, as 

opposed to Dr. Codding’s claim that it was required to use “best efforts.” See Codding, 2018 WL 

4501131, at *8. The court expressly refrained from deciding what efforts the Agreements required 

Pearson Education to use. Id. Dr. Codding argues that Pearson Education’s taking the position in its 

motions to dismiss that the Agreements required it to use only “reasonable efforts” (as opposed to 

“best efforts”) now renders it the “law of the case” that the Agreements obligated Pearson Education to 

make some efforts to market and sell PSoC. Pl. MSJ – ECF No. 187-1 at 2; Pl. Opp’n to Def. MSJ –

ECF No. 161 at 7–8. Not so. “[T]he denial of a summary judgment motion” — or a motion to dismiss 

— “is never law of the case because factual development is still ongoing. . . . Pretrial rulings, often 

based on incomplete information, don’t bind district judges for the remainder of the case. Given the 

nature of such motions, it could not be otherwise.” Peralta v. Dillard, 744 F.3d 1076, 1088 (9th Cir. 

2014) (en banc). The court’s decisions on Pearson Education’s motions to dismiss do not prevent

Pearson Education from arguing in a motion for summary judgment that the parties’ 2016 letters —

letters that it could not cite in a motion to dismiss — show that the Agreements do not in fact require it 

to use any efforts to market or sell PSoC. The law-of-the-case doctrine does not control the 

construction of the Agreements on summary judgment or in any future proceeding.

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