Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02201/USCOURTS-caed-2_08-cv-02201-2/pdf.json

Parties Involved:
Boland, Inc.
Plaintiff
Rolf C. Hagen (USA) Corp.
Defendant
S&S Supplies
Plaintiff

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

BOLAND, INC., a California

corporation dba S&S SUPLIES,

NO. CIV. S-08-2201 LKK/JFM 

Plaintiff,

v.

O R D E R

ROLF C. HAGEN (USA) CORP.,

and DOES 1 through 50,

inclusive,

Defendants.

 /

Defendant “Rolf C. Hagen (USA) Corp.” manufactures pet supply

products. Plaintiff Boland Inc., d/b/a S&S Supplies, distributes

products from defendant and other manufacturers to individual

retailers. In 2007, Hagen effectively eliminated the middleman by

offering to sell directly to retailers on the same terms offered

to distributors. Plaintiff filed suit, bringing contract, trade

secret, and other state law claims. Pending before the court is

defendant’s motion for summary judgment on all claims. The court

resolves this motion on the papers and after oral argument. For

the reasons stated below, the motion is granted in part and denied

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 In the court’s view, the case raises difficult issues 1

arising under California’s Statute of Frauds. The statute of

frauds provides a defense to enforcement, and in this motion,

defendant has not raised this issue. For this reason, and because

the court concludes in this order that plaintiffs are at most

entitled to limited damages, the court does not address that issue,

or order the parties to brief it. 

 Facts discussed in this order are undisputed unless 2

otherwise noted. Citations to the undisputed facts are to facts

that parties have identified as undisputed. 

Defendant has lodged objections to several items of evidence

relied on by plaintiff. Some of this evidence is not necessary to

the resolution of the instant motion. To the extent that this

evidence is relevant, defendant’s objections are OVERRULED except

as specified elsewhere in this order. 

In particular, defendant objects to the declaration of Sam

Sarkissian, arguing that a party may not oppose summary judgment

by relying on allegations made in the pleadings. Defendant

mischaracterizes the declaration. Although the declaration repeats

many of the contentions alleged in the complaint, this similarity

does not change the fact that the declaration is evidence, and that

plaintiff relies on this evidence, not the earlier allegations.

2

in part.1

I. BACKGROUND2

The following discussion of the facts is meant to provide

context for the present dispute. The facts are discussed in

greater detail in the court’s analysis.

A. The Parties’ Initial Relationship

Plaintiff Boland is a family corporation. Its president is

Sam Sarkissian. Many, if not all, of its directors and managers

are members of the Sarkissian family. Sometime around 1993,

plaintiff began purchasing pet products from defendant and

distributing these products to individual retailers. Plaintiff

contends that at that time, the parties entered an oral contract

regarding distribution of defendant’s products. While defendant

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disputes whether a contract was entered or is enforceable, for

purposes of this motion defendant does not deny the existence of

an enforceable contract. This agreement was never reduced to

writing.

The distribution arrangement was non-exclusive. Plaintiff

distributed defendant’s products as well as competing

manufacturers’, defendant sold its products to plaintiff as well

as to other distributors, and individual retailers purchased

defendant’s products from plaintiff and from other distributors.

Defendant’s Undisputed Facts (“Def.’s UF”) 1-3, 33. Plaintiff

contends that the contract contained terms regarding (1) pricing,

(2) defendant’s ability to sell directly to dealers, (3)

plaintiff’s obligation to use best efforts to promote Hagen

products, and (4) termination of the agreement. The court

summarizes parties’ positions here, postponing discussion of the

evidence offered in support of their contentions.

Defendant sold its products to plaintiff and other

distributors at prices set by defendant unilaterally, and plaintiff

had no right to negotiate these prices. Def.’s UF 5-6. Prior to

2007, these prices were typically one third of the suggested retail

price. Deposition of Dieter Hagen, 31.

Plaintiff argues that another term of this agreement was that

defendant would not sell directly to retailers. Defendant argues

that plaintiff is barred from making this argument, and that there

is insufficient evidence of such a term.

Plaintiff apparently contends that the contract required

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 It is unclear whether plaintiff contends that the contract 3

compelled plaintiff to use these efforts, such that if plaintiff

did not, defendant could have sought damages for breach of

contract, or whether plaintiff instead contends that failure to use

best efforts would merely provide a ground for termination of the

contract. While the court is hard put to understand how the breach

of a conceded central term of the contract would limit defendant’s

relief thereafter, it may be that such a contention has viability

under California law.

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plaintiff to use best efforts to promote defendant’s products. The 3

parties disagree as to whether “best efforts” required plaintiff

to promote defendant’s products over those of other manufacturers.

Plaintiff argues that defendant could only terminate the

contract if plaintiff failed to use best efforts, while defendant

argues that the contract was terminable at will.

B. Defendant’s Gold Dealer Program

Plaintiff’s trade secrets claims arise out defendant’s “Gold

Dealer” program. The program rewarded retailers for buying

defendant’s products. Deposition of Trevor Hagen, 31. Defendant

identified and solicited the participating retailers using

defendant’s own information. Def.’s UF 24, 25. Plaintiff, along

with other distributors, provided defendant with information

regarding participating retailers’ purchases. In reporting this

information, plaintiff submitted to defendant lists of retailers

who purchased defendant’s products from plaintiff, with the name,

telephone number, and net value of purchases for each retailer.

Def.’s UF 26. Of this information, only the amount of sales was

unknown to defendant, and the remaining information was included

for identification. Def.’s UF 28.

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 Plaintiff refers to this letter as a “termination notice.” 4

Nothing in the letter states that it terminates any existing

agreement or contract. 

5

D. HagenDirect Program

In February of 2007, defendant sent a letter to plaintiff and

other parties announcing defendant’s intention to sell its products

directly to retailers. Compl. Ex. A; see also Declaration of

Andrea K. Anapolsky Ex. D. Defendant had not previously sold 4

directly to retailers in the United States. Plaintiff’s Additional

Fact (“Pl.’s AF”) 26.

In the letter, defendant explained that retailers would be

able to purchase defendant’s products at the prices previously

offered to distributors. Def.’s UF 17; Deposition of Sam

Sarkissian (“Sam Depo.”) 107, 108. This letter offered to accept

returns of products purchased in the previous ninety days, subject

to a 10 percent restocking fee and the purchaser’s payment of

shipping costs. Anapolsky Decl. Ex. D.

“Immediately prior” to this announcement, “plaintiff had

purchased in excess of $200,000 of products,” which defendant had

already shipped. Declaration of Sam Sarkissian (“Sam Decl.”) ¶ 5.

Plaintiff contends that it “requested that [defendant] accept the

return of [this] [d]isputed [i]nventory and refund the price paid

by plaintiff for the products,” but that defendant has refused to

do so. Sam Decl. ¶ 6. The parties have not further explained this

dispute. That is, the parties have not explained whether defendant

refused to accept the inventory on the terms offered in the

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At oral argument defense counsel represented that the terms 5

of return were subject to prolonged negotiation. Nothing in the

record before the court supports that assertion.

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HagenDirect announcement, or whether plaintiff instead demanded

that defendant accept different terms.5

Plaintiff contends that in implementing the HagenDirect

program, defendant used proprietary information plaintiff had

provided to defendant for a limited purpose, to wit, the

information regarding the volume of products purchased by each

retailer. Sam Dec. ¶ 12. Defendant contends that no evidence

indicates that defendant so used this information, or that any such

use would be impermissible.

II. STANDARD FOR A FED. R. CIV. P. 56 MOTION FOR SUMMARY

JUDGMENT

Summary judgment is appropriate when it is demonstrated that

there exists no genuine issue as to any material fact, and that the

moving party is entitled to judgment as a matter of law. Fed. R.

Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157

(1970); Poller v. Columbia Broadcast System, 368 U.S. 464, 467

(1962); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985); Loehr

v. Ventura County Community College Dist., 743 F.2d 1310, 1313 (9th

Cir. 1984).

Under summary judgment practice, the moving party

[A]lways bears the initial responsibility of

informing the district court of the basis for

its motion, and identifying those portions of

“the pleadings, depositions, answers to

interrogatories, and admissions on file,

together with the affidavits, if any,” which

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it believes demonstrate the absence of a

genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[W]here the

nonmoving party will bear the burden of proof at trial on a

dispositive issue, a summary judgment motion may properly be made

in reliance solely on the ‘pleadings, depositions, answers to

interrogatories, and admissions on file.’” Id. Indeed, summary

judgment should be entered, after adequate time for discovery and

upon motion, against a party who fails to make a showing sufficient

to establish the existence of an element essential to that party’s

case, and on which that party will bear the burden of proof at

trial. Id. at 322. “[A] complete failure of proof concerning an

essential element of the nonmoving party’s case necessarily renders

all other facts immaterial.” Id. In such a circumstance, summary

judgment should be granted, “so long as whatever is before the

district court demonstrates that the standard for entry of summary

judgment, as set forth in Rule 56(c), is satisfied.” Id. at 323.

If the moving party meets its initial responsibility, the

burden then shifts to the opposing party to establish that a

genuine issue as to any material fact actually does exist.

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

586 (1986); First Nat’l Bank of Arizona v. Cities Serv. Co., 391

U.S. 253, 288-89 (1968); Ruffin v. County of Los Angeles, 607 F.2d

1276, 1280 (9th Cir. 1979), cert. denied, 455 U.S. 951 (1980).

In attempting to establish the existence of this factual

dispute, the opposing party may not rely upon the denials of its

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pleadings, but is required to tender evidence of specific facts in

the form of affidavits, and/or admissible discovery material, in

support of its contention that the dispute exists. Rule 56(e);

Matsushita, 475 U.S. at 586 n.11; First Nat’l Bank, 391 U.S. at

289; Strong v. France, 474 F.2d 747, 749 (9th Cir. 1973). The

opposing party must demonstrate that the fact in contention is

material, i.e., a fact that might affect the outcome of the suit

under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec.

Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987), and that the

dispute is genuine, i.e., the evidence is such that a reasonable

jury could return a verdict for the nonmoving party, Anderson, 242

U.S. 248-49; Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436

(9th Cir. 1987).

In the endeavor to establish the existence of a factual

dispute, the opposing party need not establish a material issue of

fact conclusively in its favor. It is sufficient that “the claimed

factual dispute be shown to require a jury or judge to resolve the

parties’ differing versions of the truth at trial.” First Nat’l

Bank, 391 U.S. at 290; T.W. Elec. Serv., 809 F.2d at 631. Thus,

the “purpose of summary judgment is to ‘pierce the pleadings and

to assess the proof in order to see whether there is a genuine need

for trial.’” Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P.

56(e) advisory committee’s note on 1963 amendments); International

Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405

(9th Cir. 1985).

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In resolving the summary judgment motion, the court examines

the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any. Rule

56(c); Poller, 368 U.S. at 468; SEC v. Seaboard Corp., 677 F.2d

1301, 1305-06 (9th Cir. 1982). The evidence of the opposing party

is to be believed, Anderson, 477 U.S. at 255, and all reasonable

inferences that may be drawn from the facts placed before the court

must be drawn in favor of the opposing party, Matsushita, 475 U.S.

at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655

(1962) (per curiam)); Abramson v. University of Hawaii, 594 F.2d

202, 208 (9th Cir. 1979). Nevertheless, inferences are not drawn

out of the air, and it is the opposing party’s obligation to

produce a factual predicate from which the inference may be drawn.

Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D.

Cal. 1985), aff’d, 810 F.2d 898, 902 (9th Cir. 1987).

Finally, to demonstrate a genuine issue, the opposing party

“must do more than simply show that there is some metaphysical

doubt as to the material facts. . . . Where the record taken as a

whole could not lead a rational trier of fact to find for the

nonmoving party, there is no ‘genuine issue for trial.’”

Matsushita, 475 U.S. at 587 (citation omitted).

III. ANALYSIS

Plaintiff brings ten causes of action. Plaintiff’s “contract

claims” are for breach of contract, breach of the implied covenant

of good faith and fair dealing, and declaratory judgment as to the

parties’ rights under the contract. Respectively, these are the

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fifth, eighth, and fourth claims. Plaintiff’s “trade secrets”

claims are for misappropriation of trade secrets under Cal. Civ.

Code § 3426 and common law, respectively the sixth and seventh

claims. The remaining claims are for intentional interference with

contractual relationship, intentional interference with prospective

economic advantage, unfair competition, unjust enrichment, and

injunctive relief.

A. Contract Claims

Plaintiff’s contract claims argue that a contract between the

parties prohibited defendant from selling directly to retailers,

that announcement of an intent to sell to retailers thereby

terminated the contract, and that defendant did not have the right

to terminate the contract in this manner and thus breached the

contract. 

Under California law, a claim for breach of contract includes

four elements: that a contract exists between the parties, that the

plaintiff performed his contractual duties or was excused from

nonperformance, that the defendant breached those contractual

duties, and that plaintiff’s damages were a result of the breach.

Reichert v. General Ins. Co., 68 Cal. 2d 822, 830 (1968); First

Commercial Mortgage Co. v. Reece, 89 Cal. App. 4th 731, 745 (2001).

A claim for breach of the implied covenant of good faith and fair

dealing requires the same elements, except that instead of showing

that defendant breached a contractual duty, the plaintiff must

show, in essence, that defendant deprived the plaintiff of a

benefit conferred by the contract in violation of the parties’

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 Plaintiff also implies that defendant breached the agreement 6

by raising the price charged to plaintiff, in addition to lowering

the prices ultimately charged to retailers. No evidence indicates

that the prices paid by plaintiff were raised, or that any increase

would have been a breach of the contract.

Plaintiff’s complaint also alleges that Hagen breached the

agreement by “refus[ing] to accept the return of the Disputed

Inventory, or to refund the purchase price paid by plaintiff for

the Disputed Inventory.” Compl. ¶ 33. Plaintiff does not discuss

this allegation in opposing this motion, and has provided no

evidence indicating that any term of the agreement pertained to an

obligation to repurchase or refund this inventory. The court

therefore grants summary adjudication to defendant as to whether

the contract contained any such express terms. As explained below,

however, defendant’s asserted refusal to accept the merchandise may

nonetheless be significant.

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expectations at the time of contracting. Carma Developers, Inc.

v. Marathon Development California, Inc., 2 Cal. 4th 342, 372-73

(1992).

For purposes of this motion, defendant does not dispute the

existence of a contract, plaintiff’s performance, or damages.

Defendant seeks summary judgment on the ground that the contract

and applicable covenant did not bar defendant from selling directly

to retailers, and alternatively on the ground that any termination

of the contract was permissible. The court denies defendant’s

motion on both grounds.

1. Whether Defendant Could Sell Directly to Dealers under

The Contract

a. The Contract’s Express Terms

Plaintiff argues that the contract expressly prohibited

defendant from selling directly to retailers. Defendant argues 6

that plaintiff is barred from making this argument because the

complaint failed to allege this prohibition. Defendant

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 In briefing this argument, defendant cites solely state 7

authority, e.g., Twaite v. Allstate Ins. Co., 216 Cal. App. 3d 239,

252 (1989) and Otworth v. Southern Pac. Transportation Co., 166

Cal. App. 3d 452, 458-459 (1985). California pleading requirements

do not apply in federal court. Indeed, federal courts have

routinely refused to apply Otworth in federal cases. See, e.g.,

Cayo v. Valor Fighting & Mgmt. LLC, No. C 08-4763, 2008 U.S. Dist.

LEXIS 102866 *5-*6 (N.D. Cal. Dec. 9, 2008); Downtown Plaza LLC v.

Nail Trix, Inc., No. C 08-cv-2001, 2008 U.S. Dist. LEXIS 97129, *3-

*4 (E.D. Cal. Nov. 26, 2008), Kassa v. BP W. Coast Prods., LLC, No.

C 08-02725, 2008 U.S. Dist. LEXIS 61668, *10 (N.D. Cal. Aug. 11,

2008), Wang & Wang, LLP v. Banco Do Brasil, S.A., No. C S-06-00761,

2007 U.S. Dist. LEXIS 25813, *7-*8 (E.D. Cal. Mar. 26, 2007),

Securimetrics, Inc. v. Hartford Cas. Ins. Co., No. C 05-00917, 2005

U.S. Dist. LEXIS 44893 *6 (N.D. Cal. July 21, 2005); but see

Campbell v. Allstate Ins. Cos., No. CV 95-1171, 1995 U.S. Dist.

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alternatively argues that plaintiff has provided no admissible

evidence that the contract included this prohibition.

Defendant’s first argument is that a plaintiff must plead the

essential terms of a contract, and that plaintiff cannot seek to

enforce essential terms not alleged in the pleading. Under the

federal rules, a “plaintiff may set forth the contract verbatim in

the complaint or plead it, as indicated, by exhibit, or plead it

according to its legal effect.” Fed. R. Civ. P. Official Form 3,

12; see also Fed. R. Civ. P. 84 (declaring these forms to be

sufficient). Here, although plaintiff’s complaint is inartful,

plaintiff alleged that defendant “willfully breached the express

and implied terms” of the contract by “refus[ing] to cease its

unfair and unlawful solicitation [of] and direct dealing with

plaintiff’s independent retailer customers.” Compl. ¶ 33.

Plaintiff therefore alleged that the contract prohibited Defendant

from selling directly to customers, sufficiently putting defendant

on notice as to this basis for plaintiff’s claim.7

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26 LEXIS 21849 *7 (C.D. Cal. May 17, 1995).

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Defendant’s next argument is that insufficient admissible

evidence indicates that the contract contained such a term.

Plaintiff provides the testimony of Sam Sarkissian, taken from both

his deposition and a declaration. Sarkissian declares that “I was

specifically assured that Hagen would not offer its products for

sale directly to retailers in plaintiff’s distribution area, or

anywhere in the United States.” Sam Decl. ¶ 8; see also Sam Depo.

30-31. Defendant argues that the court should disregard this

evidence as implausible. The Ninth Circuit has held that “[i]f the

factual context makes the non-moving party’s claim implausible,

then that party must come forward with more persuasive evidence

than otherwise would be necessary to show that there is a genuine

issue for trial.” Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145,

1149 (9th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 587 (1986) and California Architectural

Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466,

1470 (9th Cir. 1987)). Implausibility is a high standard. See,

e.g., Bator v. Hawaii, 39 F.3d 1021, 1026 (9th Cir. 1994), c.f.

Stitt v. Williams, 919 F.2d 516, 523-524 (9th Cir. 1990). In

Stitt, plaintiffs argued that they relied on defendant’s promises

in delaying to file suit, thereby invoking an equitable estoppel

argument. Id. at 523. The Ninth Circuit held it was implausible

to conclude that any reliance on these promises was reasonable when

defendant had failed to keep these promises year after year. Id.

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Summary judgment must be denied, however, where a jury could return

a verdict for the non-moving party. United States ex rel. Anderson

v. Northern Telecom, 52 F.3d 810, 815 (9th Cir. 1995). Here,

although a jury could certainly disbelieve Sam Sarkissian’s

testimony, his testimony is not so implausible that a jury would,

as a matter of law, be compelled to do so.

Nor is this a case where the non-moving party has offered

“sham” testimony. “[A] court may disregard a ‘sham’ affidavit that

a party files to create an issue of fact by contradicting the

party’s prior deposition testimony.” Leslie v. Grupo ICA, 198 F.3d

1152, 1157 (9th Cir. 1999). Here, Sam Sarkissian’s affidavit is

consistent with his prior deposition testimony.

In sum, a jury could find that the agreement included a term

prohibiting Hagen from selling directly to dealers.

b. Implied Covenant of Good Faith and Fair Dealing

Plaintiff’s opposition does not make any mention whatsoever

of the good faith claim. However, the court cannot grant summary

judgment simply for the non-moving party’s failure to oppose the

motion. Martinez v. G.D. Stanford, 323 F.3d 1178, 1182 (9th Cir.

2003), Rogstad v. North Slope Borough, 126 F.3d 1224, 1227 (9th

Cir. 1997).

Under California law, every contract carries with it an

implied covenant of good faith and fair dealing. Carma Developers,

2 Cal. 4th at 371 (noting that this duty is also recognized by most

other jurisdictions, the restatement, and the Uniform Commercial

Code). This duty requires contracting parties to exercise

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discretion given to them under the contract in a way consistent

with the parties’ expectations at the time of contracting. Id. at

372-73. A party breaches this duty when it acts in a way that

deprives another contracting party of benefits conferred by the

contract. Such a breach does not require subjective bad faith or

a breach of the contract’s express terms. Id. at 373. Because this

duty serves to protect the reasonable expectations bargained for

under the contract, the contours of this duty can be modified by

the parties at the time of contracting. Id. at 374.

In some cases, courts have determined as a matter of law the

scope of the covenant as implied by a particular contract. See,

e.g., id. at 376. It appears to the court that in the context of

an oral contract whose terms are uncertain, however, the scope of

the implied duty must be determined by the trier of fact. C.f. San

Francisco Brewing Corp. v. Bowman, 52 Cal. 2d 607, 614 (1959)

(whether an oral contract contained an implied term is a jury

question). This is especially so in light of the fact that the

parties may modify the scope of the covenant’s terms by, e.g.,

explicitly permitting certain actions. Carma Developers, 2 Cal.

4th at 374. Thus, determination of the contract’s terms must

precede determination of the covenant’s scope. Accordingly, the

scope of the covenant here must be an issue for the trier of fact,

if in fact a contract existed.

2. Termination of the Contract

If the contract prohibited defendant from selling directly to

dealers (either through a term of the contract itself or through

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the implied covenant), defendant’s letter announcing the

HagenDirect program constituted a repudiation of the contract. The

court therefore turns, employing summary judgment standards, to

whether such termination was permissible. Specifically, the court

addresses the conditions under which the contract could be

repudiated and whether those conditions were satisfied. As

explained below, a jury could conclude that reasonable notice was

required prior to termination and that defendant failed to provide

such notice.

a. Conditions for Termination

Defendant argues that the contract was terminable at will,

while plaintiff argues that the contract could be terminated only

if plaintiff ceased to use “best efforts” to promote Hagen

products. The cases cited by the parties disclose a third

possibility, that the contract was terminable for cause at any time

or at will upon reasonable notice. For the reasons explained

below, the court rejects plaintiff’s argument that the contract was

terminable only for cause. A jury could find that the contract,

if any, was terminable at will, or that it was terminable either

for cause or upon reasonable notice. 

Plaintiff argues that the contract was only terminable for

cause, such that it would continue so long as plaintiff used “best

efforts” to promote Hagen products. Whether plaintiff actually

used best efforts is discussed below. As to the antecedent issue

of whether the contract was at will, plaintiff primarily relies

upon the testimony of Sam Sarkissian:

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 Zee Medical adopted this test after an extensive review of 8

California caselaw. Over two full pages of plaintiff’s opposition

memorandum consist of direct, albeit unattributed, quotation of

this review, but plaintiff does not discuss the above test.

Similarly, while the cited cases place considerable emphasis on the

distinction between express and implied terms, plaintiff does not

specify whether the parties’ “understanding” was expressed or

implied.

Defendant, meanwhile, argues that the Zee Medical analysis--

and in particular its second step, taken from Consolidated

Theatres--applies only to exclusive sales contracts and to labor

17

While I never specifically discussed

termination of the distribution agreement

which is the subject of this action . . . with

representatives of defendant Hagen, the

understanding reached at the outset of the

distribution relationship . . . was that the

relationship would continue as long as

plaintiff continued to use its best efforts to

promote and solicit the sale of Hagen’s

products, and in fact distributed Hagen

products throughout S&S Supplies’ market area.

Declaration of Sam Sarkissian, ¶ 7; see also Pl.’s Additional Fact

21.

The court evaluates this evidence, and the question of

duration generally, under the framework found in Zee Medical

Distrib. Ass’n v. Zee Medical, 80 Cal. App. 4th 1 (2000). Zee

Medical articulated a three step process for determining a

contract’s duration. “The court first seeks an express term. If

one is absent, the court determines whether one can be implied from

the nature and circumstances of the contract. If neither an express

nor an implied term can be found, the court will generally construe

the contract as terminable at will.” Id. at 10 (citing Consolidated

Theatres, Inc. v. Theatrical Stage Employees Union, 69 Cal. 2d 713,

727-28 (1968)).8

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agreements, and therefore does not apply to this case.

Consolidated Theatres itself refutes this argument, as it based its

conclusion in part on Town of Readsboro v. Hoosac Tunnel & W. R.

Co., 6 F.2d 733 (2d Cir. 1925), which concerned a railroad’s

obligation to pay a town for bridge maintenance, and wherein the

court looked to the parties’ intent regarding duration. 69 Cal.

2d at 725. Conslidated Theatres also favorably cited J. C. Millett

Co. v. Park & Tilford Distillers Corp., 123 F. Supp. 484, 490, 493

(N.D. Cal. 1954), which engaged in a similar analysis in the

context of a non-exclusive sales agreement. Thus, nothing

indicates that a court should only seek to divine the parties’

intent when a sales agreement is exclusive. Whether exclusivity

provides an indication as to the content of the parties’ intent is

a separate question, discussed below.

 The California opinions cited herein have not explained the 9

distinction, if any, between implied contractual terms and

obligations imposed by the implied covenant of good faith and fair

dealing.

18

Here, no evidence indicates that the “understanding” Sam

attests to was the result of an express discussion. Sam instead

concedes that the parties did not discuss termination. Thus the

contract did not contain an express term as to duration. 

Absent an express term, “it is first necessary to determine

whether the intention of the parties as to duration can be implied

from the nature of the contract and the circumstances surrounding

it.” Consolidated Theatres, 69 Cal. 2d at 725. For written 9

contracts, this determination is a question of law for the court.

Id. at 725, 728, 730 (implicitly deciding the issue as a matter of

law); see also Waller v. Truck Ins. Exchange, 11 Cal. 4th 1, 18

(interpretation of written contracts a question of law), 1 Witkin,

Summary 10th Contracts § 741 (2005). For oral contracts, however,

the California Supreme Court has held that whether the contract

contains an implied term as to duration is a question for the jury.

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San Francisco Brewing Corp. v. Bowman, 52 Cal. 2d 607, 614 (1959).

Accordingly, the court asks what implied terms could reasonably be

found by a trier of fact here.

Plaintiff contends that the contract contained an implied term

prohibiting termination except for cause. The court is aware of

only a single California case holding that a contract contained

such an implied term. Zinn v. Ex-Cell-O Corp., 148 Cal. App. 2d

56, 73-74 (1957). In Ex-Cell-O, plaintiffs formed a corporation

that was to serve as the first and exclusive west coast distributor

for milk packaging machines. Id. at 73. The parties entered into

a detailed agreement, which specified definite times for

accomplishment of certain placements of machines, payment of

royalties over a two-year period, and payment of other royalties

“during the life of this agreement.” Id. at 73-74. The agreement

further directed plaintiffs to form and fund a new corporation

solely to conduct the distribution. Id. at 61. In light of all

these factors, the court concluded that “[t]he very nature and size

of the undertaking which burdened [the distributor] once [it]

executed the agency contract indicates that there was no intention

that it should be terminable at will.” Id. at 74. 

After Ex-Cell-O was decided, the California Supreme Court

announced in Consolidated Theatres that as a general rule,

“exclusive sales agency and distributorship contracts” without an

express term of duration shall last “at least a reasonable time,

and that the obligations under the contract shall be terminable at

will by any party upon reasonable notice after such a reasonable

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Consolidated Theatres described the reasonable notice rule 10

as applying when the nature of the contract provided no evidence

as to an implied term, but it may be more accurate to say that the

nature of exclusive sales contracts in general will imply the above

rule.

 See Auto Equity Sales, Inc. v. Superior Court, 57 Cal. 2d 11

450 (1962), Long Beach Drug Co. v. United Drug Co. 13 Cal. 2d 158

(1939), Great Western etc. v. J.A. Wathen D. Co., 10 Cal. 2d 442

(1937), Burgermeister Brewing Corp. v. Bowman, 227 Cal. App. 2d

274, 283 (1964) Mangini v. Wolfschmidt, Ltd., 192 Cal. App. 2d 64

(1961).

20

time has elapsed.” Consolidated Theatres, 69 Cal. 2d at 727-28;

see also Alpha Distributing Co. v. Jack Daniel Distillery, Lem

Motlow, Prop., Inc., 454 F.2d 442, 449 (9th Cir. 1972) (applying

this rule). While plaintiff cites several cases other than Ex- 10

Cell-O in which a contract was found to be terminable only for

cause, each of these cases concerned an express contract

provision.11

The Ninth Circuit’s decision in Alpha Distributing illustrates

application of the Consolidated Theatres rule. Plaintiff Alpha

Distributing contracted to be the exclusive regional distributor

for Jack Daniel’s whiskey. 454 F.2d at 446. In addition to

purchasing and selling products, Alpha “supplied local advertising,

sales aids, sampling and other promotional and sales activities and

support,” including its own “sales executive as ‘brand manager’ of

Jack Daniel’s whiskeys, a function customarily carried out by

distillers in aid of their distributors.” Id. The opinion did not

specify whether these activities were specifically required under

the contract. The Ninth Circuit held that these facts were

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sufficient to warrant application of the Consolidated Theatres

“reasonable notice” rule, but that they did not imply any longer

term of duration. Id. at 449.

While Consolidated Theatres referred to exclusive distribution

agreements, the reasonable notice rule can also apply to nonexclusive agreements. The Court in Consolidated Theatres favorably

cited J. C. Millett Co. v. Park & Tilford Distillers Corp., 123 F.

Supp. 484 (N.D. Cal. 1954), which held that a non-exclusive

distribution agreement implicitly provided that termination could

only be after reasonable notice. Consolidated Theatres, 69 Cal.

2d at 728 n.13 (citing J.C. Millett, 123 F. Supp. at 492). In J.

C. Millett, as in this case, the distribution agreement was not

exclusive in any way. Plaintiff liquor distributor carried both

defendant and other manufacturer’s products, and defendant sold

products both to plaintiff and to another distributor operating in

the same region. 123 F. Supp. at 490. After a bench trial,

Millett held that California’s reasonable notice rule applied

because the plaintiff “[bought defendant’s] products, took title

to them and thus assumed the risk of their destruction, maintained

warehouse facilities and tied up a substantial amount of its

capital in inventory and accounts receivable.” Id. at 493. The

court went on to weigh the magnitude of these particular expenses

in determining what period of time was reasonable. Id. 

While the court is not aware of any California decision

discussing implied duration of a non-exclusive distribution

contract, California opinions discussing exclusive distribution

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 The cited deposition pages are the only evidence offered by 12

plaintiff in support of these assertions. However, plaintiff has

failed to include all of these pages in the excerpt provided to the

court. 

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agreements are consistent with the federal court’s decision in J.

C. Millett. Consolidated Theatres explained the justification for

the reasonable notice requirement in exclusive distribution

contracts as follows:

When the obligor has expended a substantial

sum of money or value or has substantially

rearranged his business . . . preparatory to

engaging upon the terms of agreement for the

benefit of obligee, he ought, through

fairness, to have a reasonable time and notice

of the cancellation of the contract in order

that he might have a reasonable opportunity to

put his house in order.

Consolidated Theatres, 69 Cal. 2d at 728 n.13 (quotations omitted)

(citing J. C. Millett, 123 F. Supp. at 492, Bowman, 52 Cal.2d at

613-14, Connelly v. Venus Foods, Inc., 174 Cal. App. 2d 582, 586-87

(1959)). Thus, the purpose of the rule is to allow the obligor an

opportunity to recoup expenses made in execution of the contract.

While such expenses will often be a factor in exclusive

distribution agreements, they may also arise in non-exclusive

agreements.

Turning at last to the facts of this case, plaintiff argues

that it “expended substantial sums in purchasing, warehousing,

promoting and selling Hagen products.” Sam Decl. ¶ 4. These

expenses purportedly included expanding a warehouse, moving to a

different warehouse, increasing sales staff, and purchasing trucks.

Sam Depo. 60, 62, 65-66. Plaintiff acknowledges that the 12

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contract did not expressly require any of these activities. Sam

Depo. 74. Nor does any evidence in the record indicate to what

extent these expenditures were incurred specifically to accommodate

Hagen products, rather than as a result in the expansion of

plaintiff’s business generally. Although plaintiff further argues

that the “understanding reached at the outset of the distribution

relationship . . . was that the relationship would continue as long

as plaintiff continued to use its best efforts to promote and

solicit the sale of Hagen’s products,” the court disregards this

testimony. Sam Decl. ¶ 7. While the parties’ intent is the

ultimate issue in the Zee Medical/Consolidated Theatres inquiry,

plaintiff has provided no foundation as to Sam’s knowledge of

defendant’s intent, nor is there any evidence indicating that

defendant was aware of plaintiff’s understanding. Fed. R. Evid.

601. Sam may properly testify as to his own understanding, but

this testimony is irrelevant, because a promisee may not bind a

promisor to the promisee’s private understanding of the promise.

On these facts, it is clear that even if Ex-Cell-O remains

good law--which the court does not decide--no trier of fact could

find it satisfied here. See Alpha Distributing, 454 F.2d at 446,

449. Thus, the contract could be terminated without good cause.

Plaintiff has raised a triable question as to whether plaintiff

“expended a substantial sum of money or value or has substantially

rearranged his business” in connection with the contract, such that

the contract, if not terminated for cause, could only be terminated

after a reasonable time and with reasonable notice. Consolidated

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Theatres, 69 Cal. 2d at 728 n.13.

b. Whether The Conditions for Termination Were

Satisfied

For the reasons stated above, material questions exist as to

whether the contract was (a) terminable at will, or (b) terminable

either for cause or upon reasonable notice and after a reasonable

time. If the jury finds the latter, the jury could also find both

that good cause did not exist and that defendant failed to provide

required reasonable notice.

i. Termination for Cause: “Best Efforts”

Plaintiff argues that the contract would last so long as

plaintiff used best efforts to sell defendant’s products. Although

the court rejects plaintiff’s argument that this was the only

situation in which termination was permitted, the parties agree

that even if the contract was not at will, it could be terminated

at any time--regardless of notice--if plaintiff failed to use best

efforts.

The parties disagree as to what “best efforts” were required.

Defendant argues that “best efforts” required plaintiff to promote

defendant’s products over other products. The evidence

demonstrates that plaintiff did not engage in such promotion. Sam.

Depo. 32-35. Plaintiff instead argues that “best efforts” did not

require such preferential treatment, although plaintiff has not

proffered an alternate definition of the phrase.

Plaintiff is hampered by the fact that Sam Sarkissian, in his

deposition, stated that plaintiff agreed to “push the Hagen

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[products] first,” thereby supporting defendant’s position. Sam

attempts to retreat from this statement in a declaration, stating

that the contract did not require plaintiff “to promote Hagen’s

products before promoting products from other manufacturers.” Sam.

Decl. ¶ 9. Insofar as this declaration contradicts Sam’s

deposition testimony, it is a sham and is disregarded. Leslie, 198

F.3d at 1157.

Other evidence, however, provides some support for plaintiff’s

position. Defendant’s witness Dieter Hagen was asked in his

deposition “what kind of support were you looking for in your

distributors?”, to which he answered “That they give us a good

representation of our total product mix.” Deposition of Dieter

Hagen, 48. Dieter’s deposition testimony indicates that defendant

did not believe that plaintiff, or any other distributor, was

expected to promote Hagen over other manufacturers. Dieter’s

apparent belief such promotion was not required is unsurprising,

given defendant’s contention that no contract existed whatsoever.

Nonetheless, for this motion, defendant concedes that a contract

existed. In light of this concession, there is some evidence which

would enable a jury to conclude that any contract that existed did

not require plaintiff to promote defendant’s products over other

manufacturers. Defendant has not argued that plaintiff otherwise

failed to use best efforts, although it is difficult to know what

the phrase means. Accordingly, there is question sufficient to

deny summary judgment as to whether good cause existed to terminate

the agreement.

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 Nonetheless, under such circumstances, plaintiff was 13

required to mitigate its damages which might well mean taking

defendant’s offer but reserving the right to sue for the stock

shelving fee and the cost of transportation.

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ii. Termination after Reasonable Notice

If the contract was not at will, and if there was not good

cause to terminate the contract, defendant could nonetheless

terminate the contract after “reasonable notice.” The parties have

not briefed this issue. 

Here, although reasonable notice has not been precisely

defined, reasonable notice must at the least provide a distributor

a reasonable opportunity to avoid losing money on already-ordered

products. A jury could find that the notice provided by defendant

did not do so. Because retailers learned of the program at the

same time as plaintiff, plaintiff may have immediately lost the

ability to sell to retailers at a profit. Although defendant

offered to accept returns of products, this offer was contingent

on payment of a 10 percent restocking fee and return shipping

costs. A jury could find that the provided notice was

unreasonable.13

3. Declaratory Relief

Because there are material questions as to plaintiff’s breach

of contract and fair dealing claims, there are also material

questions as to plaintiff’s claim for a declaratory judgment as to

the parties’ rights under the contract.

4. Summary of Contract Claims

The court denies defendant’s motion for summary judgment as

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to the breach of contract, breach of the covenant of good faith and

fair dealing, and declaratory judgment claims. The court grants

partial summary adjudication, however, determining that at most,

defendant breached the contract by failing to provide reasonable

notice prior to termination. To clarify future proceedings, the

court explains what plaintiff will need to show to succeed on these

claims. Plaintiff will need to show all of the following:

C that an enforceable contract exists

C that either the contract terms or the

implied covenant prohibited defendant from

selling directly to dealers.

C that the contract did not require plaintiff

to use “best efforts” to market defendant’s

products over other manufacturers’.

C that plaintiff’s actions taken in

connection with the contract are the sort

that imply that termination of the contract

without cause required reasonable notice.

C that the notice of termination provided by

defendant was unreasonable.

C that plaintiff performed its obligations

under the contract

C that plaintiff suffered damages as a result

of defendant’s breach.

The motion for summary judgment is denied because for each of these

issues, defendant has not sought summary judgment or the court has

determined that a triable question exists. Because the breach

consisted of, at most, failing to provide reasonable notice prior

to termination, damages for the contract claims are limited to

those attributable to the failure to provide that notice, rather

than the decision to terminate the contract generally.

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 As used in this case, “misappropriation,” is defined as 14

“Disclosure or use of a trade secret of another without express or

implied consent by a person who . . . (B) At the time of disclosure

or use, knew or had reason to know that his or her knowledge of the

trade secret was: . . . (ii) Acquired under circumstances giving

rise to a duty to maintain its secrecy or limit its use; or (iii)

Derived from or through a person who owed a duty to the person

seeking relief to maintain its secrecy or limit its use.” §

3426.1(b)(2).

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B. Trade Secrets Claims

1. California Uniform Trade Secrets Act

The Uniform Trade Secrets Act, as adopted by California,

provides that “[a] complainant may recover damages for the actual

loss caused by misappropriation” of a trade secret. Cal. Civ. Code

§ 3426.3(a). Plaintiff claims that defendant misappropriated 14

proprietary information “to solicit business from, and establish

competitive business and contractual relationships with,”

plaintiff’s customers. Defendant seeks summary judgment as to this

claim on the ground that defendant did not use any potential trade

secrets.

The statute provides that

“trade secret” means information, including a

formula, pattern, compilation, program,

device, method, technique, or process, that:

(1) Derives independent economic value, actual

or potential, from not being generally known

to the public or to other persons who can

obtain economic value from its disclosure or

use; and 

(2) Is the subject of efforts that are

reasonable under the circumstances to maintain

its secrecy.

Cal. Civ. Code § 3426.1(d). 

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 Sam Sarkissian declares that defendant “utilized 15

plaintiff’s Proprietary Information to solicit and contract

directly with plaintiff’s independent retailer customers.” Sam

Decl. ¶ 12. Because this statement is devoid of factual detail and

foundation, the court disregards it. Fed. R. Evid. 601; Schneider

v. TRW, Inc., 938 F.2d 986, 991 n.3 (9th Cir. 1991).

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Plaintiff previously contended that its customer lists and

certain other information constituted trade secrets, but plaintiff

appears to have abandoned this position. In any event, plaintiff

cannot claim that the names of businesses, the fact that they carry

Hagen products, and the businesses’ contact information are trade

secrets misappropriated by defendant, as the undisputed evidence

establishes that defendant was aware of this information from other

sources. Cal. Civ. Code § 3426.1(d)(1). Although defendant may

not have otherwise known which retailers were specifically

plaintiff’s customers, no evidence indicates that defendant made

any use of the fact that some retailers purchased Hagen products

from plaintiff specifically.15

Plaintiff’s remaining contention is that the dollar value of

Hagen products plaintiff distributed to retailers is a trade

secret, and that defendant misappropriated this information.

Opp’n, 16. Assuming that this information constitutes a trade

secret, no evidence indicates that defendant used or otherwise

misappropriated this information. The HagenDirect program was

offered to all retailers carrying Hagen products. Nothing

indicates that defendant used retailers’ sales figures (from

plaintiff or otherwise) in deciding whether to implement

HagenDirect generally, to whom to offer the program, in any

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marketing effort, etc. 

Accordingly, the court grants summary judgment as to this

claim.

2. Common Law Trade Secrets

California’s Uniform Trade Secrets Act “preempts common law

claims that are ‘based on the same nucleus of facts as the

misappropriation of trade secrets claim for relief.’” K.C.

Multimedia, Inc. v. Bank of America Technology & Operations, Inc.,

171 Cal. App. 4th 939, 958 (2009) (quoting Digital Envoy, Inc. v.

Google, Inc., 370 F. Supp. 2d 1025, 1035 (N.D. Cal. 2005)); Cal.

Civ. Code § 3426.7(b). Here, plaintiff’s common law trade secrets

claim is plainly preempted.

C. Unfair Competition

California’s unfair competition law (“UCL”) proscribes

business acts or practices that are “unlawful, unfair or

fraudulent.” Cal. Bus. & Prof. Code § 17200. Here, plaintiff

offers no argument or legal theory as to how defendant violated the

UCL. See Opp’n 21-22.

Absent any legal theory, the court grants summary judgment as

to this claim insofar as it is predicated on unfair or fraudulent

acts. As to unlawful acts, the UCL “borrows” violations of other

laws. Elsewhere in this order, the court grants defendant’s motion

for summary judgment as to all but plaintiff’s contract claims.

A breach of contract, and by extension, a breach of the implied

covenant of good faith and fair dealing, is not itself an unlawful

act for purposes of the UCL. Puentes v. Wells Fargo Home Mortgage,

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Inc., 160 Cal. App. 4th 638, 645 (2008) (quoting Watson Labs., Inc.

v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 1099, 1118 n.12 (C.D.

Cal. 2001)). “Contractual duties are voluntarily undertaken by the

parties to the contract, not imposed by state or federal law.”

Smith v. Wells Fargo Bank, N.A., 135 Cal. App. 4th 1463, 1484

(2005) (internal modification omitted) (quoting Gibson v. World

Savings & Loan Assn., 103 Cal. App. 4th 1291, 1302 (2002)). An act

that breaches a contract may also breach the UCL, but only when the

act is unfair, unlawful of fraudulent for some additional reason.

Id. at 1483. Here, plaintiff has not provided evidence of, or even

alleged, the requisite additional wrongfulness.

D. Intentional Interference with Contractual Relationship

A claim for intentional interference with contractual

relations requires “(1) a valid contract between plaintiff and a

third party; (2) defendant’s knowledge of this contract; (3)

defendant’s intentional acts designed to induce a breach or

disruption of the contractual relationship; (4) actual breach or

disruption of the contractual relationship; and (5) resulting

damage.” Quelimane Co. v. Stewart Title Guaranty Co., 19 Cal. 4th

26, 55 (1998) (quoting Pacific Gas & Electric Co. v. Bear Stearns

& Co., 50 Cal. 3d 1118, 1126 (1990)).

Here, no evidence indicates that any third party breached a

contract with plaintiff. Plaintiff admits that there were no

contracts between plaintiff and retailers which prohibited

retailers from buying Hagen products from other sources. Def.’s

UF 46. More generally, there are no ongoing contracts whatsoever

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were as above, except that wrongfulness was not required under the

third element. 29 Cal. 4th at 1153. In Della Penna v. Toyota

Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 393 (1995), the Court

held that the tort required that defendant’s acts be “wrongful by

some legal measure other than the fact of interference itself.”

Korea Supply held that as a result, the traditional elements should

be modified to read as above. 29 Cal. 4th at 1154.

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between plaintiff and any retailer. Plaintiff contends that “each

completed sale of a Hagen product to one of plaintiff’s retailers

constitutes a completed contractual transaction,” Opp’n at 20.

This may be so, but no evidence indicates that any retailer had

contracted to buy Hagen products from plaintiff but then failed to

do so. The court grants summary judgment as to this claim.

E. Intentional Interference with Prospective Economic Advantage

The elements of a claim for intentional interference with

prospective economic advantage are (1) “an economic relationship

between the plaintiff and some third party, with the probability

of future economic benefit to the plaintiff;” (2) “the defendant’s

knowledge of the relationship;” (3) “intentional wrongful acts on

the part of the defendant designed to disrupt the relationship;”

(4) “actual disruption of the relationship;” and (5) “economic harm

to the plaintiff proximately caused by the acts of the defendant.”

Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153-

54 (2003) (quotations omitted). For purposes of the third 16

element, “an act is independently wrongful if it is unlawful, that

is, if it is proscribed by some constitutional, statutory,

regulatory, common law, or other determinable legal standard.” Id.

at 1159.

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Plaintiff argues that defendant acted unlawfully by breaching

the distribution agreement and by misappropriating trade secrets.

Opp’n, 21. As to trade secrets, plaintiff has not shown

unlawfulness, and even if plaintiff had, the UTSA would preempt a

claim brought on this basis. As to breach of the distribution

agreement, as noted above, California courts have held that an

breach of contract is not itself “unlawful” conduct for purposes

of California’s UCL, and these cases apply with equal force here.

F. Unjust Enrichment

Plaintiff’s ninth cause of action is for unjust enrichment.

California courts disagree as to whether unjust enrichment may be

brought as a separate cause of action, or instead merely provides

a remedy for another claim, and this court recently adopted the

latter view. See Hands on Video Svcs., Inc. v. Am. Sign Language

Svcs. Corp., No. Civ. S-09-996, 31-32 (E.D. Cal. August 12, 2009).

Regardless of whether brought as a separate cause of action, unjust

enrichment requires “receipt of a benefit and the unjust retention

of the benefit at the expense of another.” Peterson v. Cellco

Partnership, 164 Cal. App. 4th 1583, 1593 (2008) (quoting

Lectrodryer v. Seoulbank, 77 Cal. App. 4th 723, 726 (2000)).

Here, restitution, as a form of unjust enrichment, may be

available under the contract claims. The parties have not

addressed this issue. The court grants summary judgment for

defendant on this claim insofar as it is premised on defendant’s

use of plaintiff’s purported confidential information or trade

secrets.

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G. Injunctive Relief

Plaintiff’s tenth claim requests an injunction prohibiting

defendant from using plaintiff’s trade secrets and proprietary

information. Compl. ¶ 59. Injunctive relief, like restitution,

is ordinarily a remedy rather than an independent cause of action.

Pleading matters aside, plaintiff has failed to raise a triable

question as to whether defendant has wrongfully used proprietary

information. 

In opposing this motion, plaintiff implies that it seeks an

injunction against future breaches of the distribution agreement.

Although material questions exist as to whether the agreement was

wrongfully terminated, plaintiff has not shown that damages will

be an insufficient remedy. Moreover, these damages, if any, will

be limited to those resulting from failure to give proper notice

of termination. There is no possibility of an ongoing violation.

Defendant’s motion is therefore granted as to this claim.

H. Punitive Damages

Plaintiff’s remaining claims are all contract claims for which

punitive damages are unavailable. Summary adjudication is

appropriate as to this issue.

IV. CONCLUSION

For the reasons stated above, defendant’s motion for summary

judgment, Doc. No. 16, is GRANTED IN PART. The court GRANTS

summary judgment as to the first, second, third, sixth, seventh,

and tenth claims. The court DENIES summary judgment as to the

fourth (declaratory relief), fifth (breach of contract), eighth

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(good faith), and ninth (unjust enrichment) claims. These claims

may proceed to the extent consistent with the above order.

IT IS SO ORDERED.

DATED: February 3, 2010.

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