FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: POMONA VALLEY MEDICAL 

GROUP, INC.,

Debtor,

No. 04-56334 CHANDRAHAS AGARWAL, M.D.,

Appellant, D.C. No. 

v. CV-01-10027-CBM

OPINION POMONA VALLEY MEDICAL GROUP,

INC., a California professional

corporation, d/b/a PROMED HEALTH

NETWORK,

Appellee. 

Appeal from the United States District Court

for the Central District of California

Consuelo B. Marshall, Chief Judge, Presiding

Argued and Submitted

June 8, 2006—Pasadena, California

Filed January 17, 2007

Before: Dorothy W. Nelson, Johnnie B. Rawlinson, and

Carlos T. Bea, Circuit Judges.

Opinion by Judge D.W. Nelson;

Dissent by Judge Rawlinson

667
COUNSEL

Henry R. Fenton, Law Offices of Henry R. Fenton, Los Angeles, California, briefed and argued for the appellant. 

Randall J. Sherman, Stradling Yocca Carlson & Rauth, Newport Beach, California; and Garrick A. Hollander, Winthrop

Couchot, Newport Beach, California, briefed for the appellee.

Marc J. Winthrop, Winthrop Couchot, Newport Beach, California, briefed and argued for the appellee. Paul L. Gale,

Stradling Yocca Carlson & Rauth, Newport Beach, California, argued for the appellee. 

OPINION

D.W. NELSON, Senior Circuit Judge: 

Chandrahas Agarwal (“Agarwal”) appeals the district

court’s decision affirming (1) the bankruptcy court’s order

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 671
rejecting his contract with Pomona Valley Medical Group,

Inc., dba ProMed Health Network (“ProMed”) and (2) the

bankruptcy court’s subsequent order dismissing Agarwal’s

complaint in an adversary proceeding against ProMed. We

have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm,

in part, and reverse, in part. 

BACKGROUND1

On May 14, 1999, Chandrahas Agarwal, a primary care

physician and certified cardiologist, entered into a provider

agreement (the “Agreement”) with ProMed, an “independent

practice association”

2

 in Southern California. Pursuant to the

Agreement, Agarwal provided primary or basic medical services to patients in ProMed’s network. When a patient

required specialty medical services, such as cardiology tests,

Agarwal was required to seek authorization from ProMed’s

medical director. 

Under the Agreement, the twelve-month contract was

extended automatically for an unlimited number of additional

twelve-month periods, unless ProMed provided written notice

of non-renewal.3 At the end of its first term, the Agreement

was extended to June 1, 2000, by the automatic renewal pro1As Agarwal is appealing the district court’s order dismissing his complaint for failure to state a claim, we accept as true the factual allegations

in Agarwal’s Second Amended Complaint. 

2An independent practice association (IPA) is an organization that contracts with individual physicians to provide services to the enrollees of

managed health care plans (i.e., preferred provider organizations (PPOs)

and health maintenance organizations (HMOs)). The physician members

maintain their own private practices and may see patients not enrolled in

the health care plans with which the IPA has agreements. Carl H. Hitchner, et al., Integrated Delivery Systems: A Survey of Organizational Models, 29 WAKE FOREST L. REV. 273, 275 (1994). 

3The Agreement also provided other options for severing the parties’

relationship, including termination with or without cause. Each form of

termination provided different notice and process requirements. 

672 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
vision. Shortly after, on June 29, 2000, ProMed voluntarily

filed for bankruptcy under Chapter 11. 

Approximately six months later, ProMed began routinely

denying initial authorization for cardiology tests Agarwal

requested for his patients. After Agarwal protested, ProMed

eventually authorized most of the procedures he requested. In

April 2001, ProMed warned Agarwal that if he disagreed with

or continued to protest ProMed’s authorization policies he

would be terminated. A month later, the company sent Agarwal written notice that it would not be retaining his services

after the expiration of the second year of the Agreement.

Although the Agreement’s non-renewal provision did not

require justification, the notice stated that Agarwal’s frequent

ordering of “unnecessary tests for patients simply to increase

[his] compensation at ProMed’s expense” justified termination with cause. 

Following the expiration of the Agreement, Agarwal commenced adversary proceedings in bankruptcy court, alleging

various California statutory and common law causes of

action. Thereafter, ProMed moved to “reject” its executory

contract with Agarwal and to dismiss his complaint for failure

to state a claim. The bankruptcy court granted both motions

but permitted Agarwal to file an amended complaint.4 Agar4We note that the contract at issue here was, indeed, executory on June

29, 2000, which was the date ProMed filed its bankruptcy petition. To

determine whether a contract may be rejected under 11 U.S.C. § 365(a),

we look to whether the contract was executory at the time of the filing of

the bankruptcy petition. See, e.g., In re Robert L. Helms Constr. & Dev.

Co., 139 F.3d 702, 706 (9th Cir. 1998) (en banc) (holding that to determine whether a contract is executory, “we look to outstanding obligations

at the time the petition for relief is filed and ask whether both sides must

still perform”); In re Coast Trading Co., 744 F.2d 686, 692-93 (9th Cir.

1984) (holding that a contract is executory if at the time of the bankruptcy

petition filing, the contract is not yet fully performed on both sides). Agarwal concedes that his contract with ProMed was executory when the bankruptcy petition was filed in this case; thus, ProMed could move to reject

the contract under 11 U.S.C. § 365(a). 

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 673
wal, instead, appealed to the district court, which affirmed the

bankruptcy court’s decisions. This timely appeal followed. 

DISCUSSION

We review de novo the district court’s decision in a bankruptcy appeal. In re Onecast Media, Inc., 439 F.3d 558, 561

(9th Cir. 2006). Therefore, we must consider independently

the bankruptcy court’s underlying ruling, applying the same

standard of review as the district court. Id.

I. Rejection of the Executory Contract and the Business

Judgment Rule 

[1] As a preliminary matter, we hold that the bankruptcy

court did not err in approving ProMed’s rejection of its executory contract with Agarwal.5

 Under 11 U.S.C. § 365(a), a

Chapter 11 debtor-in-possession, “subject to the court’s

approval, may . . . reject any executory contract.” See also In

re Robert L. Helms Constr. & Dev. Co., Inc., 139 F.3d 702

(9th Cir. 1998) (en banc). In making its determination, a

bankruptcy court need engage in “only a cursory review of a

[debtor-in-possession]’s decision to reject the contract. Specifically, a bankruptcy court applies the business judgment

rule to evaluate a [debtor-in-possession]’s rejection decision

. . . .” Durkin v. Benedor Corp. (In re G.I. Indust., Inc.), 204

F.3d 1276, 1282 (9th Cir. 2000) (citing NLRB v. Bildisco &

Bildisco, 465 U.S. 513, 523 (1984)); see also In re Chi-Feng

Huang, 23 B.R. 798, 800 (9th Cir. BAP 1982) (citing cases).

5As explained supra, the contract was executory. See In re Robert L.

Helms, 139 F.3d at 706. We need not determine whether we are persuaded

that “events after the filing may cause the contract to be regarded as not

executory when the motion to assume or reject was made, such as contracts which expired post-petition by their own terms after the date of filing but before the motion was heard.” In re Spectrum Info. Tech., Inc., 193

B.R. 400, 404 (E.D.N.Y. 1996) (internal alterations omitted) (citing

cases). Assuming the allegations in Agarwal’s complaint are true, his contract with ProMed did not expire by its own terms; it was terminated in

violation of them. 

674 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
[2] We have never had the occasion to define the contours

of the business judgment rule in the bankruptcy context. However, courts are no more equipped to make subjective business

decisions for insolvent business than they are for solvent businesses, so we have no difficulty concluding that its formulation in corporate litigation is also appropriate here. See

Lubrizol Enter. v. Richmond Metal Finishers, 756 F.2d 1043,

1047 (4th Cir. 1985) (adopting the corporate business judgment rule for bankruptcy proceedings). 

[3] Thus, in evaluating the rejection decision, the bankruptcy court should presume that the debtor-in-possession

acted prudently, on an informed basis, in good faith, and in

the honest belief that the action taken was in the best interests

of the bankruptcy estate. See Navellier v. Sletten, 262 F.3d

923, 946 n.12 (9th Cir. 2001); FDIC v. Castetter, 184 F.3d

1040, 1043 (9th Cir. 1999); see also In re Chi-Feng Huang,

23 B.R. at 801 (“The primary issue is whether rejection would

benefit the general unsecured creditors.”). It should approve

the rejection of an executory contract under § 365(a) unless it

finds that the debtor-in-possession’s conclusion that rejection

would be “advantageous is so manifestly unreasonable that it

could not be based on sound business judgment, but only on

bad faith, or whim or caprice.” Lubrizol, 756 F.2d at 1047.

Such determinations, clearly, involve questions of fact, see

Richmond Leasing Co. v. Capital Bank, 762 F.2d 1303, 1307-

08 (5th Cir. 1985); Lubrizol, 756 F.2d at 1047, which we

review for clear error. In re Rains, 428 F.3d 893, 900 (9th Cir.

2005). 

Turning to the instant case, ProMed justified its business

decision, explaining, inter alia, that its Chapter 11 reorganization strategy included efforts to reduce costs by limiting the

number of physicians in its network and severing relationships with physicians, like Agarwal, who created financial

burdens by ordering treatment and tests ProMed considered

unnecessary. 

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 675
[4] We can discern no reason that ProMed’s stated reorganization strategy was so unreasonable as to indicate it acted

in bad faith or on whim or caprice in rejecting the Agreement.

Nor has Agarwal offered any. He merely countered that, in

making its determination to reject an executory contract, a

debtor-in-possession must abide by state law health and safety

regulations. We do not quarrel with this position. See, e.g.,

Hillis Motors, Inc. v. Hawaii Auto Dealers’ Ass’n, 997 F.2d

581, 592 (9th Cir. 1993) (citation omitted) (holding that a

bankruptcy trustee must “manage a business in accordance

with state law, as any other person must”). However, Agarwal

has failed to explain how ProMed’s rejection of the Agreement violates California health and safety laws. 

Agarwal also argued that in approving the decision to reject

an executory contract the bankruptcy court must weigh equitable concerns. He urges us that “it is proper for the court to

refuse to authorize rejection of a lease or executory contract

where the party whose contract is to be rejected would be

damaged disproportionately to any benefit to be derived by

the general creditors of the estate . . . .” In re Chi-Feng

Huang, 23 B.R. at 801. Again, we do not disagree. There may

be cases where the disproportionate damage to the party

whose contract is to be rejected demonstrates that the debtorin-possession’s decision could not be based on sound business

judgment. Here, however, there is no such indication. 

[5] We find it somewhat suspect that ProMed did not seek

to reject the Agreement until Agarwal filed an adversary

claim in the bankruptcy court, more than a year after ProMed

filed its bankruptcy petition. However, after a hearing in

which both Agarwal and ProMed presented their arguments

and representations, the bankruptcy court found that the rejection of the Agreement was in the best interests of the bankruptcy estate and its creditors. That finding of fact necessarily

indicates that the bankruptcy court believed ProMed’s justifications for its actions. The bankruptcy court approval of

ProMed’s decision, which stated the decision was “within the

676 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
sound ‘business judgment’ of the [d]ebtor,” also constitutes

an implicit finding that ProMed did not act in bad faith or on

whim or caprice. On appeal, Agarwal does not challenge

these findings.6

[6] On the record before us, we do not have “the definite

and firm conviction that a mistake has been committed by the

bankruptcy judge.” In re Rains, 428 F.3d at 900 (requiring the

reviewing court to accept findings of fact unless it is definitely and firmly convinced that the finding was erroneous).

Therefore, rejection of the Agreement was proper. 

II. Dismissal of Agarwal’s Complaint

[7] Our conclusion that rejection was proper does not end

our inquiry. ProMed’s rejection of the Agreement constituted

a breach of that contract effective immediately before ProMed

filed for bankruptcy on June 29, 2000. 11 U.S.C. § 365(g). As

of that date, ProMed was relieved of its performance obligations under the Agreement, and Agarwal was permitted to file

an unsecured claim for breach of contract. In re Onecast

Media, Inc., 439 F.3d at 563 (citing cases); In re Pacific

Express, Inc., 780 F.2d 1482, 1486 & n.3 (9th Cir. 1986).7

6As we discuss below, Agarwal does contend that ProMed’s reasons for

not renewing the Agreement were pretextual and that the real reason was

retaliation. Clearly, retaliation may constitute bad faith. Agarwal raises

this argument, however, not with respect to ProMed’s decision to reject

the contract but in relation to his substantive causes of action. Even if we

borrowed Agarwal’s retaliatory termination arguments in evaluating

ProMed’s decision under § 365(a), the bankruptcy court’s implicit finding

that ProMed did not act in bad faith necessarily belies Agarwal’s argument

that it did. Under the clear error standard of review, we are not persuaded

that this finding was incorrect. In re Rains, 428 F.3d at 900. 

7The dissent’s assertions to the contrary notwithstanding, that ProMed’s

rejection of the Agreement was cautionary, and perhaps even superfluous,

does not mean the rejection had no legal effect. Indeed, the rejection was

intended to retroactively relieve the bankruptcy estate of obligations to

perform under the contract. Such relief became effective immediately

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 677
Thus, accepting Agarwal’s allegations as true, we must consider whether it appears beyond doubt that he can prove no set

of facts in support of his claims that would entitle him to

relief. Zimmer v. PSB Lending Corp., 313 F.3d 1220, 1222

(9th Cir. 2002); see also Fed. R. Bankr. P. 7012(b) (incorporating Fed. R. Civ. P. 12(b)(6)).8

In his complaint, Agarwal asserts that ProMed’s termination of the Agreement supported six causes of action: 

(1) Retaliatory termination in violation of Cal.

Bus. & Prof. Code § 2056; 

(2) Violation of the notice and hearing requirements of Cal. Bus. & Prof. Code § 809, et seq.

before the petition for bankruptcy was filed on June 29, 2000. See In re

Rega Props., Ltd., 894 F.2d 1136, 1140 (9th Cir. 1990). Under 11 U.S.C.

§ 365(g)(1), the contract is deemed breached one day prior to the date on

which the bankruptcy petition was filed, even if the term of the contract

had expired. 

Thus, by operation of law, ProMed’s rejection of the contract, while

retroactively effective to discharge its obligation to perform, created secondary rights of compensation in Agarwal, including rights for breach of

contract. Although liability for breach of contract may have been an

unforeseen consequence of ProMed’s decision, a consequence it remains.

8

In dismissing Agarwal’s earlier complaints, the bankruptcy court

explained, 

I really believe . . . that you can come up with a complaint that’s

going to survive a motion to dismiss. But . . . it will not be a complaint in the normal easy pleading ways of the initial parts of the

Federal Rules of Civil Procedure. Instead, it will be [a] very specific, very carefully drafted complaint. 

This requirement was patently improper. The pleading requirements in an

adversary proceeding require only notice pleading—“a short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed.

R. Civ. P. 8(a)(2). See Fed. R. Bankr. P. 7008 (incorporating Rule 8’s

pleading rules). 

678 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
(3) Violation of California’s common law right

to fair procedure; 

(4) Breach of the notice requirements of the

Agreement; 

(5) Unfair competition in violation of Cal. Bus.

& Prof. Code § 17200, et seq.; and 

(6) Interference with prospective business advantage.9

[8] It immediately should be obvious that Agarwal’s fourth

cause of action, challenging as insufficient the notice provided in ProMed’s letter, cannot survive a motion to dismiss

for failure to state a claim. Because of its valid rejection of the

contract, ProMed was relieved of its obligations under the

notice provisions of the agreement. In re Pacific Express,

Inc., 780 F.2d at 1486 n.3 (noting that rejection allows the

bankrupt’s estate to avoid the requirements of the contract).

[9] We are convinced that ProMed’s valid rejection of the

Agreement also is fatal to Agarwal’s second cause of action,

alleging a violation of Cal. Bus. & Prof. Code § 809, and his

third cause of action, which alleges a violation of California’s

common law right to fair procedure. Like the notice provisions of Agarwal’s contract, these causes of action concern

primarily the process by which a company decides to discharge a physician, not whether a physician may be discharged. See Potvin v. Metropolitan Life Ins. Co., 997 P.2d

1153, 1158 (Cal. 2000) (when it applies, the right to fair procedure ensures that a decision is “both substantively rational

and procedurally fair”) (quoting Pinsker v. Pac. Coast Soc’y

of Ortho., 526 P.2d 253, 260 (Cal. 1974); Cal. Bus. & Prof.

9We do not consider the propriety of dismissing Agarwal’s sixth cause

of action, which was not discussed in Agarwal’s opening brief. Indep.

Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th Cir. 2003). 

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 679
Code § 809.1(a) & (c) (entitling certain physicians to written

notice and a hearing before they are terminated). 

[10] Section 365(a) gives debtors wide latitude in deciding

whether to assume or reject a contract, which is inconsonant

with the supplementary procedures imposed under California

law. Moreover, it would be anomalous for § 365(a)—a provision aimed at relieving the debtor of burdensome performance

obligations while it is trying to recover financially, In re Onecast Media, Inc., 439 F.3d at 563—to force ProMed to provide sham notices and hearings from which Agarwal could

expect no relief. Accordingly, we need not determine whether

Agarwal’s second, third, and fourth causes of action pass

muster under the Federal Rule of Bankruptcy Procedure. Even

assuming Agarwal’s allegations were sufficient, he can prove

no set of facts entitling him to the damages he seeks, so dismissal of these causes of action was proper. 

[11] The rejection of an executory contract does not, however, otherwise affect the parties’ substantive rights under the

contract or state law. See In re Onecast Media, Inc., 439 F.3d

at 563 (citing 3 COLLIER ON BANKRUPTCY § 365.09[1] (Alan N.

Resnick & Henry J. Sommer eds., 15th rev. ed. 2005)).

Accordingly, ProMed’s rejection of the Agreement did not

automatically extinguish Agarwal’s other causes of action,

and it is possible that he has stated a claim that survives under

the Federal Rules of Bankruptcy Procedure. We examine each

in turn. 

Agarwal’s first cause of action alleges retaliatory termination in violation of Cal. Bus. & Prof. Code § 2056, which provides that physicians cannot suffer “retaliation . . . [for]

advocat[ing] for medically appropriate health care for their

patients . . . .” Cal. Bus. & Prof. Code § 2056(a) & (c). 

[12] In order to state a claim under § 2056, Agarwal must

first allege that ProMed’s “decision to terminate [his] employment or other contractual relationship . . . or otherwise penal680 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
ize [him was] principally for advocating for medically

appropriate health care . . . .” Cal. Bus. & Prof. Code § 2056(c).10

Agarwal’s complaint states, “The real reason for PROMED’s

termination of Dr. Agarwal is that PROMED . . . wish[es] to

maximize their profits at the patient’s expense . . . . PROMED

. . . perceive[s] Dr. Agarwal as ‘too expensive’ because Dr.

Agarwal does not hesitate to order necessary and entirely

proper medical tests for his patients, in the best interests of his

patients.” If proven, these allegations match precisely the first

element of a retaliatory termination claim: Agarwal was terminated because his ordering medically appropriate health

care made him “too expensive.” Albeit unartful, these allegations are sufficient under liberal notice pleading standards. 

Under § 2056, Agarwal must also allege either that he

appealed ProMed’s decision to deny payment for a service or

that he protested a decision, policy, or practice that he “reasonably believe[d] impair[ed his] ability to provide medically

appropriate health care to his . . . patients.” Cal. Bus. & Prof.

Code § 2056(b).11 Again, Agarwal’s allegations are sufficient.

10Subsection (c) provides: 

The application and rendering by any person of a decision to terminate an employment or other contractual relationship with, or

otherwise penalize, a physician and surgeon principally for advocating for medically appropriate health care consistent with that

degree of learning and skill ordinarily possessed by reputable

physicians practicing according to the applicable legal standard

of care violates the public policy of this state. No person shall terminate, retaliate against, or otherwise penalize a physician and

surgeon for that advocacy, nor shall any person prohibit, restrict,

or in any way discourage a physician and surgeon from communicating to a patient information in furtherance of medically

appropriate health care. 

Cal. Bus. & Prof. Code § 2056(c). 

11In relevant part, subsection (b) provides: 

It is the public policy of the State of California that a physician

and surgeon be encouraged to advocate for medically appropriate

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 681
The complaint stated that Agarwal “advocat[ed] for patients

and protest[ed] the denials and delays in authorization.”

Although Agarwal conceded that payment was ultimately

authorized “[i]n most instances,” nothing in § 2056 requires

that a physician be prevented from providing medically

appropriate health care. Rather, Agarwal must reasonably

believe that ProMed’s initial denials impaired—i.e., damaged,

injured, lessened, see OXFORD ENGLISH DICTIONARY (2d ed.

1989)—his ability to treat his patients. We must broadly construe his statements that he was required to provide “extensive

oral and written justification” for “entirely necessary medical

tests and procedures” and that authorization was delayed and

“nearly always initially denied” as alleging just that. See Khajavi v. Feather River Anesthesia Med. Group, 100 Cal. Rptr.

2d 627, 638 (Cal. Ct. App. 2000) (finding an “unambiguous

legislative intent to apply the statute broadly to protect physicians’ exercise of their professional judgment in advocating

for medically appropriate health care”); id. at 640 (deciding

that there should be a “broad interpretation of the statute”). 

[13] For these reasons, the bankruptcy court erred in dismissing Agarwal’s retaliation claim under Federal Rule of

Bankruptcy Procedure 7012. 

The bankruptcy court also erred in dismissing Agarwal’s

fifth cause of action, alleging unfair competition. California’s

health care for his or her patients. For purposes of this section,

“to advocate for medically appropriate health care” means to

appeal a payor’s decision to deny payment for a service pursuant

to the reasonable grievance or appeal procedure established by

a[n] . . . independent practice association . . . or to protest a decision, policy, or practice that the physician, consistent with that

degree of learning and skill ordinarily possessed by reputable

physicians practicing according to the applicable legal standard

of care, reasonably believes impairs the physician’s ability to provide medically appropriate health care to his or her patients. 

Cal. Bus. & Prof. Code § 2056(b). 

682 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
unfair competition statute prohibits any unfair competition,

which means “any unlawful, unfair or fraudulent business act

or practice.” Cal. Bus. & Prof. Code §§ 17200, et seq.

[14] Thus, in order to state a claim for unfair competition,

Agarwal must first allege that ProMed’s termination of the

Agreement was unlawful, unfair or fraudulent. An unlawful

act is one “forbidden by law, be it civil or criminal, federal,

state, or municipal, statutory, regulatory, or court-made.”

Saunders v. Superior Court, 33 Cal. Rptr. 2d 438, 441 (Cal.

Ct. App. 1994). Thus, stating a claim for retaliatory

termination—an act forbidden by Cal. Bus. & Prof. Code

§ 2056—satisfies the requirement that Agarwal alleged an

unlawful business act or practice. 

Agarwal also advances an alternate theory of unfair competition. He alleges that ProMed’s pretextual reason for terminating the Agreement was “misleading to the public in

general” because, as a result, approximately fifty people

believe he is a bad doctor, which is “entirely false.” Although

such allegations do not state a claim in tort, as used in

§ 17200, “fraudulent” does not refer to the common law tort

of fraud. Bank of the W. v. Superior Court, 833 P.2d 545, 553

(Cal. 1992). Rather, Agarwal need allege only that “members

of the public are likely to be deceived” by ProMed’s business

act or practice. Id. (quoting Chern v. Bank of Am., 15 Cal. 3d

866, 876 (Cal. 1976) (quotation marks omitted)). Clearly, the

public is likely to be deceived by statements that are “entirely

false.” 

On its face, the unfair competition statute also appears to

require that Agarwal allege that he was in competition with

ProMed. Agarwal does allege he was in competition with

ProMed, but as a matter of law, we are not convinced that a

member of an independent practice association may be considered to be in competition with that independent practice

association. We need not resolve our concern here because,

under the unfair competition statute, “competition between

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 683
the parties is not a prerequisite to relief. . . . Emphasis is . . .

placed upon the word ‘unfair’ rather than on ‘competition.’ ”

Ball v. Am. Trial Lawyers Ass’n, 92 Cal. Rptr. 228, 303 (Cal.

Ct. App. 1971) (internal citations omitted) (interpreting virtually identical definition of “unfair competition” in Cal. Civ.

Code § 3369). 

As the California courts have explained, the unfair competition statute is not limited to “conduct that is unfair to competitors.” People ex rel. Renne v. Servantes, 103 Cal. Rptr. 2d

870, 881 (Cal. Ct. App. 2001) (citing Barquis v. Merch. Collection Ass’n, 496 P.2d 817 (Cal. 1972)). Indeed, in defining

unfair competition, § 17200 refers to only business acts and

practices, not competitive business acts or practices, and the

term “embrac[es] anything that can properly be called a business practice.” Cel-Tech Comm., Inc. v. L.A. Cellular Tel.

Co., 973 P.2d 527, 539 (Cal. 1999) (emphasis added) (quoting

Rubin v. Green, 847 P.2d 1044, 1052 (Cal. 1993); cf. Khoury

v. Maly’s of Calif., 17 Cal. Rptr. 2d 708, 712 (Cal. Ct. App.

1993) (sustaining the trial court’s demurrer under Cal. Bus. &

Prof. Code § 17001 because “[t]he facts [did] not involve

[any] . . . anticompetitive practice . . . because appellant is not

in competition with respondent”). 

Moreover, at the time Agarwal initiated his adversary proceeding, the statute gave the right to challenge the unfair business practices to any citizen, even if he suffered no

individualized injury. See Cal. Bus. & Prof. Code § 17204

(2003) (authorizing civil action to enforce § 17200 by “any

person acting for the interests of itself, its members, or the

general public”); see also Californians for Disability Rights v.

Mervyn’s, LLC, 39 Cal. 4th 223, 227 (2006).12

12As a result of an amendment, the statute now provides that “a private

person has standing to sue only if he or she ‘has suffered injury in fact and

has lost money or property as a result of such unfair competition.’ ” Californians for Disability Rights v. Mervyn’s, 46 Cal. Rptr. 3d at 60 (quoting

Prop. 64, § 3). 

684 IN RE: POMONA VALLEY MEDICAL GROUP, INC.
[15] In light of these policies, we are convinced that

competition—as that term is generally understood—is not an

element of a claim under the unfair competition statute. We

can, thus, discern no deficiency in Agarwal’s pleading,13 and

we reverse the bankruptcy court’s dismissal of Agarwal’s

unfair competition claim. 

CONCLUSION

For the foregoing reasons, the district court’s decision is 

AFFIRMED, in part, REVERSED, in part, and

REMANDED.

Each party shall bear their own costs.

RAWLINSON, Circuit Judge, dissenting in part: 

I respectfully dissent from that portion of the majority opinion holding that ProMed’s valid rejection of the Agreement

between ProMed and Chandrahas Agarwal constituted a

breach of that contract. 

The contract between Agarwal and ProMed provided for

non-renewal of the contract if written notice of non-renewal

was given. ProMed complied with the non-renewal provision

of the contract, resulting in non-renewal of the contract.

ProMed only sought rejection of the contract as a cautionary

measure in response to the filing of an adversary proceeding

by Agarwal. The fact that ProMed filed a superfluous motion

13California Business & Professional Code § 17203 allows a court to

enjoin a party from engaging in past behavior that amounted to unfair

competition. Because Agarwal has alleged that members of the public

have been deceived by ProMed’s unfair business act or practice, and he

seeks injunctive relief in his Fifth Cause of Action, Agarwal’s Fifth Cause

of Action states a claim as to which relief can be granted. 

IN RE: POMONA VALLEY MEDICAL GROUP, INC. 685
to reject a contract that had not been renewed does not support a finding of breach.

686 IN RE: POMONA VALLEY MEDICAL GROUP, INC.