N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
SC OTTY M AHLUM ,

Pla i ntiff-Appe lla

nt,
v. ADOB E SYSTEM S, INC .,

De fe nda n t-Appe l le e . No. 15-15306 D.C . No. 5:14-c v-02988-LHK
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Northe rn Distric t of C a lifornia L uc y H. Koh, Distric t

Judge , Pre siding Argue d a nd Subm itte d Fe brua

ry 15, 2017 San Fran c isc o , C a lifornia B e fore : W . FLETC HER

and R AW LINSON, C irc uit Judge s, a n d PR ATT, * * Distric t Judge
. Pla intiff-Appe lla

nt Sc otty M ahlum a ppe a ls the distric t c ourt’ s dism issa l of his c om pla i nt upon them otion of De fe nda nt-Appe lle e Adobe Sy ste m s, Inc
. Appe l la n t a sse rts the distric t c ourt e rre d in dismissing the c a se ba se d on its 

# F IL ED APR 26 2017 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The Honora

ble R obe rt W . Pra tt, Unite d State s Distric t Judge for the Southe rn Distric t of Iowa , sitting by de signa t ion.de te rm i nation tha t the e arly te rm ination fe e (ETF) a sse s se d on his c anc e lla t ion of a
se rvic e wa s a

n a lte rnative m e thod of pe rform anc e ra the r tha n a n im pe rm issible
m one ta ry pe na lty . W e re vie w the distric t c ourt’ s gra nt of a 12(b)(6) m otion to dism iss de nov o . Sk

ilstaf, Inc . v . C VS C

are mark C

orp. , 669 F.3d 1005, 1014 (9th C ir. 2012). The c om pla int a lle g e s the ETF provision viola te s C a lifornia ’ s prosc ription on im pe rm i ssible liquida

te d da m a ge s provisions. Se e C a l. C i v. C o de § 1671(d). Howe ve r, C a lifornia la

w is e xplic it: “ Whe re a

c ontra c t for a

spe c ifie d pe riod of tim e pe rm its a pa

rty to te rm inate the a gre e m e nt be fore its e xpirat ion in e xc h ange for a l um p-sum m one ta ry pa y m e nt, the pa

ym e nt is c onside re d

m e re ly an
a lte rnative to pe rform anc e , a nd not a pe n a lty .” Morris v . Re dw ood Empire Banc orp , 27 C a l. R

ptr. 3d 797, 803 (C a l. C t. App. 2005); s e e Blank v . Borde n , 524 P.2d 127, 131–32 (C a l . 1974). Appe lla nt a sks this C ourt to look bey ond the form of the provision a

nd
e va luate its substa

n c e . Se eGrand Prospe c t Partne rs, L.P. v . Ross Dre ss for Le ss, Inc
. , 182 C a l. R

ptr. 3d 235, 254 (C a l . C t. App. 2015). Howeve r, he a lle ge s no fa c ts in his c om

pla int to de m o nstra

te tha t the ETF provision ha s be e n or m ay be a pplie d in suc h a wa y tha t it should be

c onside re d a pe na lty

in substa n c e . C f ., e .g. , In re Dire c TV Early

C anc e llation Litigation , 738 F. Supp. 2d 1062, 1067–69, 1090
2(C .D. C a l. 2010) (de line at ing fa c tua l a lle gations suffic ie nt to sta te a c la im that a te rm ination fe e func tions a s a n im pe rm issiblepe na l ty ). Appe lla nt a dva nc e s two le ga l the orie s to support his a lle gation tha

t his
c om pla i nt prope rly sta

t e d a c la im . The first c onc e rns a lte rnative c o nside ra t ion, a nd the o the r whe the r the re e xists a re a sona ble re lat ion be twe e n the ETF a nd the qua ntum of da m a ge s tha t c ould be e xpe c te d to re sult from bre a c h of the c ontra c t. Ne ithe r argum e nt a ffe c ts our de te rm ination tha t the ETF, a s ple a de d in the
c om pla i nt, c onstitute s a

n a lte rnative m e thod of pe rform anc e and not a pe na lty unde r C a lifornia

la w. Se e Morris , 27 C a l. R p tr. 3d a t 803. Appe lla nt a rgue s in the a lte rnative tha t the distric t c ourt im

prope rly dispose d of que stions of fa c t in dism issing his c om

pla int. Howe ve r, the c o m pla int doe s not
a sse rt a ny fa c ts tha t, if substa

ntia te d, would a ffe c t the ETF provision’ s va lidity a s
an a l te rnative pe rform a

nc e provision. The

ope ra tive a lle gations in the c o m pla int upon whic h a

ppe lla nt now re l ie s a

re m e re ly le ga l c o nc lusions. Se e Ashc roft v

. Iqbal , 556 U.S. 662, 678 (2009) (“ Thre a dba re re c ita ls of the e le m e nts of a c a use of
a c tion, supporte d

by m e re c onc lusory

sta te m e n ts, do not suffic e .” ). Appe lla nt
e xplic itly de c line d to a

m e n d his ple a dings be fore the distric t c ourt to a lle ge
a dditiona l fa c ts a

nd re m e dy

the c om pla int’ s de fic ie nc ie s. On the ba sis of thefa c ts

3a lle ge d in the c om pla i nt, the distric t c ourt prope rly de te rm ine d the ETF provision
c onte m p late s a va l id a lte rnative m e thod of pe rform anc e . Appe lla nt’ s m o t ion to ta

k e judic ia l notic e of c ourt filings in In reDire c TV Early C anc e llation Litigation , No. 8:09-ml-02093 (C
. D. C a l. 2010) a nd Hutc hinson v . AT& T Inte rne t Se rv ic e s, Inc
. , No. 2:07-c v-03674 (C .D. C a l. 2008) is de nie d. Although the

e xiste nc e and c onte nt of the se doc um e nts a re prope r subje c ts of judic ia l notic e , the y are not re le va nt to re solving the

a ppe a l. Appe lla

nt’ s Se c ond M otion to Ta

ke Judic ia l Notic e , whic h im pe rm issibly

atte m pts to supplem e nt the fa c t ua l a lle g a tions of thec om pla int a t the re p l y sta ge on a

p pe a l, is de nie d. AFFIRM E D.

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