Filed 6/14/21

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

HEWLETT-PACKARD COMPANY,

Plaintiff and Appellant,

v.

ORACLE CORPORATION,

Defendant and Appellant.

 H044371

 (Santa Clara County

 Super. Ct. No. 2011-1-CV-203163)

Hewlett-Packard Company (HP) and Oracle Corporation (Oracle) are large 

technology companies with a long history of partnership. In 2010, after decades of 

cooperation in selling their hardware and software, HP and Oracle plunged into a 

disagreement over Oracle’s decision to hire HP’s former CEO. In an attempt to repair 

this public quarrel and reaffirm their strategic alliance, the companies negotiated a 

confidential settlement agreement. Far from resolving the controversy, it has led to years 

of litigation, including this appeal. 

The settlement agreement contains a short paragraph, described by the parties as 

“the reaffirmation clause,” stating each company’s commitment to their strategic 

relationship and support of their shared customer base. Six months after signing the 

settlement agreement, Oracle announced it would discontinue software development on 

one of HP’s server platforms. The present dispute centers on whether Oracle’s actions
2

violated the reaffirmation clause and, if so, the appropriate basis for any resulting 

damages award. 

In the first phase of a bifurcated trial, the trial court construed the reaffirmation 

clause in the settlement agreement and found that it requires Oracle to continue to offer 

its product suite on certain HP server platforms until HP discontinues their sale. 

Following that decision, Oracle announced it would appeal the trial court’s ruling and 

resume development of its software on HP’s server platforms. In the second phase of 

trial, a jury found that Oracle had breached both the express terms of the settlement 

agreement with HP and the implied covenant of good faith and fair dealing; it awarded 

HP $3.014 billion in damages. Following the jury verdict, the trial court denied HP’s 

request for prejudgment interest under Civil Code section 3287. 

Oracle has appealed the judgment, and HP has filed a cross-appeal. In its appeal, 

Oracle raises the following issues: (1) whether the reaffirmation clause creates a binding 

obligation for Oracle to continue to offer its software product suite on certain HP server

platforms; (2) whether the evidence of Oracle’s conduct supports HP’s claims for breach 

of contract and breach of the implied covenant of good faith and fair dealing, or whether 

HP’s contract claim is properly characterized as a claim for anticipatory breach, in which 

case HP waived its right to damages by accepting performance; and (3) whether HP’s 

$3.014 billion damages award penalized Oracle’s exercise of its constitutionally 

protected right to appeal prior trial court rulings and was based upon an impermissibly

speculative damages model. In its cross-appeal, HP contends the trial court erroneously 

denied its request for limited prejudgment interest under Civil Code section 3287.

For the reasons set out below, we affirm the judgment. Specifically, we conclude 

that the reaffirmation clause requires Oracle to continue to offer its product suite on

certain HP server platforms, and the trial court did not err in submitting to the jury the 

breach of contract and implied covenant claims. On the subject of damages, we reject 

Oracle’s argument that the judgment must be reversed based on violations of its
3

constitutional right to petition and because HP’s expert’s testimony on damages was 

impermissibly speculative under California law and should have been excluded. Finally, 

we decide HP has not shown an abuse of discretion in the trial court’s denial of 

prejudgment interest.

I. FACTS AND PROCEDURAL BACKGROUND

A. Factual Background 

To help explain our conclusions in these appeals, we set out in some detail the 

factual background of the relationship between HP and Oracle, their products, and the 

events leading up to the relevant dispute.1 

1. HP’s Itanium Servers and Strategic Relationship with Oracle

A server is a computer system that performs tasks too big or complex for a 

personal computer or notebook. HP is a computer technology company that in 2010 

manufactured, among other products, computer servers. HP’s high-end “Itanium” servers 

(hereafter Itanium or Itanium servers) are the technology at the center of these appeals. 

Oracle is a technology company that develops software for business clients and, in the

relevant time period, was a significant supplier of software for the high-end server 

market, including for HP’s Itanium servers. 

Itanium servers run on HP’s proprietary Unix (“HP-UX”) operating system and 

use the Itanium microprocessor, which HP jointly developed with Intel Corporation. The 

hardware and operating system together form the server “platform.” The platform is 

fitted with software; together they comprise the “technology stack”—essentially “layers” 

of hardware and software that work together to deliver an integrated product to HP’s 

customers. 

Database software constitutes an essential layer in the technology stack. Oracle is 

a major provider of database software for the high-end server market. Over 80 percent of 

1 These facts are taken from evidence presented in the first and second phases of 

the trial. Except where noted, the facts presented are not in dispute.
4

HP’s Itanium systems use Oracle’s database software. Oracle also provides 

“middleware” software, which sits between the database software and the software 

applications. 

“Porting” is the process of taking software that has been written on one operating 

system and processor architecture—like Oracle’s database, middleware, and software 

applications—and making it available on another system, like HP’s Itanium platform. 

The porting process is most involved when software must be configured and tested to 

work with a new server platform, requiring a significant investment of time and 

resources, especially by the software provider. The process continues even after software 

is established on a platform, as software vendors constantly prepare new software

releases, which need to be tested and tuned to work on the platform.

HP started to sell Itanium in 2002. In 2005, the CEOs of HP, Oracle, and Intel 

jointly launched Itanium on a larger scale. HP and Oracle worked together to port 

Oracle’s database and middleware products to Itanium and did so without any contract or 

payment to Oracle. HP and Oracle each bore the costs associated with the work it had 

done. Similarly, HP and Oracle did not sign a contract or make payments when Oracle 

ported subsequent releases of database or middleware software to Itanium. HP later 

contracted to pay Oracle up to $10.3 million to port one of its application software 

products, the E-Business Suite, to Itanium. HP provided similar funding, under contract, 

to Oracle to port a few other application products to Itanium. However, most of Oracle’s 

porting work to Itanium—about 99 percent—happened without any contract or payments

between HP and Oracle.

Once Oracle ports to a platform, it typically guarantees ongoing support under its 

lifetime support policy to Oracle’s customers on that platform. A variety of 

technological, market, and cost factors thus influence the decision to port to a platform. 

The decision is a discretionary one based on business objectives and made directly by 

Oracle’s CEO. Only a “small percentage” of Oracle’s porting decisions are governed by 
5

contract. Oracle may stop porting to a platform either because the hardware vendor is 

moving customers to a new platform, or because Oracle has decided not to develop new 

releases for the platform even though the hardware vendor continues to market and sell it. 

The only example offered at trial of Oracle choosing to stop developing software for a 

platform still being sold was for IBM’s Power processor running on Linux. It offered no 

such examples involving HP.

The Itanium product line was highly profitable for HP, generating over $2 billion 

in annual profits in 2010. According to Ann Livermore,

2 who at the time was the senior

vice-president of HP’s enterprise business, Itanium was not HP’s biggest business “but in 

many ways it was [HP’s] most important business from a customer perspective, 

because . . . customers were running such important applications, and [HP] had a lot of 

really big customers who used those products.” 

Oracle’s decision to port its software to Itanium benefitted both Oracle and HP. 

Oracle was able to deploy its software on HP’s platform, selling database, middleware, 

and some application products, while HP had “the leading software products” available 

on its servers and could provide customers with an integrated and functional solution. 

Marketing material from 2009 designed for use with customers touted the “HP and 

Oracle Global Alliance” based on “[o]ver 25 years of collaborative partnership,” “[m]ore 

than 140,000 joint customers,” and “[m]ore than $6 billion” in annual revenue generated 

by the joint business. It described HP’s and Oracle’s joint support of solutions and 

summarized each company’s substantial market share in the other’s products: 41 percent 

of Oracle’s database customers used HP systems, and 84 percent of Itanium servers ran 

Oracle’s database software. 

2 Livermore testified in both trial phases. At the time of her testimony, she served 

on HP’s board of directors and had worked for the company for 29 years. From 2004 to 

2011, during the period covering the dispute with Oracle, Livermore was the senior vicepresident of HP’s enterprise business. 
6

Oracle ported its software to HP server platforms other than Itanium, including to 

HP’s platforms that preceded Itanium. For example, when HP stopped selling its PARISC servers in December 2008, Oracle continued to port to PA-RISC after that date. 

These actions enabled Oracle to continue selling software upgrades into the installed base 

for customers who continued to use the platform. 

There were a few products that Oracle elected not to port to Itanium unless HP 

agreed to share costs, including two software applications developed in 2010 (Fusion 

Applications and Cluster File Software). HP decided that it did not want to pay Oracle 

for this service, so Oracle never ported those applications. 

2. Oracle’s Acquisition of Sun Microsystems and Employment of Mark Hurd

Certain events in 2009 and 2010 strained HP’s relationship with Oracle.

In April 2009, Oracle announced that it would acquire Sun Microsystems (Sun). 

Sun was a leading computer hardware company and competitor of HP, including in the 

server market. The acquisition was completed in January 2010. The acquisition of Sun 

marked a “potential sea change” in the relationship between HP and Oracle. The central 

question was whether Oracle would continue to make its software available on HP’s 

hardware platforms now that it owned one of HP’s direct competitors. 

At meetings between senior executives for HP and Oracle in the months after the 

Sun acquisition, Oracle emphasized that it was first and foremost a software company 

and would continue to offer its software in a platform-neutral way on the HP, IBM, and 

Sun platforms. At a February 2010 meeting attended by David Donatelli, the executive 

in charge of HP’s enterprise business, and Thomas Kurian, Oracle’s most senior software 

executive, the jointly prepared meeting minutes reflect that “HP and Oracle remain 

strategic partners” and that “Oracle’s intent” was for Itanium to “have release parity” 

with other major platforms and to “maintain the same functional parity” as other UNIX 
7

operating systems.3 HP sought further assurance at an April 2010 meeting attended by 

senior management, including HP’s senior vice-president Livermore and Oracle’s then 

co-president Safra Catz. Catz reiterated Oracle’s commitment to the alliance with HP

and to “running Oracle Software on HP Infrastructure.” 

HP understood from these discussions that the companies would compete for 

hardware business, but Oracle would continue to support its customers’ choice of server 

platforms, including HP’s platforms. There was no indication that Oracle would refuse to 

port the next release of its products to Itanium. HP understood that Oracle intended to 

maintain the same course of action as it had previously, which was to offer its software 

on Itanium through the life of the platform. This understanding shaped HP’s investment 

decisions, leading for example to a multi-year commitment to pay Intel for continuing 

development work on the Itanium chip. 

In August 2010, HP’s CEO Mark Hurd resigned at the request of HP’s board of 

directors. Oracle’s CEO Larry Ellison publicly faulted the HP board of directors for 

asking Hurd to resign, calling it “ ‘the worst personnel decision since the idiots on the 

Apple board fired Steve Jobs many years ago.’ ” Ellison offered Hurd a position at 

Oracle as co-president.4

About one month later, Oracle announced on September 6, 2010, that it had hired 

Hurd as Oracle’s co-president responsible for all marketing and sales activity. This 

announcement prompted immediate concerns for HP because of Hurd’s separation 

agreement and his unique knowledge of HP’s confidential financial, technological, and 

3

“Release parity” refers to how the software vendor releases its next generation of 

products. It means that Oracle would release new versions of its software on Itanium in 

the same time frame as its release on competing server platforms. “Functional parity” 

refers to HP’s Itanium server maintaining its place among the top tier or “Tier 1” UNIX 

operating systems. 

4 Oracle at the time had two presidents. Safra Catz was the co-president focusing 

on day-to-day operations. Catz and Hurd later became Oracle’s co-CEOs. Ellison 

became Oracle’s chief technology officer and chairman of the board of directors.
8

customer information. The following day, HP filed a civil action against Hurd for breach 

of contract and for threatened misappropriation of trade secrets. HP’s complaint alleged 

that Hurd would be unable to perform his duties for Oracle in his new position as copresident and member of the board of directors “without necessarily using and disclosing 

HP’s trade secrets and confidential information.”

Oracle responded to HP’s lawsuit against Hurd by issuing a press release. In the 

press release, Ellison called HP “ ‘an important partner’ ” and said that “ ‘[b]y filing this 

vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter 

disregard for that partnership, our joint customers, and their own shareholders and 

employees. The HP Board is making it virtually impossible for Oracle and HP to 

continue to cooperate and work together in the IT marketplace.” 

3. Settlement Agreement and Reaffirmation of the HP-Oracle Partnership 

a. Negotiation of Settlement Agreement

The lawsuit against Hurd, and Ellison’s widely reported response, prompted rapid 

action by HP and Oracle. HP’s senior vice-president Livermore contacted Oracle copresident Catz on September 7, the day HP filed its lawsuit against Hurd.

5

 That evening, 

HP’s general counsel, Michael Holston, spoke with Oracle’s general counsel, Dorian 

Daley. Both lawyers expressed a desire to resolve the lawsuit quickly and, if possible, to 

preserve the companies’ relationship. Holston and Daley spoke broadly about HP’s 

desired terms for any settlement, which they contemplated would be confidential but 

would allow the parties to jointly announce a resolution to the dispute over Hurd. 

On September 9 and 10, HP and Oracle exchanged term sheets in an attempt to 

reach an agreement to resolve the Hurd controversy. These first exchanges dealt strictly 

with terms specific to Hurd and Hurd’s activities at Oracle. The next day, September 11, 

5 The events referenced in connection with HP’s lawsuit against Hurd all took 

place in 2010, unless otherwise specified. 
9

Livermore and Catz spoke by phone. Livermore told Catz that HP’s board was 

concerned about damage to the companies’ relationship—especially from Ellison’s 

public comments—and wanted any settlement to contractually reaffirm the existing

partnership. HP wanted an assurance that the companies would continue to operate as 

they had before Oracle hired Hurd. Catz did not object. At trial, she characterized 

reaffirmation of the HP-Oracle partnership as “a very modest ask.” Livermore was not 

surprised by Catz’s stance, as the HP-Oracle relationship was mutually beneficial and 

profitable. 

Over the next two days, Oracle and HP negotiated the language of the proposed 

agreement. After some back-and-forth, Livermore and Catz concurred that the agreement 

should not put HP in a better position than it had enjoyed with respect to Oracle prior to 

Oracle’s decision to hire Hurd. 

On September 12, Oracle sent a proposed agreement to HP. Oracle had removed

language suggesting it would favor HP over other competitors. Oracle’s September 12 

version of the reaffirmation clause contained two sentences. It reaffirmed the companies’

“commitment to their longstanding strategic relationship and their mutual desire to 

continue to support their mutual customers,” and it provided that “Oracle will continue to 

offer its product suite on HP platforms and HP will continue to support Oracle products 

(including Oracle Enterprise Linux and Oracle VM) on its hardware in a manner 

consistent with that partnership.” In her cover e-mail to the September 12 draft, Daley 

clarified Oracle’s position that the reaffirmation clause was not intended “to put HP in a 

better position tha[n] it currently enjoys or result in the negotiation of a new contractual 

commitment.” Daley wrote that the discussions between Catz and Livermore did not 

address “anything more tha[n] an agreement to continue to work together as the 

companies have – with Oracle porting products to HP’s platform and HP supporting the 

ported products and the parties engaging in joint marketing opportunities – for the mutual 

benefit of customers.” 
10

Catz and Livermore spoke again the next morning. Catz was not receptive to the 

idea of adding more specifics to the reaffirmation clause. Livermore eventually agreed 

with Catz that “it was simpler and cleaner” to exclude specifics. 

Livermore testified at trial that she was satisfied the provision addressed her 

concern about Oracle continuing to offer its products on HP’s Itanium platform. 

Livermore acknowledged that Catz told her “that she didn’t think that Oracle was taking 

on any new obligations or work.” Catz told Livermore that Oracle would commit to 

maintaining the course of action it had done in the past, not any better. Catz e-mailed 

Oracle’s general counsel Daley after her call with Livermore, saying “she tried to add 

specifics on the relationship and I wasn’t open.” 

Later that day, HP’s lawyers sent a revised draft to Daley that added specific terms 

back into the proposed agreement, including an express reference to porting to Itanium.

Oracle forcefully rejected the added language. Daley wrote to Holston that this was 

“setting us back in a very big way.” Livermore admitted that the draft “got by” her 

before she had updated HP’s lawyers about her conversation with Catz. Livermore spoke 

with Catz and told her it was a mistake. They agreed to take out the detail added by HP. 

Oracle returned a draft the next day that deleted the additions that HP had 

proposed. It retained the reaffirmation language from the September 12 draft, stating that 

the companies “reaffirm their commitment” to their partnership and that “Oracle will 

continue to offer its product suite on HP platforms . . . in a manner consistent with that

partnership.” HP made only one more change to the reaffirmation clause, adding that the 

parties were reaffirming their relationship “as it existed prior to Oracle’s hiring of Mark 

Hurd.” Daley, Catz, and Holston each confirmed that the added language made it clear 

that the parties were referring to the partnership and course of dealing before the 

controversy erupted over Oracle’s hiring of Hurd.
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b. Text and Announcement of Final Settlement Agreement

The parties executed the settlement agreement between HP, Oracle, and Hurd on 

September 20, 2010 (the agreement). Paragraph 1 of the agreement comprises the 

reaffirmation clause. It states: “Reaffirmation of the Oracle-HP Partnership. Oracle and 

HP reaffirm their commitment to their longstanding strategic relationship and their 

mutual desire to continue to support their mutual customers. Oracle will continue to offer 

its product suite on HP platforms, and HP will continue to support Oracle products 

(including Oracle Enterprise Linux and Oracle VM) on its hardware in a manner 

consistent with that partnership as it existed prior to Oracle’s hiring of Hurd.” 

Recital B of the agreement, which precedes the provisions forming the parties’ 

specific commitments, reinforces that “HP, Hurd and Oracle recognize the mutual 

advantages of the continuation of the HP-Oracle partnership and its benefits to their joint 

customers and prospects and now desire to further their business relationship and resolve 

the [lawsuit against Hurd] without the further time and expense of litigation.” 

The agreement also provides for a joint press release, included as an attachment to 

the agreement. The press release, issued on September 20, announced that HP and 

Oracle had resolved the litigation regarding Hurd’s employment at Oracle in a 

confidential settlement agreement that “also reaffirms HP and Oracle’s commitment to 

delivering the best products and solutions to our more than 140,000 shared customers.” It 

quoted Ellison as saying that “ ‘Oracle and HP will continue to build and expand a 

partnership that has already lasted over 25 years.’ ” Apart from the press release, a

confidentiality provision in the agreement prevents further public disclosure about the 

lawsuit or the terms of the settlement. 

4. Course of Dealing Between HP and Oracle

In their briefing, the parties present divergent narratives of how each side 

interpreted and implemented its obligations under the reaffirmation clause. Oracle 

maintains that HP’s conduct in the months following the agreement was inconsistent with 
12

a belief that the reaffirmation clause imposed broad new obligations on either party. HP 

responds that, just as with the parties’ course of dealing before the agreement, the course 

of dealing after the agreement focused on continued product development and porting 

work. 

The trial court heard extensive evidence in phase 1 of the trial on course of 

conduct and post-agreement conduct, which we discuss in more detail in the analysis, 

post (part II.A.2.b.).

a. Prior to the Agreement

As stated in the negotiated joint press release announcing the agreement, HP and 

Oracle had “more than 140,000 shared customers” and had enjoyed a strategic 

partnership of “ ‘over 25 years.’ ” The core of Oracle’s and HP’s partnership consisted 

of joint sales, marketing, and mutual support of their products, including the porting of 

Oracle’s products to HP’s platforms. Although Oracle had ported its software in the past 

to different HP platforms, as of September 2010, when the agreement was signed, 

Itanium was the only HP server platform to which Oracle was porting new versions of its 

software products.6

Nine Oracle software products comprised the “product suite” offered on Itanium at 

the time of the agreement. Once Oracle completed the initial port of one of these major 

software products to Itanium, Oracle ported all future releases of the same product to the 

platform. 

The vast majority of porting (over 99 percent) occurred without any written 

contracts between HP and Oracle. The few instances documented at trial in which the 

companies entered a porting contract involved an initial port to Itanium of a product that 

6 Oracle also offered its products on HP’s industry standard servers, which use 

Intel’s x86 chips and Windows or Linux operating systems (not HP-UX). However, 

Oracle did not need to port its products to those servers because it developed its software

from the outset to work on all industry-standard servers that use Windows or Linux 

operating systems (of which there are many besides those of HP).
13

had not been previously ported. Oracle made subsequent versions of the product 

available without a contract. With respect to Itanium’s predecessor platforms, Oracle 

continued to support the platform by releasing new versions of software on it even after 

HP stopped sales of that server line. 

b. After the Agreement

The HP executives responsible for the relationship with Oracle were informed that 

a settlement had been reached and they should carry on with “business as usual.” They 

were not told of specific terms of the agreement, beyond the contents of the press release, 

and understood that HP’s obligation was to behave as it had been doing before the 

signing of the agreement. 

HP and Oracle continued to engage in product development and porting work in 

the post-agreement period. For example, Oracle had begun work in early 2010 to port the 

next version of its database software (database 12g, later 12c) to Itanium. HP provided 

hardware, servers, storage, and engineering support as needed to assist with the ports. In 

September 2010, HP provided additional servers to Oracle to facilitate the ongoing 

database porting work. HP’s engineers continued to collaborate with Oracle’s engineers

on the next release of the database software until as late as June 2011. HP also worked

with Oracle to ensure that Oracle’s product suite would continue to run on Itanium, even

increasing the level of support to certify the Oracle products on specific HP servers. 

Livermore and Catz spoke “off and on” in the months after the agreement was 

signed, including on March 18, 2011, four days before Oracle announced that it would 

discontinue developing new releases of its products for Itanium. Catz gave no indication 

to HP that Oracle was going to stop porting to Itanium. Livermore reported in her notes

to several HP executives that the phone call had a “[p]ositive tone overall.” Catz testified 

that she said nothing to Livermore during the call about Oracle’s impending Itanium 

announcement because Oracle “hadn’t made the final decision yet.” 
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5. Oracle’s March 2011 Announcement 

According to Oracle, by March 2011 there were clear signals from within the 

industry that the Itanium platform was losing viability. Ellison testified that

technological innovations in other server platforms led to Itanium “falling further and 

further behind,” and that “Intel had lost interest in Itanium.”7

On March 22, 2011, Oracle issued a press release in which it stated it would stop 

developing software for Itanium (March 2011 announcement). The March 2011 

announcement was titled “Oracle Stops All Software Development For Intel Itanium 

Microprocessor” and stated that after conversations with Intel about its strategic focus 

and Itanium’s future, “Oracle has decided to discontinue all software development on the 

Intel Itanium microprocessor. . . . [¶] . . . [¶] Oracle will continue to provide customers 

with support for existing versions of Oracle software products that already run on 

Itanium.” Oracle issued a second announcement the next day reiterating its support of 

the “current versions” of its software on Itanium and specifying the next versions of 

Oracle’s software that would not be available on Itanium but would be available on other 

platforms (i.e., IBM and Oracle/Sun). 

Oracle issued the March 2011 announcement at 11:00 p.m. (Eastern Standard 

Time) the night before HP’s annual shareholders’ meeting and caught both HP and Intel 

unaware. In response, Intel released a press release the next day, March 23, to “directly 

reiterate” that its work on the Itanium processer was continuing unabated, “ ‘with 

multiple generations of chips currently in development and on schedule.’ ” 

Oracle claimed that its decision to discontinue porting future Oracle software 

versions to Itanium had no effect on most joint customers, since Itanium users made up 

only “a few thousand” of the 150,000 joint customers, and the remaining joint customers 

7 Ellison described in detail the developments he believed signaled Itanium’s 

demise. He explained by way of one example that “an innovative new product, [Intel’s 

E7 microprocessor], killed an old, obsolete product, Itanium. That’s the way it works in 

Silicon Valley. That’s the way it’s always worked.” 
15

used x86-based servers, for which Oracle had no plans to stop developing new software. 

Oracle also emphasized that the decision would have no immediate effect because it 

would continue to support and develop patches for the products already offered on 

Itanium in accordance with its standard lifetime support policy. Oracle’s executives 

nonetheless recognized that the decision “would be big news” to HP. Thomas Kurian, 

Oracle’s executive vice-president of software development, acknowledged that the March 

2011 announcement was unprecedented and was the first time Oracle had decided to stop 

porting to any server based on a microprocessor architecture that was still being sold and 

marketed. Customers who were running Oracle’s software on Itanium would have to 

choose another hardware platform to receive future releases of Oracle’s software. 

Livermore called Catz immediately after the March 2011 announcement to tell her 

it contradicted the press release from just six months ago and was a “breach of our 

contract.” HP initially hoped that pressure from customers would cause Oracle to reverse 

its decision. However, customer pressure did not change Oracle’s decision, and about 

two months later HP sent a demand letter to Oracle and subsequently filed this action. 

B. Procedural Background

1. HP’s Lawsuit

HP sued Oracle in June 2011. The complaint alleges that Oracle breached the 

settlement agreement by refusing to continue to offer its product suite on Itanium just 

months after it promised to do so and by reneging on its assurances of continued support 

for customers using Oracle software on the platform. HP asserted claims for declaratory 

relief, breach of contract, breach of the implied covenant of good faith and fair dealing, 

promissory estoppel, and various tort and statutory violations.

8

 HP sought a judicial 

8 This appeal involves only HP’s claims for declaratory relief, breach of contract, 

and breach of the implied covenant of good faith and fair dealing. Although Oracle filed 

a cross-complaint (and later, an amended cross-complaint) alleging that HP violated 

federal and state law by misleading Oracle, its customers and investors, and the public, 
16

determination of the parties’ rights and obligations under the agreement, which HP 

asserted “requires Oracle to continue to offer and support” any Oracle product that was 

offered on the Itanium platform at the time Oracle signed the agreement with HP. HP 

demanded specific performance and requested direct and consequential damages as a 

remedy for the alleged breach of contract. 

The trial court bifurcated trial proceedings into two phases: (1) a phase 1 bench 

trial to interpret the agreement and decide the issues of declaratory relief and promissory 

estoppel; and (2) a phase 2 jury trial to decide the breach and damages claims. The trial 

court agreed to set a short timeline for the phase 1 bench trial, which in HP’s words

would allow the court to “resolve the contractual dispute in sufficient time to ensure that, 

if HP prevails, Oracle can complete necessary development work on its 12g database in a 

timely fashion so as not to delay the porting of its 12g database to Itanium when it 

launches 12g on competing server platforms.” 

2. Phase 1 Bench Trial

The phase 1 bench trial took place over 12 days in June 2012. The trial court 

heard testimony from 30 witnesses and admitted over 500 exhibits into evidence. 

The trial court issued its ruling on August 28, 2012. In a detailed, 45-page final 

statement of decision (statement of decision), the trial court ruled in favor of HP and 

against Oracle on HP’s claim for declaratory relief. The trial court made factual findings 

related to the period before the litigation over Oracle’s hiring of Hurd, the negotiation of 

the settlement agreement, the companies’ historical partnership and course of dealing 

about the future prospects of Itanium, and by fraudulently inducing Oracle to enter into 

the settlement agreement over the Hurd dispute, the jury in the second phase of trial in 

2016 rejected Oracle’s claim under the Lanham Act (15 U.S.C. § 1125(a)), and Oracle 

has not appealed that ruling here. As noted below, after HP succeeded on its breach of 

contract and implied covenant claims, HP voluntarily dismissed the remaining causes of 

action. 
17

(particularly as to the Oracle product suite on HP’s platforms, porting, and platform 

support), and the post-agreement period and March 2011 announcement. 

As to the legal issues, the trial court held that the reaffirmation clause (paragraph 1 

of the agreement) was unambiguous as a matter of law and that Oracle had “failed to 

offer a plausible interpretation” of it. The trial court found the extrinsic evidence, 

although not admissible to interpret the agreement’s unambiguous meaning, was 

confirmatory of HP’s interpretation. It reasoned that the contractual language that 

“ ‘Oracle will continue to offer its product suite on HP platforms’ . . . ‘in a manner 

consistent with [the HP-Oracle] partnership’ ” was consistent with the parties’ historical 

relationship and prior course of dealing, and with the language of the joint press release 

pledging continued support for customers that had for decades relied on the HP-Oracle 

partnership. 

The trial court concluded that the agreement “requires Oracle to continue to offer 

its product suite on HP’s Itanium-based server platforms and does not confer on Oracle 

the discretion to decide whether to do so or not.” The trial court construed the term 

“ ‘product suite’ ” to mean “Oracle software products that were offered on HP’s Itaniumbased servers at the time Oracle signed the [agreement], including any new releases, 

versions or updates of those products.” The court also construed Oracle’s obligation 

under the agreement to apply without charge to HP and “until such time as HP 

discontinues the sale of its Itanium-based servers.” Over Oracle’s objection, the court 

declined to construe “a host of collateral issues” that Oracle claimed had to be resolved 

concurrently, such as the effect of the reaffirmation clause on intellectual property rights 

in any resulting software and on the parties’ prior porting agreements. 

3. Oracle’s August 2012 Press Release and September 2012 Announcement

On the day the trial court released its tentative statement of decision for phase I, 

Oracle issued a press release stating it would appeal (August 2012 press release). The 
18

August 2012 press release asserted that “ ‘Oracle did not give up its fundamental right to 

make platform engineering decisions in the 27 words HP cites from the settlement of an 

unrelated employment agreement. . . . We plan to appeal the Court’s ruling while fully 

litigating our cross claims that HP misled both its partners and customers.’ ” HP 

responded that Oracle “no longer has any basis for refusing to port, and that it should . . .

resume porting immediately.” 

One month later, Oracle publicly announced that it would comply with the trial 

court’s phase 1 decision and resume porting to Itanium (September 2012 announcement). 

The September 2012 announcement indicated that “a judge recently ruled that Oracle has 

a contract to continue porting its software to Itanium computers for as long as HP sells 

Itanium computers. Therefore, Oracle will continue building the latest versions of its 

database and other software covered by the judge’s ruling. . . . Oracle software on HP’s 

Itanium computers will be released on approximately the same schedule as Oracle 

software on IBM’s Power systems.” 

Oracle wrote separately in a letter to the trial court that its September 2012 

announcement was “without prejudice to [its] rightsto appeal” the phase 1 ruling. Oracle 

told the trial court that it would be able to “meet in a timely manner substantially all of 

the porting obligations” found by the court to exist under the settlement agreement, since 

few products had had releases in the interim. Oracle told the trial court that given its 

decision to resume porting in time to meet its obligations, “HP will need to substantially 

revise its damages case” which would necessitate a delay of phase 2 of the trial. 

The trial court allowed the parties to serve supplemental expert reports addressing 

the impact of Oracle’s September 2012 announcement on HP’s damages claim and 

granted limited reopening of discovery related to expert reports.9

9 Oracle filed a petition for writ of mandate in this court on January 17, 2013, 

challenging the trial court’s order allowing HP to submit supplemental expert reports as 
19

4. HP’s Expert Testimony on Damages

In March 2012, HP’s damages expert, economist Jonathan Orszag, calculated 

HP’s estimated damages due to Oracle’s breach of contract to be between $3.8 billion 

and $4 billion. Orszag produced a supplemental written report in December 2012. In his 

supplemental report, Orszag wrote that the “continued decline in Itanium revenue” 

reflected in updated projections “shows that any favorable impact from the Phase 1

decision and the Oracle September 2012 announcement has been more than outweighed 

by the continuing negative impact . . . from the March 2011 Oracle Announcements and 

the continuing uncertainty created by Oracle’s recent statements regarding its intention to 

appeal the Phase 1 decision.”

At the evidentiary hearing held in March 2013 to determine the admissibility 

under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 

747 (Sargon) of each party’s designated expert’s testimony, Orszag explained that 

Itanium’s business “continued to deteriorate” following the September 2012 

announcement. Orszag did not assume, in making his damages calculations, that Itanium 

customers would be unable to get the Oracle products they wanted. He explained that

during the period between March 2011 and September 2012, many Itanium customers 

decided to transition to other server platforms. He noted that Oracle’s statements 

regarding its intention to appeal the phase 1 decision factored into the “significant 

uncertainty” about the future availability of Oracle products on Itanium. According to 

Orszag’s analysis, the “damage had been done.” 

well as limitations on the supplemental discovery it allowed Oracle to conduct. This 

court denied the petition without opinion. (Oracle Corp. v. Superior Court (Mar. 27, 

2013, H039210), petn. den.) This court also denied, without opinion, Oracle’s earlier 

petition for writ of mandate, filed on October 12, 2012, seeking to overturn the trial 

court’s decision in phase 1. (Oracle Corp. v. Superior Court (Jan. 31, 2013, H038880), 

petn. den.)
20

The trial court issued a written order after the evidentiary hearing finding that the 

expert testimony of Orszag, and of Oracle’s proposed expert, Ramsey Shehadeh, met the 

admissibility standard under Sargon, supra, 55 Cal.4th 747.

10

5. Anti-SLAPP Motion and Appeal

Shortly before the trial court issued its order finding Orszag’s expert testimony

admissible, Oracle filed a motion under the anti-SLAPP statute (Code Civ. Proc., 

§ 425.16) to strike “in whole or in relevant part” HP’s causes of action for breach of 

contract, breach of the implied covenant of good faith and fair dealing, and promissory 

estoppel (anti-SLAPP motion). Oracle’s motion asserted that HP had “changed its 

damages theory from one about harm caused by the unavailability of Oracle’s software to 

one about harm caused by customer uncertainty . . . allegedly resulting from Oracle’s 

March 2011 announcement and its subsequent refusal to accept the [statement of 

decision] as the final, definitive ruling on the meaning of the Hurd Settlement 

Agreement.” Oracle contended that its announced intention to appeal the trial court’s 

determination on liability was protected conduct under the anti-SLAPP statute, because it 

constituted an exercise or attempt to exercise Oracle’s constitutional rights both to 

freedom of speech and to petition the government for redress of grievances. (See Code 

Civ. Proc., § 425.16, subd. (b)(1).) 

A hearing on Oracle’s anti-SLAPP motion was held on April 5, 2013, the last

court day before the phase 2 trial was set to begin. That same day, Oracle filed a motion 

in limine seeking to exclude argument and evidence of lost profits that failed to 

disaggregate lost profits arising from Oracle’s stated intent to appeal. Oracle claimed that 

HP was precluded from asserting damages based on Oracle’s constitutional right to 

petition under the United States and California Constitutions and under California’s 

10 We discuss additional facts relevant to the jury’s damages verdict and Oracle’s 

related contentions on appeal in part II.C., post.
21

litigation privilege. HP opposed the motion in limine, which remained pending while the 

parties litigated the anti-SLAPP motion. 

In a written order on April 8, 2013, the trial court denied Oracle’s anti-SLAPP

motion as untimely. The court recognized that “as a result of this ruling, Oracle is 

statutorily entitled to perfect an appeal, and by taking that step, all matters ‘embraced’ or 

‘affected’ by the order appealed from are stayed.” Oracle filed a notice of appeal that 

same day from the order denying its anti-SLAPP motion. The trial court vacated the

phase 2 trial date pending the appeal. 

In a published opinion on August 27, 2015, a panel of this court affirmed the 

denial of Oracle’s anti-SLAPP motion. (Hewlett-Packard Co. v. Oracle Corp. (2015) 

239 Cal.App.4th 1174, 1196 (Hewlett-Packard) (anti-SLAPP appeal).) The opinion 

deemed Oracle’s appeal to be “utterly without merit.” (Id. at p. 1178.) 

Addressing only the question of timeliness, this court held that “[t]he motion was 

late under any reasonable construction of the facts, and it was quite properly denied 

because it could not possibly achieve the purposes for which the anti–SLAPP statute was

enacted.” (Hewlett-Packard supra, 239 Cal.App.4th at p. 1178.) This court rejected 

Oracle’s proffered excuse for untimeliness (id. at pp. 1193–1194) and raised other 

concerns with the anti-SLAPP motion, including that it did not target a “cause of action” 

or “claim” under the statute (id. at pp. 1195–1196) “but part of HP’s intended proof of 

causation and damages” (id. at p. 1196), rendering it “in effect a motion in limine.” 

(Ibid.) It observed that the anti-SLAPP motion in fact “raised the same substantive 

issues” (ibid.) as the above-mentioned motion in limine filed in anticipation of the phase 

2 trial, “and had the matter not been derailed, would have produced a ruling that could be 

reviewed in due course along with any other issues remaining after trial.” (Ibid.) In its 

affirmance, this court stated that it was declining to assess sanctions against Oracle only

to avoid any further delay of the long-deferred phase 2 jury trial. (Id. at p. 1178.) 
22

6. Phase 2 Jury Trial

Upon remand of the case following the anti-SLAPP appeal, the parties proceeded 

with the phase 2 trial to decide the breach and damages claims in May and June of 

2016.11 Oracle sought, through multiple procedural vehicles, to challenge HP’s theory of 

breach and to limit HP’s claim to damages. We describe these efforts in our discussion 

of the jury’s breach of contract verdict, post (part II.B.1.a.). The trial court rejected 

Oracle’s motions in limine and proposed motion for summary adjudication of these 

issues. 

The jury heard testimony over 19 days from 19 witnesses, including from each 

side’s damages expert. At the close of HP’s case in chief, Oracle moved unsuccessfully 

for a judgment of nonsuit on HP’s breach of contract claims. Oracle later moved, at the 

close of all the evidence, for a directed verdict as to HP’s breach of contract claims, 

contending that the evidence was legally insufficient to permit a jury finding in HP’s 

favor and HP had not established damages “by any actionable conduct.” The trial court

denied these motions and allowed the contested issues to go to the jury. 

Over Oracle’s objection, the trial court instructed the jury using the interpretation 

of the agreement found by the court in the phase 1 statement of decision. The 

introductory breach of contract instruction (CACI No. 300) stated that it was the court’s 

duty to interpret the meaning of the agreement at issue in the case, and that at the 

conclusion of the first trial phase, the court “determined that the Hurd Settlement 

Agreement is a binding contract between HP and Oracle.” The instruction set forth 

paragraph 1 of the agreement and instructed the jury that it “must accept as true” the 

court’s findings regarding the meaning of the agreement. These findings in relevant part 

stated the following: “1. The [agreement] requires Oracle to continue to offer its product 

suite on HP’s Itanium-based server platforms and does not confer on Oracle the 

discretion to decide whether to do so or not. [¶] 2. The term ‘product suite’ means 

11 The phase 1 and phase 2 trials were conducted before different bench officers.
23

Oracle software products that were offered on HP’s Itanium-based servers at the time 

Oracle signed the [agreement], including any releases, versions, or updates of those 

products. [¶] 3. Oracle’s obligation to continue to offer its product suite on HP’s 

Itanium-based server platforms lasts until such time as HP discontinues the sale of its 

Itanium-based platforms. [¶] 4. Oracle is required to port its product suite to HP’s 

Itanium-based servers without charge to HP.”

The instruction further stated in part that “HP claims that Oracle breached this 

contract when it decided and announced in March of 2011 that it would no longer offer 

new versions of its product suite on Itanium-based servers, thereafter discontinuing 

software development and porting work for HP’s Itanium-based server platforms and 

repeatedly telling customers that it would no longer offer its product suite on Itaniumbased servers. [¶] . . . . [¶] Oracle denies that it breached the [agreement] and denies that 

a breach, if any, caused HP any harm.” 

After deliberations, the jury delivered its verdict finding that Oracle breached the 

contract and breached the implied covenant of good faith and fair dealing. The jury 

awarded HP $1.699 billion in damages for “[p]ast lost profits” and $1.315 billion in 

“[f]uture lost profits” for a total damages award of $3.014 billion.

HP moved for an award of prejudgment interest for the period during which the 

phase 2 trial was delayed due to Oracle’s anti-SLAPP appeal. The trial court denied the 

motion after a hearing, finding that while the improper delay weighed in favor of an 

award, other factors related to HP’s “highly contested and uncertain” damages weighed 

more significantly against it. We address the motion for prejudgment interest in our 

analysis of HP’s cross-appeal, post (part II.D.).

After the parties stipulated to dismiss and voluntarily dismissed the remaining 

causes of action, HP requested entry of judgment and “elected not to pursue specific 

performance as a remedy for its breach-of-contract cause of action.” On October 20, 
24

2016, the trial court entered judgment in favor of HP and against Oracle in the amount of 

$3.014 billion and ordered that HP was entitled to recover allowable costs from Oracle. 

After briefing and argument, the trial court denied a motion for new trial on 

damages, filed by Oracle on the ground the jury award was excessive and contrary to law. 

Oracle timely appealed from the final judgment, and HP timely filed its cross-appeal. 

II. DISCUSSION

We must first decide whether the trial court erred in interpreting the agreement’s 

reaffirmation clause to require Oracle to continue to offer its product suite on Itanium 

until HP discontinues its sale of the platform. We next consider Oracle’s two-pronged

contention that (1) the jury verdict finding breach of contract and breach of the implied 

covenant of good faith and fair dealing must be reversed because the evidence that Oracle 

resumed porting its software to Itanium precluded liability for breach, and (2) HP waived 

any alternative claim for anticipatory breach of the contract by seeking and obtaining 

Oracle’s specific performance of the agreement. We also consider Oracle’s claim that the 

trial court erroneously allowed HP to introduce evidence in violation of Oracle’s 

constitutionally protected and privileged statement that it intended to appeal the phase 1

decision, as well as speculative expert testimony in support of HP’s claim for lost profit 

damages. Lastly, we address HP’s cross-appeal on the issue of prejudgment interest.

A. Interpretation of the Reaffirmation Clause

Oracle contends that, contrary to the trial court’s interpretation of the settlement 

agreement, the reaffirmation clause merely restates the historically voluntary, noncontractual relationship between Oracle and HP. It argues that the unambiguous, plain 

language of the agreement is not reasonably susceptible to the interpretation HP ascribes 

to it, and furthermore that the undisputed extrinsic evidence confirms Oracle’s own 

interpretation. HP responds that the reaffirmation clause plainly commits Oracle to 

continue porting its software to HP’s Itanium server platform, consistent with Oracle’s 

prior course of conduct as shown by the extrinsic evidence admitted at trial. 
25

1. Principles of Contract Interpretation

The fundamental goal of contract interpretation is “to give effect to the mutual 

intention of the parties as it existed at the time of contracting.” (Civ. Code, § 1636.)

12 To 

interpret a contract, we look to its language (§ 1638) and ascertain the intent of the 

parties, if possible, based solely on the contract’s written provisions (§ 1639). In doing 

so, we apply the “ ‘clear and explicit’ meaning of these provisions, interpreted in their 

‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special 

meaning is given to them by usage’ [citation] . . . . Thus, if the meaning a layperson 

would ascribe to contract language is not ambiguous, we apply that meaning.” (AIU Ins. 

Co. v. Superior Court (1990) 51 Cal.3d 807, 822 (AIU Ins.).) At the same time, we 

“recognize[] the ‘interpretational principle that a contract must be understood with 

reference to the circumstances under which it was made and the matter to which it relates.

(Civ. Code, § 1647.)’ ” (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC 

(2017) 3 Cal.5th 744, 752.)

It is essentially a judicial function to apply the rules of interpretation to a written 

contract “so that the purposes of the instrument may be given effect.” (Parsons v. Bristol 

Development Co. (1965) 62 Cal.2d 861, 865, citing §§ 1635-1661 (Parsons).) In so 

doing, the trial court may “properly admit[] evidence extrinsic to the written instrument 

to determine the circumstances under which the parties contracted and the purpose of the 

contract.” (Parsons, at pp. 864–865.) “ ‘Extrinsic evidence is admissible to prove a 

meaning to which the contract is reasonably susceptible.’ ” (Iqbal v. Ziadeh (2017) 10 

Cal.App.5th 1, 8 (Iqbal).) The court, at least initially, considers “all credible evidence 

offered to prove the intention of the parties. [Citations.] Such evidence includes 

testimony as to the ‘circumstances surrounding the making of the agreement . . .

including the object, nature and subject matter of the writing . . .’ so that the court can 

‘place itself in the same situation in which the parties found themselves at the time of 

12 Unspecified statutory references are to the Civil Code.
26

contracting.’ ” (Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d

33, 39–40, fn. omitted (Pacific Gas).) 

On appeal, we apply a de novo standard of review when construing the contract, 

including where conflicting inferences may be drawn from undisputed extrinsic evidence,

“unless the interpretation turns upon the credibility of extrinsic evidence.” (Parsons, 

supra, 62 Cal.2d at pp. 865, 866, fn. 2; accord Garcia v. Truck Ins. Exchange (1984) 36 

Cal.3d 426, 439.) Put simply, “when the competent extrinsic evidence is not in conflict, 

the appellate court independently construes the contract.” (Iqbal, supra, 10 Cal.App.5th 

at p. 8.) To the extent there is conflicting extrinsic evidence requiring credibility 

determinations by the finder of fact regarding a meaning of which the contract is 

reasonably susceptible, we will uphold the trial court’s determination if supported by 

substantial evidence. (Ibid.; see also Tin Tin Corp. v. Pacific Rim Park, LLC (2009) 170 

Cal.App.4th 1220, 1225 (Tin Tin).)

2. Analysis

Oracle and HP characterize the plain language of the reaffirmation clause as 

unambiguous, yet ascribe different meanings to it. As we explain, the parties’ 

disagreement stems not from an ambiguity in the language or from conflicting extrinsic 

evidence but from distinct views of what defines the HP-Oracle partnership as set forth in

the agreement. Under California’s objective theory of contracts, we must determine 

“ ‘ “what the outward manifestations of consent would lead a reasonable person to 

believe.” ’ ” (Allen v. Smith (2002) 94 Cal.App.4th 1270, 1277; see also Iqbal, supra, 10 

Cal.App.5th at p. 8.) 

We begin by analyzing the agreed-upon language, focusing on its plain meaning 

as much as possible and referencing the extrinsic evidence to ascertain whether it 

supports an interpretation to which the agreement is reasonably susceptible. (Hess v. 
27

Ford Motor Co. (2002) 27 Cal.4th 516, 524.) As the key extrinsic evidence here is not in 

conflict, we engage in independent review. (Iqbal, supra, 10 Cal.App.5th at p. 8.) 

a. Plain Language

The reaffirmation clause, set forth in the agreement’s first paragraph, consists of 

only two sentences. First, “Oracle and HP reaffirm their commitment to their 

longstanding strategic relationship and their mutual desire to continue to support their 

mutual customers.” Second, “Oracle will continue to offer its product suite on HP 

platforms and HP will continue to support Oracle products (including Oracle Enterprise 

Linux and Oracle VM) on its hardware in a manner consistent with that partnership as it 

existed prior to Oracle’s hiring of Hurd.” 

The first sentence addresses two points, namely the companies’ “longstanding 

strategic relationship” and “mutual desire to continue to support their mutual customers.” 

The only conduct referenced in the first sentence is that HP and Oracle each “reaffirm 

their commitment.” The plain and unambiguous meaning from a layperson’s perspective 

(AIU Ins., supra, 51 Cal.3d at p. 822) is that the companies are abiding by the 

commitment they have historically shown to (1) each other through their strategic 

relationship and (2) their shared customers. 

The second sentence elaborates on this commitment by specifying what each side 

must do to maintain the partnership. Oracle, for its part, “will continue to offer its 

product suite on HP platforms” while HP “will continue to support Oracle products 

(including Oracle Enterprise Linux and Oracle VM) on its hardware.” What is more, 

each agrees to continue performing its part “in a manner consistent with th[e] partnership 

as it existed” before Oracle hired Hurd. The second sentence transforms the value 

statement articulated in the first sentence (i.e., we are committed to our partnership and to 

our mutual customers) into an actionable and enforceable commitment (i.e., Oracle will 

continue to offer, and HP will continue to support). Oracle’s general counsel Daley, who 
28

drafted the main part of the sentence, conceded at trial that use of the term “will” is

mandatory in nature. 

The latter part of the second sentence also provides a temporal point of reference 

for the action that each side has agreed it “will continue” to perform. The phrase “in a 

manner consistent with that partnership as it existed prior to Oracle’s hiring of Hurd”

eliminates any doubt that the required action—Oracle continuing to offer its product suite 

on HP servers and HP continuing to support Oracle products on its hardware—must be 

consistent with the partnership as it existed before tensions flared between the companies 

in September 2010 over the hiring of Hurd. We conclude that the second sentence, 

moreover, does more than declare an aspiration or intent to continue working together, as 

Oracle claims. It commits the parties to continue the actions specified (Oracle offering 

its product suite and HP supporting the products) as they had done before Oracle hired 

Hurd.

Other provisions of the agreement reinforce the mutual intent expressed in the 

reaffirmation clause. Recital B states that “HP, Hurd and Oracle recognize the mutual 

advantages of the continuation of the HP-Oracle partnership and its benefits to their joint 

customers and prospects and now desire to further their business relationship and resolve 

the [l]awsuit [against Hurd].” The joint press release, provided for in the agreement, 

states that the settlement “reaffirms HP and Oracle’s commitment to delivering the best 

products and solutions to our more than 140,000 shared customers.” 

Each instance in the agreement that refers to the HP-Oracle partnership (recital B, 

paragraph 1, and the attached press release) is paired with a reference to supporting the 

joint customer base. Viewed together, “each clause helping to interpret the other” 

(§ 1641), the agreement addresses three subjects: purpose, conduct, and public 

assurance. The recital highlights the purpose for the reaffirmation clause, to continue the 

partnership and its benefits to the joint customers, the reaffirmation clause articulates the 

conduct agreed upon, to continue the partnership by offering and supporting Oracle’s 
29

products on HP’s hardware as before the Hurd dispute, and the press release provides a

public assurance of the joint “commitment to delivering the best products and solutions 

to our more than 140,000 shared customers.”

Oracle’s arguments to the contrary are unconvincing. Oracle maintains that the 

agreement’s plain language, considering the text of the reaffirmation clause and the 

agreement as a whole (§ 1641), confirms that HP and Oracle agreed only to continue, not 

fundamentally alter, their prior, voluntary and mutually beneficial relationship after the 

Hurd dispute unfolded. Oracle contends that the trial court erred in finding the language 

to be consistent with “a continued porting obligation” because no “obligation” ever 

existed outside of a few contracts applicable to specific products, let alone for an 

indefinite period of time and without payment. Oracle submits it is undisputed that the 

parties’ relationship before the hiring of Hurd was based on “porting at will” without any 

payment or condition when mutually beneficial. It points to the negotiated porting 

agreements, executed a few times for specific software, as the only instances in which 

Oracle obligated itself to port a product. Thus, Oracle asserts that the relationship the 

parties agreed to continue was one in which each company had discretion to engage, and 

“[i]f their views did not align, Oracle would simply decline to port.” Oracle contends 

that reaffirming the arrangement as it already existed does not create new commitments 

or enlarge their scope.

We disagree. The plain language of the agreement not only ties the notions of 

partnership and support for joint customers together but also describes, in the second 

sentence of the reaffirmation clause, the behavior to which each side commits for that 

purpose. Oracle relies on Barham v. Barham (1949) 33 Cal.2d 416 (Barham), for the 

proposition that a contract “[r]eaffirm[ing]” prior agreements “will preserve their legal 

effect” (id. at p. 425) but “will not operate to enlarge their scope” (id. at p. 426). But 

Barham involved the interpretation of a divorce settlement provision that “expressly 
30

ratified and reaffirmed” several preceding agreements concerning property distribution 

between the estranged spouses. (Id. at p. 425.) 

The contractual provision here bears no resemblance to the one examined in 

Barham because the agreement here does not reaffirm a legal agreement with delineated

duties, but instead references a noncontractual relationship defined by the parties’ past

course of dealing. The language providing that Oracle “will continue to offer its product 

suite on HP platforms . . . in a manner consistent with that partnership” maintains—not 

enlarges—the parties’ scope of activities as conducted before the Hurd dispute. But 

unlike the express ratification of a prior contractual agreement that serves only to 

preserve the prior agreement’s legal effect (cf. Barham, supra, 33 Cal.2d at p. 425), this 

mandatory language, which appears in a contractual setting where previously no contract 

had existed, necessarily creates new legal duties. The parties in the agreement, therefore, 

have bound themselves by contract to “continue” certain conduct, the scope of which is 

defined by past, voluntary practices.

Oracle next points to the agreement’s overarching purpose—resolution of Hurd’s 

employment dispute—and its employment of an integration clause as support for its 

proposed interpretation. Oracle questions how a 17-page agreement that is 

“overwhelmingly dedicated” to resolving the controversy over the terms of Hurd’s 

employment can be read to surrender “in just two sentences” each company’s control 

over its development obligations. Oracle argues that to read a “sweeping porting 

obligation” into the agreement is inconsistent with the integration clause stating that the 

agreement “constitutes the entire agreement among the Parties regarding the resolution 

and settlement of the [l]awsuit” (italics added) over Hurd, especially because specific 
31

porting agreements were still operative between the parties and contained detailed 

provisions regarding duration, remedies, intellectual property rights, and payment.13 

We perceive no contradiction between the commitments made in the affirmation 

clause and the settlement of the Hurd dispute. Oracle’s hiring of Hurd precipitated a 

tumultuous period in which the parties’ partnership—and particularly Oracle’s continued 

commitment to offering its product suite on Itanium—was in question. As Oracle states 

in its opening brief, quoting the trial court’s findings, “the reaffirmation clause was a 

reaction to Oracle’s public threat to end all business collaboration just days before, and 

arose from HP’s concern that ‘the litigation might permanently damage its relationship 

with Oracle.’ ” Recital B of the agreement, in which the companies expressly recognized

“the mutual advantages of the continuation of the HP-Oracle partnership and its benefits 

to their joint customers” suggests that reaffirming the partnership was central to settling 

the dispute over Hurd’s hiring.14 By assuring Oracle’s continued offering of its product 

suite on HP’s platforms, the reaffirmation clause furthers the overarching goal of the 

entire agreement to continue the companies’ partnership for the benefit of their joint 

customers, particularly as expressed in the joint press release provision and statement.

Finally, Oracle challenges the trial court’s determination that to construe 

paragraph 1 as having reserved for the companies the “absolute discretion not to work 

together” would be “essentially illusory.” Oracle claims it was error to characterize its 

interpretation as illusory when it both constrained Oracle from altogether ending the 

13 For example, in 2006 HP contracted to pay Oracle up to $10.3 million to port an 

application software product, the E-Business Suite, to Itanium (EBS agreement). The 

EBS agreement is a 14-page commercial contract with terms defining the products 

covered by the agreement, Oracle’s porting and maintenance responsibilities, contract 

duration (set to expire December 31, 2013), the amount HP would pay, and limitation of 

liability provisions, among other standard commercial contract terms. 

14 The other two recitals, Recital A and Recital C, address the procedural history 

of HP’s lawsuit against Hurd and specify the effect of the agreement on Hurd’s 

obligations under his prior separation agreement with HP. 
32

relationship with HP and abandoning Itanium (which it submits it was free to do in 

September 2010) and prevented it from allowing the Hurd dispute to interfere with its 

relationship. Oracle relies on Third Story Music, Inc. v. Waits (1995) 41 Cal.App.4th 798 

(Third Story) and other authorities to argue that illusoriness is determined from the entire 

contract, not a single provision, and that even entirely discretionary provisions in 

contracts are frequently upheld. Oracle further disputes that its interpretation renders the 

affirmation clause illusory, since it conferred on HP the “temporary benefit” of 

preventing Oracle from terminating the relationship. Oracle cites Asmus v. Pacific Bell

(2000) 23 Cal.4th 1, 16 (Asmus), in support of the proposition that a short-term benefit is 

not illusory where the promisee obtains the benefit of the promise while it remains in 

force. 

Asmus concerned an employer’s implied power to terminate a unilateral contract

in the employment context and does not help Oracle here, both because the contract in 

question does not confer the implied-in-fact unilateral power discussed in Asmus and 

because Oracle’s exercise of its purported discretion under the agreement lacked any of 

the procedural protections identified in that case. (See Asmus, supra, 23 Cal.4th at p. 18

[concluding, based on the application of contract principles, that “an employer may 

terminate a unilateral contract of indefinite duration, as long as its action occurs after a 

reasonable time, and is subject to prescribed or implied limitations, including reasonable 

notice and preservation of vested benefits”].) More to the point, in our view the issue is 

not whether the agreement was illusory, or even contained an illusory promise, but 

whether the reaffirmation clause may be construed to mean that Oracle reserved absolute 

discretion to decide whether to offer its next generation products on HP’s platform. 

In stark contrast with Third Story and other cases cited by Oracle, the contractual 

language does not expressly grant a discretionary power. (Cf. Third Story, supra, 41 

Cal.App.4th at pp. 801–802 [marketing contract promised to market music, or to refrain 

from doing so, at the election of the promisor]; Carma Developers (Cal.), Inc. v. 
33

Marathon Development California, Inc. (1992) 2 Cal.4th 342, 376 (Carma) [lease 

provision granting the lessor the right to terminate and recapture tenant’s lease “to claim 

for itself appreciated rental value of the premises was expressly permitted by the lease 

and was clearly within the parties’ reasonable expectations”].) The trial court in this case 

used the phrase “essentially illusory” to mean that interpreting the reaffirmation clause as 

“ ‘an agreement to continue to work together . . . that reserves the absolute discretion not 

to work together . . . gives [it] no real meaning.’ ” 

Applying de novo review to the agreement’s terms, we agree with the trial court’s 

interpretation. Oracle’s proposed construction of the reaffirmation clause as an 

obligation-free reaffirmation of an entirely voluntary partnership is contrary to the plain 

language of the second sentence and renders the provision superfluous, since the 

affirmatory public restatement of the partnership was addressed by paragraph 15, which 

required issuance of a joint press release. “An interpretation which gives effect is 

preferred to one which makes void. (§ 3541; see also Rest.2d Contracts, § 203, subd. (a) 

(1981) [interpretation which gives a reasonable meaning is preferred to one which 

renders a part of no effect].) Oracle’s interpretation runs contrary to the statutory 

preference for a construction of the contract which gives meaning to all the terms. 

We conclude that the phrase “ ‘in a manner consistent with that partnership as it 

existed’ ” is not reasonably susceptible to an interpretation that would transform the 

“ ‘will continue’ ” language in the first part of the sentence into language meaning “ ‘may 

continue’ ” or “ ‘has the discretion not to continue.’ ” Simply put, the language of the 

reaffirmation clause and the agreement as a whole do not support Oracle’s claim to 

absolute discretion over whether to continue offering its products on HP’s platform. To 

the contrary, as noted ante, in agreeing that it “will continue to offer its product suite on 

HP platforms . . . in a manner consistent with th[e] partnership as it existed prior to 

Oracle’s hiring of Hurd” (italics added), Oracle ceded its discretion over whether to offer 

those products by taking on a new legal obligation to do so. 
34

Our analysis thus far has focused on ascertaining the parties’ mutual intent based 

solely on the agreement’s plain language. Though the words of the affirmation clause are 

clear and explicit and may be understood in an ordinary, non-technical way (§§ 1638, 

1644), words alone “do not have absolute and constant referents.” (Pacific Gas, supra,

69 Cal.2d at p. 38.) In our view, more information about the “partnership as it existed

prior to Oracle’s hiring of Hurd” is needed to understand what that arrangement entailed 

and the resulting expectations or limitations it imposed on each company. Paragraph 1 of 

the agreement thus exemplifies the need to appraise “ ‘circumstances surrounding the

making of the agreement . . . including the object, nature and subject matter of the writing

. . .’ so that the court can ‘place itself in the same situation in which the parties found

themselves at the time of contracting.’ ” (Id. at p. 40.) 

To accomplish this task, we turn to the extrinsic evidence offered during the phase

1 trial. 

b. Extrinsic Evidence

Oracle maintains that the uncontroverted course-of-dealing evidence, set forth in 

the trial court’s findings of fact, confirms the voluntary nature of the partnership 

arrangement, whereby Oracle conducted “over 99% of all porting to HP-UX/Itanium” 

voluntarily and without contractual obligation. It asserts that even HP’s witnesses 

testified that each company had “ ‘discretion’ ” under the arrangement not to offer 

products, in Oracle’s case, and not to support products, in HP’s case. Oracle further 

contends that the parties’ negotiations over the agreement terms and HP’s conduct after 

executing the agreement confirm that the parties did not intend for the reaffirmation 

clause to impose any new obligations. 

It is well settled that courts may consider extrinsic evidence insofar as it sheds 

light on a meaning to which the contract is reasonably susceptible. (Iqbal, supra, 10 

Cal.App.5th at p. 8.) “Extrinsic evidence is ‘admissible to interpret the instrument, but 
35

not to give it a meaning to which it is not reasonably susceptible.’ ” (Parsons, supra, 62 

Cal.2d at p. 865.) Accordingly, we review the extrinsic evidence to understand the 

objective intent behind the agreed-upon point of reference for the reaffirmation clause, 

namely the “partnership as it existed prior to Oracle’s hiring of Hurd.” Because the

extrinsic evidence relevant to our analysis is largely uncontradicted, we apply 

independent review, even when conflicting inferences may be drawn from the evidence. 

(Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1126 (Wolf).) 

To the limited extent that we refer to disputed evidence, we defer to the trial court’s 

determination of witness credibility if supported by substantial evidence in the record. 

(See Tin Tin, supra, 170 Cal.App.4th at p. 1225.)

The record is replete with descriptive evidence of how the companies viewed and 

portrayed their strategic partnership. For example, marketing material from October 

2009 touted the companies’ more than “25 years of collaborative partnership” and 

“140,000 joint customers” and highlighted their joint support of solutions and market 

share in each other’s products. Even after the acquisition of Sun, Oracle’s top software 

executives told their HP counterparts that the company was committed to releasing new 

versions of software on Itanium in parity with their release on competitor platforms. 

Joint meeting minutes from the February 2010 meeting (after the Sun acquisition) 

attended by executives on both sides listed “[c]ommitment to the partnership” as a “key 

decision[] reached” (capitalization omitted) and covered topics like release parity of 

Oracle’s products on Itanium. And meeting minutes from the “joint alliance executive 

review” in April 2010 reflect Oracle co-president Catz’s opening statement about the 

companies’ “[s]trong relationship from many years of working together” and Oracle’s“

commit[ment] to [the] HP relationship and running Oracle Software on HP 

Infrastructure.” As these examples illustrate, the parties’ own conception of their

partnership in the timeframe prior to Oracle’s hiring of Hurd centered on serving their 
36

joint customers by continuing to offer Oracle’s software on HP’s hardware in a way that 

was competitive with other platforms. 

Evidence specific to the parties’ course of dealing in the years and months before 

Hurd’s hiring further demonstrates that the porting of Oracle’s products to HP’s 

platforms, the companies’ joint sales and marketing of those products, and coordinated 

joint support constituted the defining features of the partnership. Most notably, the 

partnership history between HP and Oracle contained no instance of Oracle offering a 

product on an HP platform, carrying out the initial port, and then electing not to continue 

to offer the product by porting subsequent versions or releases to the platform. 

Oracle’s executive vice-president of software development confirmed that “once 

we made the ports available[,] subsequent versions were available on Itanium.” When 

customers expressed concern about a rumored change in Oracle’s commitment to Itanium 

after it acquired Sun, Oracle’s “updated drawer statement” for HP to share with 

prospective customers highlighted Oracle’s products that were available on HP’s Itanium 

servers and reiterated Oracle’s “target[]” to ship upcoming Oracle releases to Itanium in 

parity with “the other strategic UNIXes.” 

We conclude this evidence of Oracle’s unbroken practice of porting the newest 

versions and releases of its product suite to existing HP platforms supports the only 

plausible reading of the agreement’s commitment to furthering the companies’ business 

relationship (recital B) and “delivering the best products and solutions to [their] more 

than 140,000 shared customers” (appended press release). It would be objectively 

unreasonable for the parties to agree to further their business relationship and to publicly 

announce their commitment to delivering the best products to their customers while 

giving Oracle unbounded discretion to refuse to port to their shared customers the latest 

versions of those products, which as the trial court correctly noted “are perforce its ‘best 

products,’ ”—an authority that Oracle had not previously exercised with respect to HP’s 

server platforms.
37

The evidence surrounding formation of the agreement also does not support

Oracle’s construction of the reaffirmation clause as having preserved its discretion to 

decline to port products that were already being offered on the platform. From the outset, 

both sides expressed a desire to preserve the strategic relationship. That relationship, as 

just discussed, was premised on a course of dealing in which Oracle made available, 

typically without contract or fee, and through mutual cooperation and joint efforts, the 

latest versions of its product suite on HP’s server platforms. When Livermore and Catz 

spoke on September 11, 2010, after HP initiated the Hurd lawsuit, Livermore conveyed 

HP’s desire that the settlement include “reaffirmation of the partnership” “as part of the 

contract.” Catz testified that she viewed reaffirming the partnership as “a very modest 

ask.” 

Second, the parties quickly agreed that the strategic relationship was not bounded 

by their preexisting written contracts. HP deleted Oracle’s initial, proposed partnership 

language that limited the reaffirmation commitment to the “longstanding strategic 

partnership as established under” the companies’ “existing contractual commitments and 

their mutual desire to continue to support their joint customers.” Oracle accepted the 

deletion of the existing contracts limitation and adopted HP’s modified version of what 

became the first sentence of paragraph 1. 

Third, the parties agreed to omit language that was preferential to HP or would 

have put HP in a better position than it had been prior to Oracle’s decision to hire Hurd. 

Oracle firmly rejected HP’s proposal that would have favored HP over other competitors, 

with Catz and Livermore agreeing that the purpose of reaffirmation was not to put HP in 

a better position than it currently enjoyed. In a draft proposal on September 12, 2010,

Oracle retained HP’s proposed language that “Oracle will continue to offer its product 

suite on HP platforms and HP will continue to support Oracle products . . . on its 

hardware” but replaced the term that would have advantaged HP over other competitors

with the phrase “in a manner consistent with that partnership.” Daley highlighted
38

Oracle’s intent on this point in her cover e-mail to HP, stating that the reaffirmation 

clause “was intended to reaffirm and continue the existing relationship and not to put HP 

in a better position tha[n] it currently enjoys or result in the negotiation of a new 

contractual commitment.” 

Fourth, the parties ultimately agreed to exclude specific commitments and instead 

used their “partnership as it existed prior to Oracle’s hiring of Hurd” as the point of 

reference for the strategic partnership. This point was closely tied to HP’s early efforts to 

include preferential language. Daley’s September 12 e-mail rejected this approach, 

stating that Catz and Livermore “did not discuss anything more tha[n] an agreement to 

continue to work together as the companies have – with Oracle porting products to HP’s 

platform and HP supporting the ported products and the parties engaging in joint 

marketing opportunities – for the mutual benefit of customers.” Livermore agreed the 

next day not to add more specific language into the agreement. Livermore testified that 

she was satisfied at that point that the draft provision addressed her concerns about

Oracle continuing to offer its product suite on HP’s server platform. Livermore also 

understood from Catz that Oracle was committing to continue its past course of action 

and was not taking on new obligations. Consistent with this understanding, Livermore 

quickly stepped in when HP’s lawyers tried to add specific terms for Oracle to “continue 

to support all ongoing versions of HP-UX with Oracle’s relevant database, middleware 

and application products with the availability, marketing and pricing in competitive terms 

that Oracle has provided HP for the past five years.” Livermore told Catz that the 

lawyers’ language got past her and was a mistake. 

In the final exchanges surrounding the negotiation of the agreement, Oracle 

deleted language about supporting “all ongoing versions of HP-UX . . . in competitive 

terms that Oracle has provided HP for the past five years,” and HP modified the 

partnership reference to specify that the parties were reaffirming their relationship “as it 

existed prior to Oracle’s hiring of Mark Hurd.” Daley, Catz, and HP’s general counsel 
39

Holston each testified that the parties intended to refer to the partnership and course of 

dealing before the controversy erupted over Oracle’s hiring of Hurd.

Our observations here reinforce the plain meaning of the reaffirmation clause and 

the extrinsic evidence pertaining to the parties’ partnership. Oracle repeatedly refused to 

commit to granting preferential terms to HP in relation to the marketing or pricing of its 

products, but it did not protest the inclusion of an explicit commitment to continue 

offering its product suite on HP’s platform in the same manner it had immediately prior 

to the Hurd dispute. Oracle adopted the proposed language and framed it in terms of the 

preexisting partnership, which was undeniably premised—both in external messaging and 

internal planning—on the consistent and prospective availability of the latest versions of

Oracle’s software on HP’s platforms.

Oracle contends that this interpretation is inconsistent with its rejection, during

negotiations, of language proposed by HP “that would have included a new duty to port,”

as well as with the parties’ mutual understanding that Oracle “was not ‘taking on any new 

obligations or work.’ ” Oracle cites its rejection on September 12, 2010, of language that 

would have committed it “to continue to offer its product suite on HP Platforms on terms 

that are as good or better than any other platform,” and on September 13 of language that 

would have committed it to “continue to support all ongoing versions of HP-UX with 

Oracle’s relevant database, middleware and application products with the availability, 

marketing and pricing in competitive terms that Oracle has provided HP for the past five 

years.” Oracle suggests the common element of these spurned clauses was the porting 

obligation and claims it was implausible for the trial court to instead infer that the 

rejection pertained to the preferential terms.

But these arguments ignore what the record plainly shows. Most significantly, 

Oracle rejected the proposed language on September 12 that related to “terms that are as 

good or better than any other platform” but accepted the obligation to “continue to offer 

its product suite on HP Platforms . . . .” Oracle in fact adopted that language in its 
40

responsive proposal and added to it, inserting HP’s commitment to “continue to support 

Oracle products (including Oracle Enterprise Linux and Oracle VM) on its hardware in a 

manner consistent with that partnership.” Oracle’s further rejection of the language 

proposed by HP’s lawyers on September 13, which again contained preferential language 

regarding pricing and marketing, does not change its express acceptance and adoption of 

the “will continue to offer its product suite” language. 

In accepting that language, Oracle manifested an objective intent to “continue [] 

offer[ing]” (i.e., porting) its product suite to existing HP server platforms. The record 

does not support Oracle’s attempt to draw a contrary inference, particularly given Daley’s 

contemporaneous e-mail in which she disclaimed Catz and Livermore discussing 

“anything more tha[n] an agreement to continue to work together as the companies have 

– with Oracle porting products to HP’s platform and HP supporting the ported products 

and the parties engaging in joint marketing opportunities – for the mutual benefit of 

customers.” Daley’s testimony at trial that she “made a reference to porting and joint 

marketing as examples of the kinds of things that would not become obligatory as a result 

of that affirmation provision” cannot be reconciled with the text of the e-mail. We defer 

to the trial court’s credibility finding on this point, as articulated in the statement of 

decision, that “Daley’s testimony is the precise opposite of what [her] email actually 

stated and is entitled to no weight.” 

Nor does the evidence of Oracle’s assertion that it was taking on no new 

obligations help its case. There is no question that Catz emphasized, and Livermore 

understood, that Oracle would not commit to “any new obligations or work.” Oracle 

contends that this manifestation of intent confirms the parties did not agree to a new 

porting obligation. We agree there were no “new” obligations in the reaffirmation clause 

because the agreement was for each party to continue to do what it had done in the past. 

In Oracle’s case, it agreed that it “will continue to offer its product suite on HP 
41

platforms . . . in a manner consistent with that partnership as it existed prior to Oracle’s 

hiring of Hurd.”

We do not construe the invocation of no “new obligations or work” as tantamount 

to disavowing any legal commitments altogether. Taken to its logical conclusion, 

Oracle’s insistence on no new obligations would have precluded it from entering into a 

contract, which by definition entails a “new” legal obligation. By agreeing to continue to 

offer its product suite on HP’s platforms in a manner consistent with the partnership as it 

existed prior to Oracle’s hiring of Hurd, Oracle did exactly what the parties at the outset 

had agreed upon, which was to “reaffirm their commitment to their longstanding strategic 

relationship and their mutual desire to continue to support their mutual customers.” In 

Oracle’s case, the uncontested evidence is that its past practice was to continue porting 

new versions of its product suite to the HP servers that HP continued to sell to its 

customers.

Oracle complains that in construing the agreement to require Oracle to “port all its 

software, indefinitely and without charge,” the trial court contravened the parties’ mutual 

intent not to put HP “in a better position” than it had enjoyed prior to the agreement. Yet 

the trial court did not construe the agreement to require Oracle to port all its software but 

to continue to offer the software, including new versions, releases, or updates, that made 

up the product suite that was already offered for Itanium at the time the parties signed the 

agreement. The trial court did not construe Oracle’s obligation to apply without charge 

indefinitely but “until such time as HP discontinues the sale of its Itanium-based servers.”

Each of these obligations reflected the continuation of past practices, consistent with the 

objective intent of the agreement.

Oracle contends that HP’s conduct in the months after signing the agreement, 

before the present controversy arose, demonstrates the parties’ understanding that the 

reaffirmation clause did not impose upon Oracle a duty to port. Oracle cites, for 

example, evidence that HP never told its executives responsible for the Oracle-HP 
42

relationship that Oracle was required to port. Oracle also suggests that HP did not act in 

conformity with the understanding of the agreement it professes, because in December 

2010 it offered to support Oracle Enterprise Linux and Oracle VM products—both which 

were already expressly listed in paragraph 1 of the agreement—if Oracle agreed to pay $5 

million and guarantee continued porting to Itanium. 

Oracle advances a form of “practical construction” placed upon a contract by the 

parties before a controversy has arisen as to its meaning, which under appropriate 

circumstances may be entitled to great weight by the court. (Crestview Cemetery Ass’n v. 

Dieden (1960) 54 Cal.2d 744, 753–754; see Universal Sales Corp. v. Cal. etc. Mfg. Co.

(1942) 20 Cal.2d 751, 761–762.) HP responds that this approach “ ‘may be considered 

only when the acts of the parties were positive and deliberate and done in attempted 

compliance with the terms of the agreement.’ ” (United States Liab. Ins. Co. v. 

Haidinger-Hayes, Inc. (1968) 263 Cal.App.2d 531, 538 (Haidinger-Hayes).) The 

Restatement, which “ ‘California usually follows’ ” (Airs Aromatics, LLC v. CBL Data 

Recovery Technologies Inc. (2020) 50 Cal.App.5th 1009, 1014), indeed suggests that 

such evidence of acceptance or acquiescence in a course of performance requires 

“repeated occasions for performance by either party with knowledge of the nature of the 

performance and opportunity for objection to it by the other.” (Rest. 2d, Contracts 

§ 202(4).) An exemplary application of the doctrine may be found in Oceanside 84, Ltd. 

v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1450–1451, where the court 

determined that a borrower’s payments on a loan for five years, without objection, in the 

face of periodic rate adjustments may be considered acquiescence in the lender’s

interpretation of the method for calculating the interest rate adjustments. 

Here, however, none of the conduct cited by Oracle meets the specifications of the 

interpretational doctrine of practical construction because, unlike in Oceanside 84, there 

was no meaningful and sustained opportunity prior to the onset of this litigation for the 

parties to engage in or test their performance under the agreement. For example, while it 
43

is true that the key individuals at HP responsible for the Oracle relationship were 

informed only that a settlement had been reached and they should carry on with “business 

as usual,” that messaging was wholly consistent with the agreement’s terms (including its

confidentiality provision), because the HP employees understood their obligation was to 

keep doing what they had been doing before the agreement. 

Regarding HP’s offer to support Oracle’s Enterprise Linux and VM products, 

Oracle omits to mention that the evidence adduced at trial on this subject, which included 

testimony from several fact witnesses, showed that HP’s offer was in reference to 

providing “enhanced OEL/OVM support and marketing” (italics added) after actions 

taken by Oracle on pricing appeared to disadvantage HP’s competitiveness. Oracle also 

appears to misconstrue HP’s communications as an attempt to “negotiate a porting 

agreement for Itanium” (which would be unnecessary had it believed it already had one). 

But the evidence Oracle relies on shows only a discussion about Oracle’s commitment to 

“continued parity for HP-UX” in timing its software releases and does not seek a 

commitment to porting generally. HP’s conduct in this context may not be fairly 

construed as evidence of a deliberate effort to comply with the terms of the agreement. 

(Cf. Haidinger-Hayes, supra, 263 Cal.App.2d at p. 538.) 

c. Definite and Enforceable Terms

In addition to these arguments grounded in extrinsic evidence, Oracle also 

challenges the agreement as lacking sufficiently definite and enforceable terms. It 

contends that the reaffirmation clause omits material terms including the scope of the 

duty involved, performance limits, duration, and compensation, as well as other terms 

necessarily included in prior porting agreements between the parties. HP responds that 

the parties used their course of dealing to supply the material terms for the agreed-upon 

porting and product support obligations. We agree that the parties’ past practices afford

an adequate basis to ascertain and enforce the obligations under the agreement.
44

The object of the agreement, defined as “the thing which it is agreed, on the part of 

the party receiving the consideration, to do or not to do” (§ 1595) is, in this case, entirely 

ascertainable. Oracle agreed to continue to offer and update its product suite—those 

software products already available on Itanium when the agreement was signed—on 

HP’s existing platform. Even so, Oracle complains that the agreement fails to identify 

products or platforms, does not discuss porting fees or address project management, 

maintenance, or support, and includes no warranties, disclaimers, damages limitations, or 

provisions on intellectual property ownership. Oracle contrasts the sparseness of the 

reaffirmation clause against more detailed provisions of the agreement, like the multiparagraph “standstill agreement” pertaining to possible takeover activity, or the durationspecific provisions limiting Hurd’s activities at Oracle. Oracle maintains, citing 

Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 215 and Vons Companies, Inc. v. 

United States Fire Ins. Co. (2000) 78 Cal.App.4th 52, 58 (Vons), that the trial court 

improperly supplied terms the contract lacked and did so in a manner inconsistent with 

the express terms of the parties’ written porting agreements and with the terms that would 

have been specified had two, sophisticated parties sought to negotiate an “unconditional, 

comprehensive porting agreement.” 

Oracle’s argument rests on a faulty premise. The reaffirmation clause is not an 

unconditional, comprehensive porting agreement; nor do we believe the trial court’s 

construction of the agreement made it one. Simply put, the reaffirmation clause creates 

an obligation to continue with an expressly identified course of dealing (offering and 

supporting Oracle’s products on HP’s existing platforms as long as they are sold by HP) 

no different from the course of dealing that had defined their strategic partnership for 

years prior to Oracle’s hiring of Hurd. Our independent review of the plain language and 

of the relevant extrinsic evidence, including the past course of dealing and circumstances 

surrounding formation of the agreement, confirms the trial court’s interpretation that 
45

paragraph 1 of the agreement requires Oracle to continue to offer its product suite on the 

HP Itanium platform, which HP continued to sell. 

To be sure, the trial court articulated terms in its order granting HP declaratory 

relief. But it did so by inferring from the parties’ past practices and longstanding course 

of dealing on each of those topics. This was entirely acceptable. “Unexpressed 

provisions of a contract may be inferred from the writing or external facts.” (Cal. Lettuce 

Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 482 (Cal. Lettuce).) While courts 

may not “create for the parties a contract that they did not make” (Vons, supra, 78 

Cal.App.4th at p. 59), courts may look to the nature and circumstances of the contract to 

effectuate the intent of the parties where it can be reasonably ascertained. “ ‘The law 

does not favor, but leans against the destruction of contracts because of uncertainty; and 

it will, if feasible, so construe agreements as to carry into effect the reasonable intentions 

of the parties if that can be ascertained.’ ” (Cal. Lettuce, at p. 481.) 

California case law provides numerous examples of the use of extrinsic evidence 

to infer or clarify a contractual term. (See, e.g., Cal. Lettuce, supra, 45 Cal.2d at 

pp. 484–485 [inferring price setting features and obligation to purchase from prior 

dealings of the parties]; Consolidated Theatres, Inc. v. Theatrical Stage Employees Union

(1968) 69 Cal.2d 713, 729 [inferring term of duration from “the nature of the contract and 

the circumstances surrounding it”]; Okun v. Morton (1988) 203 Cal.App.3d 805, 818 

[rejecting uncertainty of business ventures contract where extrinsic evidence introduced 

at trial was “sufficient to establish . . . the ways in which future ventures were to be 

financed, owned, and operated by the parties”].) 

In this case, extrinsic evidence of the strategic partnership provided detailed 

information about the parties’ course of dealing as it related to Oracle’s porting practices 

to HP’s existing server platforms, summarized ante (part II.A.2.b.). Oracle does not 

question that the products it offered for Itanium when the agreement was signed properly 

defined the product suite. It does not dispute that over 99 percent of porting at the time 
46

had occurred or was occurring without a written contract or exchange of payment, and 

that once it made a product available on Itanium by porting, it continued to release 

subsequent versions of the software on the platform as long as HP offered the platform. 

These practices comprised the course of dealing for many years and formed the basis for 

the strategic partnership. Because the reaffirmation clause identified the “partnership as 

it existed prior to Oracle’s hiring of Hurd” as the reference point for Oracle’s 

commitment to continue offering its product suite on HP platforms, the trial court did not 

err in construing the agreement to require the contractual partnership to continue—and 

end—on those same terms.

d. Summary

For these reasons, we conclude that the agreement is not reasonably susceptible to 

Oracle’s proposed interpretation. To construe the reaffirmation clause as affirming only 

the voluntary or discretionary basis of the HP-Oracle partnership is inconsistent with both 

the plain language of the agreement and with the record of the parties’ past course of 

dealing, which we view as the defining feature of their strategic partnership. While there 

may not have been a contractual porting obligation prior to the signing of the agreement, 

there was an established and uninterrupted porting practice in which Oracle partnered 

with HP to make each subsequent release of software available on Itanium, without 

payment or limitation. Oracle’s stated desire to enter into a contract without taking on 

any new obligations does not supersede the mutually expressed intent of the parties, as 

evidenced by the words of the contract and confirmed by robust extrinsic evidence, to 

continue their practice of offering and supporting Oracle’s product suite on HP’s existing 

platform as long as HP continued to sell the platform, as that practice existed before the 

Hurd dispute arose. Accordingly, the trial court did not err in its construction of 

paragraph 1 of the agreement as set forth in its statement of decision following the phase 

1 trial.
47

B. Breach of Contract and Breach of Implied Covenant Claims

Oracle attacks the jury verdict for breach of contract and breach of the implied 

covenant of good faith and fair dealing. With respect to breach of contract, Oracle 

contends that the undisputed evidence at the phase 2 trial established that there was never 

a breach of the agreement because Oracle resumed porting to Itanium in time to complete 

the next significant port of a product version around the same time frame it made that 

version available on competitor platforms. Oracle maintains that HP’s actual claim,

based on the March 2011 announcement to end porting to Itanium, was for anticipatory 

repudiation. Further, Oracle asserts that HP waived any right to damages for anticipatory 

breach by seeking, obtaining, and accepting performance. 

As for the verdict on breach of the implied covenant, Oracle contends that because 

the reaffirmation clause had no express porting provision and was not a “porting 

agreement,” the implied covenant could not impose a substantive duty to port and could 

not be breached by Oracle’s (later retracted) decision to cease porting.

HP responds that Oracle failed to assert the anticipatory repudiation argument in 

the trial court and has forfeited its claim that HP waived the right to contract damages. 

HP otherwise contends that substantial evidence supports the jury’s conclusion that 

Oracle’s March 2011 announcement and the ensuing conduct breached the express terms 

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

1. Breach of Contract 

We begin with Oracle’s challenges to the jury verdict for breach of contract. We 

address and reject HP’s contention that Oracle has forfeited this argument on appeal. We 

next apply the law governing contract repudiation and breach to uncontroverted facts in 

the record to decide as a matter of law whether HP waived any claim to damages based 

on Oracle’s March 2011 announcement. 
48

a. Forfeiture 

HP frames Oracle’s anticipatory repudiation claim as an issue newly asserted on 

appeal. HP contends that nowhere in motion practice, in limine motions, or in any other 

filings in the trial court, including in its proposed jury instructions, did Oracle argue that 

HP could not pursue contract damages because the purported basis for Oracle’s liability 

was anticipatory repudiation of the agreement. Oracle responds that HP’s forfeiture 

argument is “perplexing” given that Oracle attempted at numerous points in the phase 2

trial to limit HP’s contract claim and available damages based on the fact that HP

received and accepted performance under the contract. 

“ ‘As a general rule, theories not raised in the trial court cannot be asserted for the 

first time on appeal; appealing parties must adhere to the theory (or theories) on which 

their cases were tried. This rule is based on fairness—it would be unfair, both to the trial 

court and the opposing litigants, to permit a change of theory on appeal.’ (Eisenberg et 

al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2015) ¶ 8:229; p. 8–

167.) ‘New theories of defense, just like new theories of liability, may not be asserted for 

the first time on appeal.’ ” (Nellie Gail Ranch Owners Assn. v. McMullin (2016) 4 

Cal.App.5th 982, 997.)

Having reviewed the record, we agree with Oracle that it raised the relevant issues 

of breach of contract and anticipatory repudiation numerous times before and during the 

phase 2 trial. For example, Oracle argued in briefing filed before the phase 2 trial that the 

trial court should adopt Oracle’s proposed special instructions on damages, in part 

because HP’s failure to plead “any theory of breach by anticipatory repudiation . . . is 

fatal to any effort by HP to claim lost profits damages based on the statement contained 

in Oracle’s March 2011 announcement.” Oracle asserted that if HP were permitted to 

pursue damages based on the theory that the March 2011 announcement constituted an 

anticipatory repudiation, it could not claim lost profits from a period before performance 

was due, because when the repudiating party retracts its repudiation before performance 
49

is due, “ ‘the repudiation is nullified and the injured party is left with his remedies, if any, 

invocable at the time of performance.’ ” (Citations omitted.) Oracle argued that since 

both parties acknowledge the agreement is still in force, any belated attempt by HP to 

claim damages based on an anticipatory repudiation theory “cannot succeed.” 

Oracle also sought leave to move for summary adjudication of HP’s cause of 

action for breach of contract before the phase 2 trial. Oracle argued that because it 

fulfilled its stated intent after the phase 1 trial to deliver its software for Itanium on the 

same schedule as other platforms, the court should determine prior to trial whether the 

“real-world contractual performance of the [agreement], as interpreted by this Court, 

voids HP’s breach of contract and promissory estoppel claims.” Oracle asserted in the 

proposed summary adjudication motion that HP’s only possible theory of breach was 

based on Oracle’s March 2011 announcement that it would not discharge its future 

obligation (as defined by the trial court in phase 1); however, that theory of anticipatory 

breach was incompatible with HP’s subsequent demand for and acceptance of Oracle’s

performance under the contract. The trial court denied Oracle leave to file the proposed

motion for summary adjudication. 

These instances demonstrate Oracle’s attempts before and during the phase 2 trial 

to challenge HP’s contract claim on the grounds that (1) Oracle fully performed under the 

contract, precluding liability for breach of contract, and (2) HP had waived any claim 

based on anticipatory repudiation by demanding and accepting performance. 

Oracle’s showing more than satisfies the minimum standard for preservation of 

claims on appeal, which “ ‘is that the asserted error must have been brought to the 

attention of the trial court.’ ” (DiPirro v. Bondo Corp. (2007) 153 Cal.App.4th 150, 178.) 

Both the trial court and HP were aware of Oracle’s grounds for challenging HP’s breach 

of contract claim by the phase 2 trial. We decide that Oracle has not forfeited its right to 

assert on appeal its anticipatory repudiation argument; therefore we address its merits.
50

b. Breach of Contract and Anticipatory Repudiation 

Oracle’s contention that HP’s breach of contract claim is actually a claim for 

anticipatory repudiation, for which HP has waived its right to damages, rests on two 

premises—first, Oracle’s interpretation of the parties’ obligations under the agreement; 

second, application of the laws governing breach of contract and anticipatory repudiation 

to certain undisputed statements made by Oracle. 

We begin by summarizing the governing rules and principles. As the facts 

relevant to ascertaining the nature of HP’s breach claim are not in dispute, we generally 

exercise independent review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.) To the 

extent there are factual disputes concerning any of the relevant historical facts, we defer 

to the decision of the trial court where supported by substantial evidence. (Id. at p. 800.)

Oracle relies on principles of contracts, anticipatory repudiation, and double 

recovery. “California law recognizes that a contract may be breached by 

nonperformance, by repudiation, or a combination of the two.” (Central Valley General 

Hospital v. Smith (2008) 162 Cal.App.4th 501, 514, fn. omitted; see Rest.2d Contracts,

§ 236 (1981).) “Any breach, total or partial, that causes a measurable injury, gives the 

injured party a right to damages as compensation.” (Witkin, Summary of Cal. Law (11th 

ed. 2020) Contracts, § 877.) Nonperformance typically refers to an unjustified or 

unexcused failure to perform a material contractual obligation when performance is due. 

(Central Valley, at p. 514, fn. 3.) But “[t]here can be no actual breach of a contract until 

the time specified therein for performance has arrived.” (Taylor v. Johnston (1975) 15 

Cal.3d 130, 137 (Taylor).) By contrast, “an anticipatory breach of contract occurs when 

the contract is repudiated by the promisor before the promisor’s performance under the 

contract is due.” (Central Valley, at p. 514, citing Taylor, at p. 137.) In other words, “if 

a party to a contract expressly or by implication repudiates the contract before the time 

for his or her performance has arrived, an anticipatory breach is said to have occurred.”

(Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 489 (Romano).) 
51

Oracle maintains that HP’s breach of contract claim is, in fact, a claim for 

anticipatory breach involving an express repudiation. An express repudiation “is a clear, 

positive, unequivocal refusal to perform.” (Taylor, supra, 15 Cal.3d at p. 137.) The 

California Supreme Court’s 1975 opinion in Taylor illustrates the principles of

repudiation and anticipatory breach. 

The plaintiff in Taylor contracted to breed his two thoroughbred mares to the 

defendants’ stallion. (Taylor, supra, 15 Cal.3d at p. 133.) The defendants sold the 

stallion and shipped it to buyers in Kentucky before the time for performance under the 

breeding contracts was due. The plaintiff refused to accept the defendants’ written 

“ ‘release []’ ” from his “ ‘reservations’ ” for the stallion and insisted on performance. 

(Ibid.) The plaintiff shipped the mares to Kentucky where the defendants arranged for 

the breeding to go forward. (Id. at pp. 133–134.) But after numerous failed attempts to 

secure a date for the breeding, the plaintiff abandoned the effort and bred his mares to a

different stallion for a substantially higher stud fee. (Id. at pp. 134–135.) 

In the breach of contract action that followed, the trial court awarded the plaintiff 

damages after finding the defendants liable for breach. (Taylor, supra, 15 Cal.3d at 

p. 135.) The California Supreme Court in Taylor reversed. The court noted that while 

the trial court found the defendants’ continuous course of conduct from the sale of the 

stallion through the plaintiffs’ last attempted effort to schedule a breeding “amounted to a 

repudiation which [the] plaintiff was justified in treating as an anticipatory breach,” the 

conduct “cannot be treated as an undifferentiated continuum amounting to a single 

repudiation but must be divided into two separate repudiations.” (Id. at p. 138.) The 

court explained that where the plaintiff did not treat the defendants’ repudiation (selling 

the stud to buyers in Kentucky) as an anticipatory breach and instead acted on the 

defendants’ retraction of the repudiation (by arranging for breeding in Kentucky), the 

“retraction nullified the repudiation.” (Ibid.) 
52

The high court disagreed with the trial court’s conclusion that the defendants’

repeated, subsequent cancellations of the plaintiffs’ attempts to reserve the stallion

constituted a second repudiation. (Taylor, supra, 15 Cal.3d at pp. 138–139.) The court 

observed that there was no evidence the defendants had expressly refused to perform, nor 

did their conduct amount to an unequivocal refusal to perform, since at the time the 

plaintiffs abandoned their efforts there still remained time in the breeding season to 

attempt performance. (Id. at p. 139.) The court reasoned that while the defendants’ 

conduct may have “cast doubt upon the eventual accomplishment of performance[,] it did 

not render performance impossible.” (Ibid.) The court concluded that “as a matter of law 

this conduct did not amount to an unequivocal refusal to perform and therefore did not 

constitute an anticipatory breach of the contract.” (Id. at p. 141.)

In reaching its conclusion that there had been no anticipatory breach of the 

contract, the California Supreme Court in Taylor explained the legal consequences of an 

anticipatory repudiation. “When a promisor repudiates a contract, the injured party faces 

an election of remedies: he can treat the repudiation as an anticipatory breach and 

immediately seek damages for breach of contract, thereby terminating the contractual 

relation between the parties, or he can treat the repudiation as an empty threat, wait until 

the time for performance arrives and exercise his remedies for actual breach if a breach 

does in fact occur at such time. [Citation.] However, if the injured party disregards the 

repudiation and treats the contract as still in force, and the repudiation is retracted prior to 

the time of performance, then the repudiation is nullified and the injured party is left with 

his remedies, if any, invocable at the time of performance.” (Id. at pp. 137–138.) The 

court, in a later case, described the principle of anticipatory breach as a recognition that 

“the promisor has engaged not only to perform under the contract, but also not to 

repudiate his or her promise.” (Romano, supra, 14 Cal.4th at p. 489.) 

Oracle contends that its March 2011 announcement that it was discontinuing

software development for Itanium was not a breach of the agreement because the time for 
53

performance had not yet arrived. Oracle maintains that the March 2011 announcement 

equally cannot serve as the basis of a claim for anticipatory breach for which HP can 

recover damages because HP did not consider the announcement as a repudiation but 

instead treated the contract as in force and accepted Oracle’s eventual performance. 

Oracle argues that for HP to treat the repudiation as a breach and seek damages while 

also demanding continuing performance conflicts with the established rule whereby the 

injured party, upon repudiation, “faces an election of remedies.” (Taylor, supra, 15 

Cal.3d at p. 137.) 

Oracle compares HP’s posture to that of the plaintiff in Taylor after the breeding 

arrangements in Kentucky effectively nullified the retraction. Oracle claims that because 

HP pressed for performance of the agreement and accepted and relied upon Oracle’s 

September 2012 announcement retracting any repudiation, it was limited to its “remedies 

that might arise at the time of performance” (Taylor, supra, 15 Cal.3d at p. 138) if Oracle 

failed to perform. Oracle further contends that as the non-repudiating party suing for 

breach of contract damages, HP had to reject the breaching party’s tender of performance

or else waive its right to pursue damages for anticipatory breach.

Oracle’s attempt to characterize HP’s claim as a waived claim for anticipatory 

repudiation rests on two assumptions about the agreement. First, Oracle assumes that the 

reaffirmation clause, interpreted by the trial court to require “Oracle to continue to offer 

its product suite on HP’s Itanium-based server platforms” sets the time of performance as

Oracle’s release of the next versions of software in its product suite available on Itanium.

In Oracle’s words, “[t]he time for performance had not yet arrived, and would not arrive, 

until Oracle actually released the software versions that it purportedly had agreed to port 

to Itanium.” 

Second, Oracle assumes that the agreement defines the mandatory conduct strictly 

in terms of the obligation to port, ignoring the broader context and purpose to publicly 

reaffirm the continuation of the strategic partnership in service of the joint customers. 
54

These assumptions, if correct, would support the application of an anticipatory 

repudiation framework to Oracle’s March 2011 announcement, as anticipatory 

repudiation exists to address a repudiation before the promisor’s performance under the 

contract is due. (Romano, supra, 14 Cal.4th at p. 489.)

However, the agreement’s text, as we have construed it above, does not support 

these assumptions. The agreement obligates Oracle to “continue to offer its product suite 

on HP platforms, . . . in a manner consistent with th[e] [companies’] partnership” before 

the Hurd dispute arose. (Italics added.) As we have explained above, the timeframe for 

performance was immediate because the agreement provided for the continuation of 

conduct that was ongoing at the time the parties signed the agreement. The evidence at 

trial, which described the nature and function of the partnership before the Hurd dispute,

was for all intents and purposes uncontroverted. This evidence established that the 

process for Oracle to “offer its product suite” on the Itanium platform required ongoing 

coordination and collaboration around porting that did not have a definitive endpoint 

since software requires new releases, updates, and constant tuning to run on the platform. 

Performance here is defined as continuing conduct that was already established 

between the parties and was in full swing when Oracle made its March 2011 

announcement. It is difficult to imagine circumstances in which a company’s public 

announcement that it was discontinuing all software development for a specified platform 

would not constitute actual breach of an agreement in which the company had agreed to 

“continue to offer” its software products on that platform consistent with the abovedetailed prior practice. 

Furthermore, Oracle’s claim that the March 2011 announcement did not constitute 

a breach of contract ignores a fundamental feature of the agreement, which was its public

reaffirmation of the HP-Oracle partnership. Here, as HP points out, the announcement by 

its very nature undermined customer confidence in the HP-Oracle relationship. 

Immediately after the March 2011 announcement, Oracle posted on its customer website 
55

a list of the “next software release[s]” that would not be available for Itanium. In the 

months that followed, Oracle ceased all ongoing work to port new versions of its 

software to the Itanium server platforms. HP introduced evidence that Oracle capitalized 

directly on the opportunity to further weaken HP’s position by mobilizing its sales force 

to try to convert Itanium customers who depended on Oracle’s software to Oracle’s Sun 

platforms. HP also introduced evidence that customer uncertainty about the future 

availability of Oracle’s database software (in particular) on Itanium provoked many 

customers to switch their business to other platforms, and that by the time Oracle released 

its September 2012 statement recommitting to Itanium, many customers “had made 

alternate plans.” HP asserts that its Itanium business suffered immediate and irreversible 

harm as a result of the March 2011 announcement and subsequent actions taken by 

Oracle.

Under these circumstances, Oracle’s March 2011 announcement did more than

assert “a clear, positive, unequivocal refusal to perform” (Taylor, supra, 15 Cal.3d at 

p. 137) as in an express repudiation. The announcement precipitated nearly 18 months of 

conduct (until Oracle’s subsequent September 2012 statement in which it reversed 

course) during which Oracle arguably did not perform what under the terms of the 

agreement was a continuing contractual obligation to offer its software on the Itanium 

platform, and during which time customers were revaluating their positions and choices 

regarding next-generation database and other software applications. Although Oracle’s 

course reversal in September 2012, after the phase 1 ruling, allowed it to complete the 

port of Oracle’s database application and other products, substantial evidence in the 

record supports HP’s position that the damage from Oracle’s initial decision to 

discontinue porting and the conduct that attended that decision had an “immediate and 

devastating” impact. This evidence provided a sufficient basis for the trial court to allow 

the breach of contract claim to go to the jury. 
56

We conclude that because the time for performance began when the parties signed 

the agreement, and the nature of the performance was both continuous and public, the 

March 2011 announcement did not constitute an anticipatory repudiation but was 

substantial evidence from which a reasonable jury could find Oracle had committed an 

actual breach of the agreement. 

2. Breach of Implied Covenant of Good Faith and Fair Dealing

Oracle similarly challenges the jury verdict on breach of the implied covenant of 

good faith and fair dealing. Oracle does not appear to challenge the sufficiency of the 

evidence; rather, it attacks the legal basis for the judgment in HP’s favor, claiming that 

there was no porting contract from which a covenant of good faith and fair dealing could 

be implied and that any purported breach arose only from Oracle’s anticipatory 

repudiation. Oracle also contends that the trial court’s erroneous interpretation of the 

reaffirmation clause “necessarily infected” the jury’s consideration of whether Oracle 

acted in good faith and consistently with the purposes of the agreement.

The California Supreme Court has articulated the relevant framework. “The 

covenant of good faith and fair dealing, implied by law in every contract, exists merely to 

prevent one contracting party from unfairly frustrating the other party’s right to receive 

the benefits of the agreement actually made.” (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 

317, 349, italics omitted.) The implied covenant “finds particular application in 

situations where one party is invested with a discretionary power affecting the rights of 

another. Such power must be exercised in good faith.” (Carma, supra, 2 Cal.4th at 

pp. 371–372.) The implied covenant cannot, however, “impose substantive duties or 

limits on the contracting parties beyond those incorporated in the specific terms of their 

agreement.” (Guz, at pp. 349–350.) In other words, “the scope of conduct prohibited by 

the covenant of good faith is circumscribed by the purposes and express terms of the 

contract.” (Carma, at p. 373.) It “will only be recognized to further the contract’s 
57

purpose; it will not be read into a contract to prohibit a party from doing that which is 

expressly permitted by the agreement itself.” (Wolf, supra, 162 Cal.App.4th at p. 1120.)

We perceive no error in the trial court’s application of the implied covenant of 

good faith and fair dealing. We have addressed and rejected Oracle’s contention that the 

agreement imposes no duty to port. The reaffirmation clause requires Oracle to “continue 

to offer its product suite on HP platforms . . . in a manner consistent with th[e] 

partnership as it existed prior to Oracle’s hiring of Hurd.” As discussed in detail above, 

the extrinsic evidence overwhelmingly confirms that to “offer its product suite” is 

synonymous with porting and impossible without porting. Oracle is therefore incorrect to 

assert that there was no porting obligation from which a covenant of good faith and fair 

dealing could be implied. 

This is not a case in which a court has read a contract’s implied terms to vary or 

impermissibly expand upon the express terms (see Carma, supra, 2 Cal.4th at p. 374), 

because the express terms affirmatively identify the conduct required by the contract. 

Oracle’s decision to cease porting its products to Itanium directly contradicted the 

contractual term that it would continue to offer those products on HP’s platform in a 

manner consistent with the parties’ partnership before the Hurd dispute. This 

arrangement stands in contrast with cases like Wolf, where the contract expressly granted 

“unfettered discretion” to a party (Wolf, supra, 162 Cal.App.4th at p. 1121), rendering 

any attempt to limit that discretion by use of an implied covenant improper as a matter of 

law (id. at pp. 1120–1121). Here, we have little difficulty concluding that Oracle’s 

decision to stop porting activities, and its subsequent conduct, could properly serve as the 

basis for the jury to consider breach of the implied covenant as “contrary to the contract’s 

purposes and the parties’ legitimate expectations.” (Carma, at p. 373.) 

Oracle also contends that the trial court’s “erroneous interpretation of the 

reaffirmation clause” that Oracle was required to port and had no discretion to do 

otherwise “necessarily infected the jury’s consideration of whether Oracle’s conduct was 
58

in good faith and consistent with the purposes of the agreement.” Oracle submits that the 

verdict on the breach of the implied covenant of good faith and fair dealing claim must be 

reversed because HP’s theory that Oracle “lacked subjective good faith in the validity of 

its act” (Wolf, supra, 162 Cal.App.4th at p. 1123) was, in effect, predetermined by the 

trial court’s erroneous evidentiary rulings and jury instructions. Oracle focuses on the 

jury instruction that conveyed the trial court’s findings regarding the meaning of the 

agreement and on evidentiary rulings during Catz’s phase 2 trial testimony which 

prevented her from explaining her reasons for rejecting HP’s proposed terms on porting. 

It is true that over Oracle’s objection, the jury instruction for HP’s breach of 

contract cause of action repeated the trial court’s findings in the phase 1 statement of 

decision. As noted ante, the jury was instructed that it was the court’s duty to interpret 

the meaning of the agreement at issue in the case, and that at the conclusion of phase 1, 

the court determined the agreement “is a binding contract between HP and Oracle.” The 

jury was instructed that it “must accept as true” the court’s findings regarding the 

meaning of the agreement, including that the agreement “requires Oracle to continue to 

offer its product suite on HP’s Itanium-based server platforms and does not confer on 

Oracle the discretion to decide whether to do so or not.” 

Oracle contends that this instruction prevented the jury from even considering 

Oracle’s subjective good faith, especially because Oracle says the trial court’s evidentiary 

rulings during the phase 2 trial excluded evidence that showed why, even if mistaken, 

Oracle believed it was not required to continue porting. Oracle points out that the trial 

court sustained certain objections and did not allow Oracle to elicit testimony from Catz 

regarding her decision to reject the porting term that HP had proposed during the 

agreement negotiations, nor did it allow the jury to view the redlined draft agreement 

striking out HP’s proposed terms even though that exhibit had been admitted in phase 1. 

Oracle contends that having instructed the jury that Oracle was required to port its 

software to Itanium and having prevented the jury from hearing the already admitted 
59

evidence that supported Oracle’s contrary view of its obligations, the jury’s consideration 

of the implied covenant claim was “indelibly tainted.” 

Oracle has not on appeal challenged the trial court’s evidentiary rulings or jury 

instructions; therefore, we do not examine those decisions for error. We note in relation 

to Catz’s testimony that although the trial court sustained an objection to a question 

asking why she struck language from a draft proposal during negotiations and did not 

allow the redlined draft to be published to the jury, it otherwise allowed Catz to testify in 

detail about her decision to reject HP’s proposed language regarding Itanium and 

development commitments. What is more, Oracle calls our attention in a perfunctory 

manner, in what amounts to a few paragraphs of summary argument, to issues that were

fully litigated before and during the phase 2 trial. For example, the extent of the binding 

effect of the phase 1 findings at the phase 2 trial was the subject of extensive briefing and 

argument to the trial court. 

We recognize that in challenging the implied covenant verdict, Oracle seeks to 

highlight more broadly what it sees as the cumulative effect of the erroneous phase 1

rulings and interpretation of the agreement imposing an affirmative porting obligation on 

Oracle. Yet having determined that the trial court’s interpretation of Oracle’s obligations 

under the contract was not erroneous, and that the agreement did not authorize Oracle to 

discontinue porting to Itanium but expressly required that it continue offering its product 

suite on HP’s Itanium platform in a manner consistent with the partnership before 

Oracle’s hiring of Hurd, we see no basis, as a matter of law, for reversal of the verdict on 

this ground. 

C. Damages 

Oracle requests that we reverse the jury’s damages award of $3.014 billion for 

HP’s lost profits. Oracle’s two claims center on the testimony of HP’s damages expert, 

economist Jonathan Orszag. First, Oracle claims that Orszag’s calculation of damages 

was predicated in part on Oracle’s announced intent to appeal the trial court’s phase 1
60

ruling, effectively penalizing Oracle for exercising its right of appeal under the Petition 

Clause of the First Amendment of the United States Constitution, and infringing on 

Oracle’s litigation privilege (§ 47, subd. (b)) and the fair-and-truthful reporting privilege 

(§ 47, subd. (d)(1)). Second, relying primarily on Sargon, supra, 55 Cal.4th 747, Oracle 

claims that the trial court should have excluded Orszag from testifying because his 

testimony about HP’s lost profit damages was impermissibly speculative. 

1. Standard of Review

We apply de novo review to Oracle’s claim that the jury’s damage award 

erroneously included lost profits based on Oracle’s constitutionally protected and 

statutorily privileged statement that it would appeal. (See In re Taylor (2015) 60 Cal.4th 

1019, 1035.) With respect to Oracle’s challenge to the trial court’s admission of Orszag’s 

expert testimony, “[e]xcept to the extent the trial court bases its ruling on a conclusion of 

law (which we review de novo), we review its ruling excluding or admitting expert 

testimony for abuse of discretion.” (Sargon, supra, 55 Cal.4th at p. 773.) “A ruling that 

constitutes an abuse of discretion has been described as one that is ‘so irrational or 

arbitrary that no reasonable person could agree with it.’ . . . [¶]. . . ‘The scope of 

discretion always resides in the particular law being applied, i.e., in the “legal principles 

governing the subject of [the] action . . . .” Action that transgresses the confines of the 

applicable principles of law is outside the scope of discretion and we call such action an 

“abuse” of discretion. . . . [¶] The legal principles that govern the subject of discretionary 

action vary greatly with context. . . . They are derived from the common law or statutes 

under which discretion is conferred.’ ” (Ibid., citations omitted.) 

2. Additional Background

a. HP Expert Orszag’s Testimony

Prior to the phase 2 jury trial in 2016, HP’s damages expert Orszag produced three 

written reports, two in 2012 and one in 2015. His original report was finalized in March 
61

2012 and calculated HP’s estimated damages from Oracle’s breach of contract to be 

between $3.8 billion and $4 billion. As described above, in its September 2012 statement

Oracle announced a reversal of its previous decision and stated it would resume porting

to Itanium. Oracle wrote in a letter to the trial court that its September 2012 statement 

was “without prejudice to [its] rights to appeal” the rulings relevant to phase 1. In an 

earlier press release from August of that year, Oracle had also referenced its right to 

appeal when it criticized the trial court’s “preliminary opinion” and stated that “[w]e plan 

to appeal the Court’s ruling.” 

In order to address the impact of Oracle’s decision to resume porting to HP 

products, the trial court allowed the parties to serve supplemental expert reports and 

engage in additional discovery. In December 2012, Orszag produced a supplemental 

written report on damages. Shortly thereafter, the trial court conducted an evidentiary 

hearing in March 2013 on the admissibility of expert testimony, including that of Orszag, 

under the standards set out in Sargon, supra, 55 Cal.4th 747. 

Orszag testified at the March 2013 evidentiary hearing. Orszag stated that, in 

formulating his opinions, he relied on HP documents and projections, industry data, 

Oracle documents, industry analyst reports, and press releases or announcements, among 

other materials. 

In his original March 2012 report, Orszag divided his analysis into two time 

periods: (1) a “pretrial” period from March 2011 until “effectively today” and (2) from 

“today through 2020” and analyzed what HP’s revenues for the Itanium business would 

have been but for Oracle’s breach of contract. 

For the pretrial period, Orszag stated that he used three alternative approaches to 

estimate damages. The first approach was the “Itanium constant market share” approach, 

in which he assumed that Itanium’s market share in 2010 remained constant through 

2020. His second approach used multiple versions of a regression (which he defined as a 

“statistical or econometric analysis of the relationship between variables”) to project 
62

HP’s damages. His third approach relied on an internal HP forecast of the Itanium 

business, referred to as the “kinetic plan,” which HP had completed shortly before the 

Oracle announcement in March 2011. 

For the posttrial period, of the three methodologies he had used for the pretrial 

period, Orszag employed only those based on constant market share and kinetic plan. 

Orszag gave several reasons for his decision to extend future damages to 2020, including 

his use of data from a “roadmap” in place between HP and Intel (the supplier of the 

Itanium microprocessor) that went through 2020. In projecting future damages, he 

testified that he took into account factors other than Oracle’s March 2011 announcement, 

including market and sales trends. Orszag noted that the high-end server market in which 

Itanium competed against IBM’s and Sun’s proprietary servers (the RISC/EPIC market) 

had performed worse than projected in March 2011, which caused him to adjust down his 

projection of HP’s damages. He also considered in his calculations that some of the sales 

HP had lost were recaptured by other parts of HP’s business, including HP’s x86 server. 

Regarding the monetary damages that he calculated using the three methodologies, 

Orszag stated that in his original March 2012 report he had calculated damages to be 

between $3.8 billion and $4 billion depending on the methodology. Based on his 

experience as an economist, the numbers resulting from the different approaches were 

“robust” and showed a “pretty tight range for an estimate of damages.” 

In his December 2012 supplemental report, Orszag updated his prior opinion from 

March 2012 to account for new data from industry analysts and Oracle’s announcement 

that it “would reverse their previous decision and now port their Database software to the 

Itanium product.” Orszag did not assume that HP’s business would have grown 

exponentially but for Oracle’s conduct; rather he assumed that HP’s Itanium revenue 

“would have shrunk.” Orszag incorporated more recent industry data that revealed a 

“slightly more pessimistic view than [analysts] previously had” and which caused him to 

reduce in the December report his calculation of the amount of estimated damages. 
63

Orszag discussed the impact of Oracle’s September 2012 announcement that it 

would resume porting to Itanium. Based on his review of the data, HP’s Itanium business 

continued to deteriorate following Oracle’s September 2012 announcement. Orszag did 

not assume that any Itanium customer would be unable to get the Oracle product it 

wanted. However, he concluded that HP had still suffered damages because of the gap 

between March 2011 and the September 2012 announcement. He relied in part on

industry analysts’ observations that “[t]he damage had been done.” Orszag noted there

had been a drop in sales because of the change in the mix of information to customers 

who “want to have reliability and assurance that the products they need for years are 

going to be there, and it wasn’t there.” On cross-examination, he stated, “I am not 

assuming there are customers who lost software today” but rather “[t]here are customers 

who believed that they were going to lose software tomorrow, that affected their 

decisions today because they are buying servers for a multi-year use period.” 

On cross-examination, Orszag acknowledged that one of the factors he took into 

account in his December 2012 supplemental report was Oracle’s August 2012 press 

release stating Oracle’s intent to appeal and its filing of a petition for writ of mandate. 

Orszag’s supplemental report highlighted the fact that “Oracle will appeal and there is no 

guarantee of the outcome.” 

Following Orszag’s testimony at the pretrial hearing on the admissibility of expert 

testimony, Oracle’s damages expert Ramsey Shehadeh also testified. He criticized 

Orszag’s reasoning as “circular.” For example, addressing Orszag’s constant market 

share methodology, Shehadeh stated that Orszag “assumes that HP would maintain a 

constant market share of what he describes as the RISC EPIC market” and that “his 

regression analysis evaluates the statistical correlation relationship between HP sales and 

that same RISC EPIC market.” According to Shehadeh, Orszag’s regression analysis “is 

constructed to yield the exact same assumption about the performance of the HP business 

that his constant market share approach does.” However, Shehadeh testified that in his 
64

own analysis he, like Orszag, had relied on a constant market approach and industry 

analyst data to make certain of his calculations. 

Shortly after the evidentiary hearing, on March 20, 2013, the trial court issued a 

written order finding that Orszag’s expert testimony was admissible and rejecting 

Oracle’s argument that it failed to meet the Sargon standard. The trial court found that 

“[u]nlike the expert’s ‘employer’ in Sargon, HP is the veritable definition of an 

‘established’ business, and Orszag was entitled to look at company records and statistics” 

and that, furthermore, “the analysis he undertook appears to be based on that data.” The 

trial court found that “Orszag’s testimony provides a logical basis for his conclusions, 

meets the standards proscribed in Sargon and the [Code of Civil Procedure], and will be 

admitted into evidence.” 

In its analysis of Orszag’s testimony, the trial court did not reference Orszag’s 

consideration of Oracle’s statement that it intended to appeal in calculating HP’s 

damages. However, the trial court did address Oracle’s intent to appeal in the context of 

its discussion of Oracle’s expert Shehadeh. The trial court stated, “whether the ‘we 

intend to appeal’ statement has a probative effect or not is for the jury to decide. It is but 

another prong in HP’s damages argument which may, or may not be persuasive at trial.” 

b. Oracle’s Motion in Limine Regarding its Constitutional Right to 

Petition

On April 5, 2013, Oracle filed a motion in limine seeking to exclude argument and 

evidence of lost profits that failed to disaggregate lost profits arising from Oracle’s plan 

to appeal (Oracle’s motion in limine). Oracle argued that HP was precluded from 

asserting such damages based on Oracle’s constitutional right to petition under the United 

States and California Constitutions, California’s litigation privilege, and California’s 

substantive law governing breach of contract and promissory estoppel. HP opposed 

Oracle’s motion in limine, arguing Orszag’s testimony should be presented to the jury. 

Oracle’s motion in limine remained pending while the parties litigated Oracle’s anti-
65

SLAPP motion. The trial court dismissed Oracle’s anti-SLAPP motion as untimely, and 

this court affirmed that order in 2015. (Hewlett-Packard, supra, 239 Cal.App.4th at 

p. 1196.) (See ante, part I.B.5.)

In November 2015, following the delay in the litigation due to Oracle’s antiSLAPP appeal, Orszag prepared his third and final report. The purpose of his final report 

was to update his December 2012 supplemental report with “actual data of what had 

happened over a three-year period.” He calculated a new damages estimate of $3.014 

billion. As he testified at trial, Orszag reduced his calculation of damages from his 

previous estimate of approximately $4 billion because the RISC/EPIC market had shrunk 

much faster than analysts had forecast.

On May 23, 2016, prior to the phase 2 trial, the trial court addressed the parties’ 

pending motions in limine, including Oracle’s motion to exclude arguments and evidence 

of lost profits that failed to disaggregate potential damages arising from Oracle’s exercise 

of its appellate rights. At the hearing, relying on its constitutional rights to freedom of 

speech and petition and the litigation privilege, Oracle argued that the jury could not base 

any damages on Oracle’s announcement that it would appeal the trial court’s phase 1

ruling. After hearing argument from counsel, the trial court denied Oracle’s pretrial

motion. 

c. Expert Testimony on Damages and Jury Award

Orszag testified at the phase 2 jury trial on June 20, 2016 and June 21, 2016. On 

direct examination, he stated that he had based his damages opinion on Oracle’s decision 

in March 2011 to discontinue porting, its public announcement of that decision, and “the 

reaffirmation of that announcement over the next 17 and half months or so.” Orszag 

testified that under the constant market approach—his “preferred approach for 

damages”—he calculated that HP’s damages for the period of March 22, 2011, until 
66

October 31, 2015, were $1.699 billion.15 Regarding future damages from November 1, 

2015 to October 31, 2020, Orszag estimated the damages at roughly $1.3 billion. 

On cross-examination, Orszag confirmed that he was “not measuring damages 

based on a failure to ultimately deliver software.” Rather, in Orszag’s view, HP had 

suffered damages because Oracle had created uncertainty in the marketplace, and the risk 

that Oracle would win on appeal was part of the conduct that created the marketplace 

uncertainty. According to Orszag, “There was uncertainty in the marketplace about the 

fact that they were porting their software under protest, and that’s reflected in the real 

world decisions of businesses buying mission-critical hardware products.” When asked 

if, assuming Oracle had a legal right to appeal, Orszag’s current damage estimates could 

tell how much damages were caused by the uncertainty of the appeal, Orszag responded

that that was “not an analysis that [he had] undertaken.” Orszag stated that he had not 

examined the damages caused by Oracle separate from its right to appeal and could not

“give you an answer one way or the other.” 

The jury in the phase 2 trial ultimately awarded HP $1.699 billion in damages for 

“[p]ast lost profits” and $1.315 billion in “[f]uture lost profits” for a total damages award 

of $3.014 billion. In November 2016, Oracle filed a motion for new trial requesting a 

new trial on damages, or, in the alternative, a reduction of the damages to the maximum 

amount Oracle’s expert (Shehadeh) had testified was supported by the evidence ($559 

million). Oracle asserted that the jury award was both excessive and contrary to law. It 

argued that Orszag’s statistical models were flawed in that they did not include “even one 

other causative factor that would have played a significant role in the declining market 

share” for Itanium but rather concluded that Oracle’s “announcement caused 100% of 

this decline in market share.” Oracle further argued that Orszag “did not attempt to 

15 Orszag segregated past from future damages using October 31, 2015, as the final 

date for which he was able to include past data when preparing his third and final report 

in November 2015. 
67

separate the impact to Itanium of other factors that by law cannot form the basis of any 

damages award, such as Oracle’s statements and actions that it would appeal the Phase 1

decision” and that Orszag “admitted that, if Oracle’s assertion of its right to appeal was 

legally proper, then he had no opinion on the amount of damages in this case.” 

The trial court denied Oracle’s motion for new trial. Among its other findings, the

trial court addressed Oracle’s argument “that the litigation privileges immunize[] it from 

any liability arising from its statement in the September 2012 announcement that it would 

appeal the Phase [1] decision in this action.” The trial court found that “HP did not claim 

that this statement caused its damages, merely that this and other circumstances created 

uncertainty surrounding Oracle’s commitment to Itanium, explaining why the September 

2012 announcement did not cause HP’s market share to recover.” 

3. Constitutional Claim

We begin with Oracle’s claim that the trial court erred as a matter of law in 

allowing Orszag to base his calculation of damages in part on Oracle’s constitutionally 

protected and privileged statement that it would appeal the trial court’s phase 1 decision. 

Oracle broadly asserts that its statement of intent to appeal was protected by the First 

Amendment right to petition the courts and the California litigation and fair-and-truthful 

reporting privileges. Oracle submits that Orszag both attributed damages to the intent to 

appeal and conceded he could not disaggregate those damages from damages caused by 

other factors. 

“[I]t is a fundamental principle of appellate procedure that a trial court judgment is 

ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the 

basis of the record presented to the appellate court, that the trial court committed an error 

that justifies reversal of the judgment.” (Jameson v. Desta (2018) 5 Cal.5th 594, 608–

609.) This principle of appellate practice is founded in the constitutional doctrine of 

reversible error. (Ibid.; see Cal. Const., art. VI, § 13.) It precludes reversal of the
68

judgment on the ground of the improper admission of evidence unless, after examining 

the entirety of the matter before us, we conclude that “the error complained of has 

resulted in a miscarriage of justice” (Cal. Const., art. VI, § 13) which, in this case, may be 

conceived as damages that penalize Oracle for exercising a constitutional right.

We recite these basic principles in observance of several, unaddressed gaps in 

Oracle’s arguments for reversal of the jury’s damages verdict on constitutional and 

privilege grounds. As explained further below, we decide that Oracle has failed to 

establish both that there was legal error in admission of this testimony and that the jury’s 

damages award was actually based on an impermissible consideration of Oracle’s 

protected or privileged conduct.

As a threshold matter, to demonstrate that the jury impermissibly assigned 

damages based on constitutionally protected conduct, Oracle must first establish that its 

conduct was protected. Oracle relies on the Petition Clause in the First Amendment to 

the United States Constitution and cites a single line from a single case, Borough of 

Duryea v. Guarnieri (2011) 564 U.S. 379 (Guarnieri), to support the premise that its

September 2012 announcement was an exercise of its constitutionally protected right to 

petition. 

Guarnieri, however, bears little relationship to the dispute at issue here. Guarnieri 

addressed “the extent of the protection, if any, that the Petition Clause grants public 

employees in routine disputes with government employers.” (Guarnieri, supra, 564 U.S.

at p. 382.) In Guarnieri, the United States Supreme Court described the right of petition 

as “the right of individuals to appeal to courts and other forums established by the 

government for resolution of legal disputes.” (Id. at p. 387.) This general statement does 

not establish whether invoking the intent to appeal in a press release in a private, 

contractual, commercial dispute implicates the Petition Clause. (See Guarnieri, at 

pp. 388–389 [“A petition conveys the special concerns of its author to the government 

and, in its usual form, requests action by the government to address those concerns.”].)
69

Other leading cases from the United States Supreme Court on the Petition Clause 

are similarly far afield. (See e.g., Bill Johnson’s Restaurants, Inc. v. N.L.R.B. (1983) 461 

U.S. 731, 733 [considering whether the National Labor Relations Board may issue a 

cease-and-desist order to halt the prosecution of a state court civil suit brought by an 

employer to retaliate against employees for exercising federally protected labor rights]; 

California Motor Transport Co. v. Trucking Unlimited (1972) 404 U.S. 508, 511

[concluding that the right of access to the courts is an aspect of the First Amendment 

right to petition the Government for redress of grievances and construing the antitrust 

laws as not prohibiting the filing of a lawsuit, regardless of the plaintiff’s anticompetitive 

intent or purpose in doing so, unless the suit was a “ ‘mere sham’ ” filed for harassment 

purposes].)

In short, Oracle’s conclusory reference to the right of petition, accompanied by 

neither argument nor application to the facts presented, is insufficient to establish that its 

press release raised a constitutionally protected right. But even if we assume that 

Oracle’s statement of intent to appeal comes within the ambit of the Petition Clause of 

the First Amendment, Oracle offers no authority connecting the exercise of the right of 

petition in the context of a breach of contract claim with what it presents as “black letter 

law” that the First Amendment prohibits courts from awarding damages that would 

penalize protected speech. The cases upon which Oracle relies bear no resemblance to 

the circumstances here. 

For example, Oracle cites Snyder v. Phelps (2011) 562 U.S. 443, in which the 

United States Supreme Court considered whether the First Amendment shields church 

members from tort liability for picketing near a soldier’s funeral service. The court 

examined the nature of the speech, whether of public or private concern, as determined 

by the circumstances of the case (id. at pp. 450–451), and concluded that the First 

Amendment barred the plaintiff’s recovery on tort claims like intentional infliction of 

emotional distress (id. at p. 459) and intrusion upon seclusion (id. at p. 460). The Court 
70

reasoned that the church members’ speech was “at a public place on a matter of public 

concern” and therefore “entitled to ‘special protection’ under the First Amendment.” (Id. 

at p. 458.) Oracle does not demonstrate how its press release falls within this rubric.

Oracle cites another case along this vein of protected speech, Freitag v. Ayers (9th 

Cir. 2006) 468 F.3d 528, 532, in which a jury found three prison administrators liable for 

retaliating against a former correctional officer for engaging in constitutionally protected 

speech. After determining that a jury instruction erroneously listed examples of 

unprotected speech as well as protected speech, the Ninth Circuit remanded to the district 

court to decide whether the error was harmless (i.e. whether the jury verdict finding 

retaliation was affected by the erroneous inclusion of the two or three examples of 

unprotected speech) (id. at p. 546) and whether the compensatory damages award 

remained valid (id. at p. 547). In its decision, the Ninth Circuit relied on a then-recent 

decision from the United States Supreme Court, which held that the First Amendment 

protects speech by public employees only when “the speech in question addresses a 

matter of public concern” and is not made pursuant to their official duties. (Id. at 

pp. 543–544 [analyzing Garcetti v. Ceballos (2006) 547 U.S. 410].)

Oracle does not attempt to explain the relevance of these cases to the issues 

presented here, beyond the unremarkable generalization that the First Amendment 

prohibits penalizing protected speech. The reliance on this overarching principle does 

not establish constitutional error in the damages award—particularly because Snyder and 

Freitag involve the protection of speech, whereas here Oracle claims a violation of its 

right to petition. Further, there was no dispute in Snyder and Freitag that the speech had 

directly resulted in significant penalties (in the case of Snyder a substantial tort judgment 

and in the case of Freitag the termination of employment), whereas here the link between 

the asserted right to petition and the money judgment for breach of contract and the 

implied covenant of good faith and fair dealing is—at best—substantially more 

attenuated. 
71

The only other case in support of its constitutional claim that Oracle refers to is an 

unreported opinion from the Central District of California. That case examines the 

contours of “[s]ubstantial truth” as a defense to defamation and trade libel/commercial 

disparagement claims under California and Illinois law. (See Aurora World, Inc. v. Ty 

Inc. (C.D. Cal., Aug. 24, 2010) 2010 WL 11506546, at *13.) We fail to see its relevance 

to this appeal. 

In sum, in failing to develop a reasoned argument supported by legal authority for 

its First Amendment claim, Oracle improperly leaves this court to decode what amounts 

to little more than “ ‘a bare assertion that the judgment, or part of it, is erroneous’ ” . . . .’ 

(Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2018) 

¶ 8:17.1, p. 8-6).” (Lee v. Kim (2019) 41 Cal.App.5th 705, 721.) For this reason alone, 

Oracle’s First Amendment argument cannot prevail.

Nonetheless, recognizing the possibility that Oracle’s stated intent to appeal may 

fall within its First Amendment right of petition (Guarnieri, supra, 564 U.S. at p. 387) 

and the likelihood that damages arising from the protected conduct are prohibited (see, 

e.g., NAACP v. Claiborne Hardware Co. (1982) 458 U.S. 886, 926–927, 933 [reversing 

judgment where state court imposed liability on organizers of a boycott for business 

losses resulting in part from nonviolent, protected speech and assembly]), we examine 

Oracle’s contention that the jury was permitted to award damages based on Oracle’s 

exercise of its constitutional right to petition the courts.

Oracle claims that Orszag’s approximately $3 billion damages figure was based on 

“two Oracle statements”: the March 2011 announcement that it would discontinue future 

product development on Itanium and the September 2012 statement that it would comply 

with the trial court’s order, though it was appealing the court’s decision. Oracle further 

states that Orszag attributed all of HP’s damages to these announcements and admitted 

that he could not allocate damages between them. To assess the accuracy of Oracle’s 

claim, we consider Orszag’s testimony. 
72

There is no dispute that Orszag’s testimony about how he calculated HP’s 

damages included consideration of Oracle’s stated intention to appeal the phase 1 ruling. 

Orszag told the jury that HP had suffered damages because Oracle had created 

“uncertainty” in the marketplace, and the risk that Oracle would win an appeal was part 

of the conduct that created the marketplace uncertainty despite Oracle’s announcement 

that it would resume porting to HP’s products. As summarized by Orszag to the jury on 

direct examination, “When the decision [after the phase 1 trial] had been reached they 

said that they were disappointed in the decision and that they intended to appeal that 

decision. Then some time after that, within a few weeks, . . . they announced that they 

would resume porting. So, they would resume the future development of—future 

software development of their Oracle Database for Itanium. And that they would do so, 

effectively under protest, because they were still appealing the decision.” Orszag

confirmed that he took those announcements into consideration in calculating damages, 

explaining that in the “actual world” of data he reviewed after the September 2012

announcement, customers were “making buying decisions with the knowledge that 

Oracle is currently porting its database software, A. And B, that they are appealing the 

decision. So, I’m taking that into account. And those buying decisions are the buying 

decisions that we observed in HP’s data.” 

Oracle argues, based on this testimony and similar statements, that the claimed 

uncertainty was the sole basis for HP’s claim that Itanium would continue to lose market 

share even after Oracle resumed porting “and is the entire basis for Orszag’s damages 

from that point in time forward.” But this assertion substantially oversimplifies Orszag’s 

testimony. 

For example, Oracle’s counsel pressed Orszag in cross-examination to identify 

whether the damages he calculated after Oracle’s September 2012 announcement “are

100 percent based upon the effect of the announcement and zero percent based upon the 

actual availability or nonavailability of the software? [¶] That was your position;
73

correct?” Orszag responded, “And it’s the same position I have had prior to that date and 

the same position I have today.” In other words, Orszag testified that the September 

2012 announcement that Oracle would resume porting its software to Itanium did not 

alter Orszag’s opinion regarding the market effect of the original, March 2011 

announcement. Orszag clarified his statement by explaining that “there was an 18-month 

period when they stopped software development, and then they restarted software 

development, and then they delivered software to customers. But during that 18-month 

period, they had been telling the market that they had discontinued software 

development, and that had a significant adverse effect on the marketplace, as I measure in 

my damage calculation.” 

We observe that Orszag’s testimony on this point was consistent throughout his 

direct and cross-examination. Orszag identified the same sources of damages at the 

outset of the jury trial when he explained that he had based his damages opinion on “the 

decision not—to discontinue porting, the March 2011 announcement of that decision, and 

the reaffirmation of that announcement over the next 17 and a half months or so.” 

Orszag testified that based on the market data he had collected, the September 2012

announcement that Oracle would resume porting did not cause HP’s market to “bounce 

back” because, for the preceding 18 months, the market had operated with the knowledge 

that Oracle’s next generation of database and other applications would not be available 

on Itanium. Orszag opined that “there was uncertainty in the marketplace about Oracle’s 

commitment to the future development of its database for the Itanium products.” 

Orszag’s testimony thus falls far short of attributing damages to the stated intent to 

appeal, rather than to market uncertainty about the availability of Oracle’s software on 

HP’s Itanium platform after Oracle’s March 2011 announcement. The following 

colloquy illustrates Orszag’s response at trial to a question clarifying the relationship 

between Oracle’s stated intent to appeal and the market’s uncertainty leading to damages: 

“[Counsel for Oracle]: You’re saying that’s the way the world was. The way the world 
74

was, was Oracle had the right to appeal, and that was part of the uncertainty; correct? 

[¶] [Orszag]: I think that’s a fair proposition. There was uncertainty in the marketplace 

about the fact that they were porting their software under protest, and that’s reflected in 

the real world decisions of businesses buying mission-critical hardware products. [¶] 

[Counsel for Oracle]: And that uncertainty that you’ve described in your report is one 

part of the cause of damages in this case; correct? [¶] [Orszag]: Again, it’s — I'm 

looking at what actually happens. Part of the uncertainty would tend to reduce sales. The 

fact that they decided to port their software would tend to increase sales, and I looked at 

the world as it actually was from 2012 to 2015.” 

We conclude from the testimony at trial that Orszag explained HP’s damages in 

terms of the real-world data that showed what consumers were buying, or not buying, 

starting in March 2011, through late 2012 following Oracle’s September 2012

announcement, and through the time of trial in 2016. Orszag acknowledged that Oracle’s 

vow to appeal failed to reverse the market’s uncertainty about the future of Oracle’s 

product suite on Itanium, even after the September 2012 announcement that Oracle 

would resume porting. At no point, however, did Orszag ascribe damages to Oracle’s 

statement of its intent to appeal standing alone or suggest the uncertainty reflected in the 

market data was solely, or even predominantly, the result of Oracle’s announcement

about its appeal. More accurately, Oracle’s appeal was a factor in the calculation of 

damages only insofar as it reduced any mitigation from the resumption of porting in 

September 2012, not because the exercise of the right to appeal was a source of harm in 

and of itself. Orszag’s testimony cannot reasonably be interpreted as having based his 

calculation of HP’s damages on Oracle’s statement of intent to appeal. 

Our observations are reinforced by the trial court’s ruling on Oracle’s motion for 

new trial. In addressing whether Oracle was immune from liability arising from its 2012 

statement regarding its plan to appeal the phase 1 decision, the trial court found that “HP 

did not claim that this statement caused its damages, merely that this and other 
75

circumstances created uncertainty surrounding Oracle’s commitment to Itanium, 

explaining why the September 2012 announcement did not cause HP’s market share to 

recover.” Though the trial court framed this aspect of Oracle’s new trial motion as 

largely a legal issue, it rendered its finding fully informed by its evaluation of the 

evidence at trial. To the extent that the basis for HP’s damages claim represents a factual 

issue about the nature of the testimony heard by the jury, we defer to the trial court’s 

finding. (Ghirardo, supra, 8 Cal.4th at p. 800.) 

We also note that although Oracle proposed special jury instructions to address the 

“constitutional prohibition of damages based on” Oracle’s petitioning activity, Oracle has 

not claimed instructional error in the instructions given, none of which directed the jury 

to consider Oracle’s September 2012 announcement in ascertaining damages. The jury 

was instructed to decide reasonable compensation “for the harm caused by the breach” 

(CACI No. 350) and defined breach, as claimed by HP, only in terms of Oracle (1) 

making its March 2011 decision and announcement, and (2) repeatedly telling customers 

that it would no longer offer its product suite on Itanium (CACI No. 300). This 

differentiates the circumstances here from a case like Freitag, supra, 468 F.3d at p. 532, 

where the jury instruction on retaliation expressly identified instances of unprotected 

speech as well as protected speech.

We recognize the circumstances here present an apparently novel issue, but 

Oracle’s arguments lack both legal and factual support. Oracle has cited no case 

authority that addresses the implications of a party’s exercise under the Petition Clause of 

the First Amendment, where that constitutional exercise affects the market behavior 

underlying an expert’s calculation of damages. Nor have we identified a case directly on 

point—or even one that is analogous. As a general proposition, Oracle may be correct 

when it argues that “[n]o one could seriously contend that a plaintiff could recover 

damages because the defendant noticed an appeal.” (Cf. Bordenkircher v. Hayes (1978) 

434 U.S. 357, 363 [“To punish a person because he has done what the law plainly allows 
76

him to do is a due process violation of the most basic sort.”].) But Oracle has not 

persuaded us that issuance of a press release announcing an intent to appeal an interim 

legal finding on a contractual claim in a business dispute implicates the Petition Clause.

In addition, based on our review of the record, Oracle has not shown that HP 

recovered damages based on Oracle’s stated intention to appeal the phase 1 ruling. That

the jury in the phase 2 trial awarded HP the same amount of damages set forth in 

Orszag’s preferred damages model does not demonstrate that Oracle was penalized for 

exercising its constitutional right of petition, because Orszag did not testify that he 

considered Oracle’s intent to appeal as a “cause” of damages but as a factor in the 

affected market’s failure to “bounce back” after the resumption of porting. For these 

reasons, we conclude that Oracle has not sustained its burden to demonstrate error 

requiring reversal of the jury’s damages verdict on First Amendment grounds.

Lastly, although Oracle references the California litigation and fair-and-truthful 

reporting privileges (§ 47, subds. (b), (d)(1)) as an additional source of immunity from 

liability for its exercise of its right of petition, it fails to support its claim with adequate 

argument or authority. Oracle relies on a single line from the California Supreme Court’s 

decision in Silberg v. Anderson (1990) 50 Cal.3d 205 (Silberg), which explained the 

broad application of the litigation privilege. The quoted sentence states that the privilege 

applies to any publication, or communication, “required or permitted by law in the course 

of a judicial proceeding to achieve the objects of the litigation, even though the 

publication is made outside the courtroom and no function of the court or its officers is 

involved.” (Id. at p. 212.) 

Oracle’s conclusory assertion that the litigation privilege applies here is 

insufficient. Oracle does not attempt to apply the formulation typically used to determine 

whether the privilege applies under the circumstances in a given case. (See Silberg, 

supra, 50 Cal.3d at p. 212 [articulating the “usual” four-part formulation]; accord 

Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057.) The sheer breadth of the privilege is 
77

not enough to establish its application to Oracle’s statement of intent to appeal. We 

observe that Oracle wholly fails to address that it remains unsettled under California law 

whether or to what extent the privilege precludes liability for contract claims.16 The 

broad formulation of the privilege set forth in Silberg, and in more recent cases like 

Rusheen, discuss the privilege only in terms of immunity to tort claims. (Silberg, at 

p. 212 [stating “the privilege is now held applicable to . . . all torts except malicious 

prosecution”]; Rusheen, at p. 1057 [“ ‘[C]ommunications with “some relation” to judicial 

proceedings’ are ‘absolutely immune from tort liability’ by the litigation privilege”].) 

Although Oracle points to the outcome in Action Apartment Assn., Inc. v. City of Santa 

Monica (2007) 41 Cal.4th 1232 (Action Apartment) as additional authority for reversing, 

as a matter of law, a damages award purportedly based on protected litigation conduct, 

that case does not address whether the litigation privilege serves as a bar to contract 

damages.17 Meanwhile, Oracle cites no authority and provides no legal analysis to 

support its argument that the fair-and-truthful reporting privilege applies to its September 

2012 announcement.

Because Oracle has failed to provide reasoned argument or legal analysis in 

support of its assertion that Oracle’s stated intent to appeal was absolutely privileged 

under the California litigation and fair-and-truthful reporting privileges, we are unable to 

ascertain any reversible error as to this issue. 

16 Indeed, the California Supreme Court is currently considering whether the 

litigation privilege of section 47, subdivision (b), applies to contract claims, and if so, 

under what circumstances. (See Doe v. Olson (Aug. 30, 2019, B286105) [nonpub. opn.], 

review granted Nov. 20, 2019, S258498 [2019 WL 4127263].)

17 In Action Apartment, the California Supreme Court held that the litigation 

privilege partially preempted a city ordinance authorizing civil and criminal penalties 

against a landlord for maliciously serving a notice of eviction, and fully preempted a 

provision of the ordinance authorizing penalties against a landlord for bringing an action 

to recover possession of a rental unit without a reasonable factual or legal basis. (Action 

Apartment, supra, 41 Cal.4th at p. 1237.)
78

4. Sargon Claim

Oracle asserts, relying on Sargon, supra, 55 Cal.4th 747, that Orszag’s testimony 

was impermissibly speculative and should have been excluded from the jury’s 

consideration in the phase 2 trial. Oracle argues primarily that Orszag’s approach to 

damages was fundamentally flawed because he attributed a single causal factor—

Oracle’s conduct—to HP’s actual and projected decline in its share of the relevant 

market. Oracle argues that Orszag failed to consider other key events in the complex 

market for servers, including Intel’s announcement of a new microprocessor (i.e., the 

Xeon E7 microprocessor for x86 servers), and other events related to HP’s overall 

business. 

Courts have “a substantial ‘gatekeeping’ responsibility” to exclude unreliable 

expert testimony. (Sargon, supra, 55 Cal.4th at p. 769.) The California Supreme Court 

explained in Sargon that the trial court’s gatekeeping responsibility is required by 

Evidence Code sections 801, subdivision (b), and 802, and that the trial court must 

exclude expert opinion testimony “that is (1) based on matter of a type on which an 

expert may not reasonably rely, (2) based on reasons unsupported by the material on 

which the expert relies, or (3) speculative.” (Sargon, at pp. 771–772.) The trial court’s 

gatekeeping role as to expert testimony, including as to lost profits, is to determine 

“whether the expert opinion is founded on sound logic” rather than to assess its 

“persuasiveness.” (Id. at p. 772.) 

In Sargon, the California Supreme Court explained that “[l]ost profits need not be 

proven with mathematical precision, but they must also not be unduly speculative” and 

concluded that the trial court had acted within its discretion to exclude “opinion 

testimony that [Sargon] would have become extraordinarily successful had the university 

completed the clinical testing.” (Sargon, supra, 55 Cal.4th at p. 753.) Although it 

affirmed the trial court’s exclusion of the expert in that case, the California Supreme 

Court in Sargon also provided the following caution: “The lost profit inquiry is always 
79

speculative to some degree. Inevitably, there will always be an element of uncertainty. 

Courts must not be too quick to exclude expert evidence as speculative merely because 

the expert cannot say with absolute certainty what the profits would have been. Courts 

must not eviscerate the possibility of recovering lost profits by too broadly defining what 

is too speculative. A reasonable certainty only is required, not absolute certainty.” (Id. at 

p. 775.) A “trial court’s gatekeeping role does not involve choosing between competing 

expert opinions.” (Id. at p. 772.) Rather, a trial court “must simply determine whether 

the matter relied on can provide a reasonable basis for the opinion or whether that 

opinion is based on a leap of logic or conjecture.” (Ibid.)

We have carefully considered Oracle’s arguments with respect to Orszag’s 

methodology and assumptions and decide that Oracle has not shown error in the trial 

court’s admission of Orszag’s testimony. Oracle’s arguments criticizing Orszag’s 

methodology are factors the jury could properly consider, but they do not mandate 

exclusion of the evidence altogether. For example, Oracle argues—as it did in the trial 

court— that Orszag failed to isolate the impact of Intel’s announcement about the Xeon 

E7 chip, which occurred approximately three weeks after the Oracle announcement in 

March 2011. Oracle portrays Intel’s announcement as the “death knell” of the Itanium

platform. Oracle contends that Orszag’s analysis was “fatally speculative” because he 

did not measure the effect of the introduction of the Xeon E7 on Itanium’s market share. 

But at trial, Orszag testified that he had considered the impact of similar product 

announcements on Itanium in past years and noted that “when we look at competing 

products, every time they came out Itanium did fine.” In his view, when a competitor 

came out with a faster chip, there was not a significant impact because “[i]n this market 

there’s a lot of . . . installed base.” Regarding the Xeon E7 chip in particular, Orszag 

characterized it as only “an incremental improvement over the previous year’s chip” and 

opined that its introduction would not affect HP’s market share because “there’s no 
80

evidence that this product would [a]ffect one company in the RISC/EPIC marketplace 

differently than the others.” 

The record thus does not support Oracle’s assertion that Orszag’s approach, like 

the expert testimony deemed inadmissible in Sargon, was impermissibly speculative 

because it failed to consider the relevant variables. The issue in Sargon was that the 

expert’s “attempt to predict the future was in no way grounded in the past.” (Sargon, 

supra, 55 Cal.4th at p. 780.) Here, Orszag relied on past data to explain his conclusions 

regarding Itanium’s predicted market share and provided a “logical basis to infer” that his 

conclusions were supported. (Cf. Sargon, at p. 781.) Orszag’s testimony explained his 

consideration of other dynamic factors that contributed to the drop in Itanium revenue—

independent of Oracle’s conduct—including not only the impacts of competing and faster 

technology like the Xeon E7 chip but also the “shrinking” market and market-wide 

movement to x86 platforms. 

This evidence also supports a conclusion that Orszag considered multiple variables 

and did not attribute lost profits exclusively to a single factor. (Cf. Camper v. McDermott

(1968) 266 Cal.App.2d 41, 46 [reversing damages award that relied exclusively on one 

factor and failed to consider “many” other relevant factors].) Therefore, we conclude that 

Orszag’s testimony provided a “reasonable basis for [his] opinion” (Sargon, supra, 55 

Cal.4th at p. 772), and the trial court did not abuse its discretion in admitting the 

testimony.

Oracle contends that Orszag’s calculation of projected future damages from 2015 

to 2020 “is even more unsound.” Orszag testified that he used the most recent forecasts 

from HP’s quarterly financial data that HP had as of November 2015. He stated that he 

had projected his calculations to October 31, 2020, for “a number of reasons” including 

because the Itanium collaboration agreement between Intel and HP that was “signed in 

October of 2010 had a roadmap out past 2020” and there would be “chips available to be

sold until about 2022.” In addition, he relied on statements that “they’re going to support 
81

the product through 2025” and noted that for the RISC/EPIC market, “[o]ne of the 

witnesses for Oracle said that they had a roadmap through 2020 as well.” 

Oracle does not argue that Orszag lacked evidentiary support for these 

considerations. Instead, Oracle contends that it was speculative to award five years of 

projected future damages based on a constant market share given the “likely introduction 

of new products and technology and appearance of new competitors.” However, we 

disagree with Oracle’s characterization of Orszag’s projections into 2020 as “sheer 

fantasy.” Based on the market information that Orszag considered, and given the 

technology roadmaps upon which he relied, we cannot say his projections were illogical

or lacked a reasonable basis. (See Sargon, supra, 55 Cal.4th at p. 772.) It was for the 

jury to consider the probative value of the evidence and the persuasiveness of Orszag’s

projections, and we may not second-guess its conclusions on that score. 

We also do not agree that the evidence here mirrored that found inadmissible in 

Sargon. As the California Supreme Court stated, “[a]n expert might be able to make 

reasonably certain lost profit estimates based on a company’s share of the overall 

market.” (Sargon, supra, 55 Cal.4th at p. 776.) The problem with the expert’s analysis 

in Sargon was that he did not “base his lost profit estimates on a market share Sargon had 

ever actually achieved” but rather “he opined that Sargon’s market share would have 

increased spectacularly over time to levels far above anything it had ever reached.” 

(Ibid.) 

In contrast to the expert in Sargon, Orszag relied on actual market share data from 

a third-party upon which other companies, including Oracle, relied. Unlike the business

in Sargon, HP is a long-established enterprise, and Orszag appropriately relied upon HP 

business information and data. 

Oracle does not dispute that HP is an established business or that lost profits could 

be quantified. Rather, Oracle argues that “an enterprise server business in a dynamic, 

competitive market requires more than an assumption that future market share over 
82

almost a decade would exactly mirror the past.” In our view, whether other events—such 

as the introduction of Intel’s Xeon E7 microprocessor or HP-specific business issues—

affected or undermined Orszag’s calculation of lost profits were factual matters for the 

jury. Oracle vigorously cross-examined Orszag on these and other topics and provided 

the testimony of a competing expert who challenged Orszag’s analysis. 

In sum, we conclude that the trial court acted within its discretion in admitting 

Orszag’s testimony and rejecting Oracle’s contention that Orszag’s expert opinion was 

impermissibly speculative.

D. HP’s Cross-Appeal

In its cross-appeal, HP contends the trial court abused its discretion in declining to 

award HP prejudgment interest under Civil Code section 3287, subdivision (b). HP 

maintains that it was entitled to prejudgment interest on the jury award for the period in

which the phase 2 jury trial was delayed due to Oracle’s appeal from the denial of its 

anti-SLAPP motion. HP acknowledges the “high bar” to reverse the trial court’s 

discretionary decision but argues that where Oracle, through its delay, “extracted a threeyear, ‘interest-free loan’ from HP in the amount that the jury determined Oracle properly 

owed,” fundamental fairness and sound judicial policy require a limited award of

prejudgment interest to remedy the harm presented. 

“Prejudgment interest is awarded to compensate a party for the loss of the use of 

his or her property.” (Bullis v. Security Pac. Nat. Bank (1978) 21 Cal.3d 801, 815

(Bullis).) More specifically, it “provide[s] just compensation to the injured party for loss 

of use of the award during the prejudgment period—in other words, to make the plaintiff 

whole as of the date of the injury.” (Lakin v. Watkins Associated Industries (1993) 6 

Cal.4th 644, 663 (Lakin).) Section 3287 authorizes the recovery of prejudgment interest 

on damage awards. The provision at issue here is section 3287, subdivision (b) (hereafter 

section 3287(b)). Section 3287(b) governs cases involving unliquidated contract claims 

and grants the court discretion to award prejudgment interest from a date no earlier than 
83

the filing of the action.18 (North Oakland Medical Clinic v. Rogers (1998) 65 

Cal.App.4th 824, 829.)

We review the trial court’s ruling on prejudgment interest under section 3287(b) 

for abuse of discretion. (Faigin v. Signature Group Holdings, Inc. (2012) 211 

Cal.App.4th 726, 752 (Faigin).) We will uphold the trial court’s exercise of discretion “if 

it is based on a ‘reasoned judgment’ and complies with the ‘legal principles and policies 

appropriate to the particular matter at issue.’ ” (Bullis, supra, 21 Cal.3d at p. 815.)

HP requested prejudgment interest pursuant to section 3287(b) following the 

jury’s verdict in the phase 2 trial. HP sought prejudgment interest only on the past lost 

profits component of the $3.014 billion damages award, measured not from the start of 

the litigation in 2011, but from April 8, 2013, the date on which Oracle filed its appeal 

from the denial of its anti-SLAPP motion. The trial court denied HP’s request in a 

written order after a hearing. 

In its denial of HP’s request, the trial court cited several considerations. It

recognized that Oracle filed its appeal of the anti-SLAPP order “just as Phase II of the 

trial was scheduled to commence,” which “had the effect of delaying Phase II for over 

two years.” It noted this court’s “strongly-worded opinion” affirming the denial of 

Oracle’s anti-SLAPP motion and deeming “ ‘the appeal, like the motion engendering 

it, . . . utterly without merit.’ ” (Quoting Hewlett-Packard, supra, 239 Cal.App.4th at 

p.1178.) And it weighed the “improper delay” caused by the appeal against several other 

factors. These factors included: (1) that HP’s damages “were not only unliquidated but 

18 Section 3287(b) provides: “Every person who is entitled under any judgment to 

receive damages based upon a cause of action in contract where the claim was 

unliquidated, may also recover interest thereon from a date prior to the entry of judgment 

as the court may, in its discretion, fix, but in no event earlier than the date the action was 

filed.” (§ 3287(b).) While section 3287(b) authorizes the discretionary award of 

prejudgment interest on unliquidated damages, section 3287, subdivision (a) provides for 

the nondiscretionary award of prejudgment interest on liquidated damages, or damages 

certain. (See Espejo v. The Copley Press, Inc. (2017) 13 Cal.App.5th 329, 376.) 
84

highly contested and uncertain;” (2) the uncertainty was amplified by “damages 

continu[ing] to accrue during the litigation while HP received at least partial performance 

under the contract;” and (3) the jury was aware of the delay caused by Oracle’s appeal 

and “may have considered the delay when it elected to award HP the full amount of the 

damages it requested without reduction.” The trial court found these factors “more 

significant” under the circumstances and declined to award HP prejudgment interest. 

Having considered the applicable law and reviewed the record on HP’s motion for 

prejudgment interest, including the trial court’s assessment of the issues at the hearing on 

the trial court’s then-tentative ruling, we cannot conclude the trial court abused its 

discretion. “ ‘An abuse of discretion occurs if, in light of the applicable law and 

considering all of the relevant circumstances, the court’s decision exceeds the bounds of 

reason and results in a miscarriage of justice. [Citations.] This standard of review 

affords considerable deference to the trial court provided that the court acted in 

accordance with the governing rules of law. We presume that the court properly applied 

the law and acted within its discretion unless the appellant affirmatively shows 

otherwise.’ ” (Faigin, supra, 211 Cal.App.4th at p. 752, quoting Mejia v. City of Los 

Angeles (2007) 156 Cal.App.4th 151, 158.)

The trial court’s refusal to grant prejudgment interest on HP’s damages for past 

lost profits was neither irrational, arbitrary, nor contrary to applicable law and governing 

principles. HP contends that the trial court employed an incorrect understanding of the 

law because it conflated issues of uncertainty and delay. HP argues that while it may be 

unfair to require a defendant to pay full compensation if the reason for its delay was 

uncertainty about the amount owed—hence the discretionary component of section 

3287(b)—uncertainty is not an independent basis for denying prejudgment interest under 

section 3287(b). 

We agree in principle with HP that uncertainty in the amount of damages is not 

alone determinative, because “[u]ncertainty is inherent in any award of prejudgment 
85

interest under section 3287(b).” (Carmel Development Company, Inc. v. Anderson

(2020) 48 Cal.App.5th 492, 525.) The original statutory scheme, prior to the enactment 

of section 3287(b), “provided for the recovery of prejudgment interest only where 

damages were ‘ . . . certain, or capable of being made certain by calculation.’ ” (A & M 

Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 496 (A & M Produce), quoting 

section 3287, subdivision (a).) The 1967 amendment adding subdivision (b) to section 

3287 “created a limited exception to the prevailing general rule that prejudgment interest 

is not allowed on unliquidated obligations.” (Lewis C. Nelson & Sons, Inc. v. Clovis 

Unified School Dist. (2001) 90 Cal.App.4th 64, 69 (Lewis C. Nelson).) 

The rationale for precluding prejudgment interest on unliquidated claims is “that it 

is unreasonable to expect a defendant to pay a debt before he or she becomes aware of it 

or is able to compute its amount.” (Lewis C. Nelson, supra, 90 Cal.App.4th at p. 69.) By 

allowing the trial court to consider awarding prejudgment interest on an unliquidated 

contractual claim within the limits prescribed by the statute, section 3287(b) aims “to 

balance the concern for fairness to the debtor against the concern for full compensation to 

the wronged party.” (Lewis C. Nelson, at p. 69.) The “discretion to the trial court to 

allow prejudgment interest even in cases where the amount of damages was 

‘unliquidated’ . . . was designed to allow trial courts flexibility in circumstances . . . 

where the exact amount of damage is in dispute.” (A & M Produce, supra, 135 

Cal.App.3d at p. 496.) 

Given the intent of section 3287(b) to enable trial courts to award prejudgment 

interest despite the uncertain amount owed on a contract claim for unliquidated damages, 

it would appear contrary to the statutory scheme for the trial court to refuse prejudgment 

interest for the sole reason that the amount of damages was highly uncertain. HP claims 

that the trial court did just that when it attributed more significance to the “highly 

contested and uncertain” damages than the “improper delay” caused by Oracle’s untimely 
86

anti-SLAPP motion and subsequent appeal. We disagree with HP’s characterization of 

the trial court’s ruling.

The trial court properly recognized that the unliquidated damages rendered 

prejudgment interest discretionary under section 3287(b), then articulated the factors it 

deemed most relevant to its decision. It declined to award prejudgment interest after 

weighing those factors, some of which it deemed “more significant considering all of the 

circumstances” at issue in the case. There is no authoritative list of criteria for courts to 

consider, and “[f]ew cases have discussed the standards by which a trial court’s exercise 

of discretion under section 3287, subdivision (b) are to be judged.” (A & M Produce, 

supra, 135 Cal.App.3d at p. 496.) We believe the trial court identified and properly 

considered the factors most relevant to the prejudgment interest question as it arose in 

this case, balancing as well as possible the permissible concerns of fairness and just 

compensation. (See Lewis C. Nelson, supra, 90 Cal.App.4th at p. 69; Lakin, supra, 6 

Cal.4th at p. 663.) 

First, the trial court acknowledged not only this court’s condemnation of the 

dilatory impact of Oracle’s anti-SLAPP appeal (Hewlett-Packard, supra, 239 

Cal.App.4th at p. 1178) but also noted that Oracle brought the motion and filed for appeal 

on the eve of the phase 2 trial. The trial court recognized that this factor supported HP’s 

request for prejudgment interest. 

Next, the trial court articulated its reasons for deciding that among the most 

important considerations under the circumstances of the case was the “highly contested 

and uncertain” damages. The court identified one aspect “[a]dding to this uncertainty” 

was that “damages continued to accrue during the litigation while HP received at least 

partial performance under the contract, when Oracle resumed or continued porting its 

software to HP’s servers following Phase I.” Although the trial court recognized that 

HP’s expert took Oracle’s partial performance into consideration in calculating damages, 
87

it found that “Oracle’s partial performance mitigated HP’s damages during the appeal and 

added to the complexity and uncertainty of the damages.”

The record thus demonstrates a nuanced assessment of these points and does not 

support the suggestion that the trial court “conflated” its consideration of delay with the 

uncertainty of damages. Nor are we aware of any authority under which the jury’s 

award—viewed in relation to the complexity or uncertainty affecting the unliquidated

damage estimates—is an improper consideration.

HP challenges the trial court’s supposition that the jury “may have” taken the 

delay caused by Oracle’s appeal into account when it awarded HP its full damages 

“without reduction.” It points out that the jury’s damages award cannot support a 

conclusion that the jury factored prejudgment interest into account when it was neither

instructed nor authorized to do so, and when it awarded damages equal to the exact 

amount of lost profits calculated by HP’s expert, which did not include prejudgment 

interest or damages predicated on delay. HP moreover questions whether the trial court’s 

speculation on this point was proper since the decision to award prejudgment interest 

rests only with the court. (§ 3287(b) [authorizing trial court, in its discretion, to award 

prejudgment interest].)

We perceive no error in the trial court’s consideration of the jury’s damages 

award. The record supports the trial court’s observations that the jury was “aware that 

there was a two and a half to three-year delay” and that it awarded HP damages “on the 

higher end of” the range requested.19 Case law, including Esgro Central, Inc. v. General 

19 Indeed, HP’s closing argument in rebuttal raised the issue of the three-year 

delay due to Oracle’s appeal. In addressing the reduction in Orszag’s damages 

calculation from $4 billion in his 2012 report to $3 billion in his 2015 report, HP’s 

counsel reminded the jury that “we had a three-year delay because there was an appeal 

filed in this case by Oracle to cause a three-year delay. So Mr. Orszag had to go back in 

2015 and look at his damages again and calculated them from 2012. [¶] He had three 

new years of data. He had actual hard data that was not available to him in 2012 when he 
88

Ins. Co. (1971) 20 Cal.App.3d 1054 (Esgro)—upon which the trial court specifically 

relied in its order—supports the trial court’s approach. 

Esgro involved businesses that claimed prejudgment interest on a judgment

entered on an insurance policy, where the extent of damage for losses covered was in 

dispute. (Esgro, supra, 20 Cal.App.3d at pp. 1062–1063.) The trial court denied interest 

under section 3287(b). (Id. at p. 1064.) On appeal, the court determined there was no

abuse of discretion, despite a record that “undoubtedly” could have supported an exercise 

of discretion in favor of an award of prejudgment interest. (Id. at p. 1065.) The factors 

supporting prejudgment interest included that the respondent insurer’s refusal to honor

the appellants’ original proof of loss “resulted in a delay of over four years in the 

payment of indemnity to appellants” and allowed the respondent “the benefit of an 

investment return for that period upon the sum first claimed by [the] appellants and 

eventually ordered paid to them by the trial court.” (Ibid.) But there were also factors 

supporting the trial court’s decision, specifically an inference drawn from the record

suggesting that the trial court “denied prejudgment interest on appellants’ business 

interruption policy because, in view of counsel’s statement in closing argument, [the 

judge] was of the opinion that the jury had already considered that item in awarding 

damages.” (Ibid.) The court concluded that this provided “a basis in fact supporting the 

denial of prejudgment interest” and held that the trial court’s exercise of discretion under 

the circumstances was not “so unreasonable as to be an abuse.” (Ibid.) 

did his first report. He could replace forecasts with actual data . . . and yes, some of it 

caused the damages to go up, and some of it caused it to go down. [¶] He reduced his 

damages from $4 billion to $3 billion because he said . . . [n]ow that I have this three 

years of data, that’s a fairer number.” 

The trial court’s observation that the jury chose “the higher end of” the range of 

damages is not inconsistent with Orszag’s presentation of three methodologies for 

calculating past damages (“kinetic” valued at $1.5 billion; “constant market share” valued 

at $1.7 billion; and “regression” at $1.8 billion), where he recommended—and the jury 

adopted—the “constant market share” approach. 
89

HP submits that Esgro is inapplicable. HP points out that in Esgro, supra, 20 

Cal.App.3d at page 1065, the record reflected an invitation by the appellants’ lawyers for

the jury to consider the delay to judgment and revealed the trial judge’s assessment that 

the jury’s award was larger than would have been expected based on the evidence. Here, 

HP argues that its lawyers consistently told the jury that HP’s expert had lowered the 

calculated lost profits based on data obtained during the appeal, and the trial court never 

implied that the jury’s award was excessive. HP also emphasizes that in Esgro there was 

no claim the defendant’s actions were meritless or in bad faith, whereas Oracle’s decision 

to appeal the anti-SLAPP order was a bad faith delay tactic. (Hewlett-Packard, supra,

239 Cal.App.4th at p. 1178.) HP emphasizes that courts since Esgro have declined to 

recognize jury contemplation of prejudgment interest since they are not instructed to do 

so and because that discretion lies with the trial court. (See, e.g., George v. Double-D 

Foods, Inc. (1984) 155 Cal.App.3d 36, 48 (George) [holding trial court “erred in 

confiding the issue of whether prejudgment interest should be awarded to the discretion 

of the jury, rather than exercising its own discretion”]; Copart, Inc. v. Sparta Consulting, 

Inc. (E.D. Cal. 2018) 339 F.Supp.3d 959, 1004 [rejecting argument that “jury adequately 

compensated” the claimant based on Esgro and noting the jury instructions did “not 

contemplate an interest award or even some form of delay”].) 

Esgro is not factually identical to the circumstances here, but it is instructive as to 

the breadth of factors that may reasonably be considered in the court’s assessment of a 

request for prejudgment interest. Here, as in Esgro, the jury heard closing arguments that 

emphasized the delay in the plaintiff’s compensation for harm suffered. We note little 

difference between HP’s counsel’s reminder to the jury that “there was an appeal filed in 

this case by Oracle to cause a three-year delay” and the reference in Esgro to the passage 

of time since the businesses incurred damages. (Esgro, supra, 20 Cal.App.3d at p. 1065 

[noting counsel’s argument that it had been “ ‘five years since the Watts riots occurred’ ” 

and “ ‘[w]e still haven’t gotten a nickel from this company’ ”].) Similar comparisons 
90

may be drawn between the trial court’s observations about the damages verdict in this 

case and the trial court’s observations in Esgro. In Esgro, the trial court described the 

jury’s verdict as “ ‘a very, very substantial judgment . . . based upon the facts as [it] heard 

them’ ” (ibid.), whereas here the trial court noted that the jury awarded “the full amount 

of the damages [HP] requested without reduction.” We believe that taking account of the 

jury award was no less proper a factor for the trial court to consider in this case than it 

was in Esgro, where the appellate court credited it as a reasonable basis to deny the 

requested prejudgment interest. (Id. at p. 1063.)

Nor do we interpret the trial court’s reference to the damages award in this case as 

an unsupported presumption that the jury included prejudgment interest in its 

calculations. In George, the trial court improperly placed the issue of prejudgment 

interest before the jury, rather than exercising the court’s own discretion whether to 

award it. The appellate court held the error was prejudicial, noting that shifting the 

decision about an interest award onto the jury “deprived [the] defendant of its right to 

judicial objectivity.” (George, supra, 155 Cal.App.3d at p. 48.) 

Here, unlike in George, the trial court acknowledged and exercised its discretion

and articulated the factors that it viewed as supporting its assessment. The trial court’s 

observation that, despite the highly contested and uncertain nature of damages, the jury 

elected to adopt the expert’s preferred damages model at the “higher end” of the range 

presented, implies that the trial court found the jury’s assignment of damages fairly

compensated HP for its losses, even when balanced against Oracle’s responsibility for the 

delay to the phase 2 trial. This was an appropriate exercise of judicial discretion, with a 

view toward effecting “the requirements of substantial justice.” (George, supra, 155 

Cal.App.3d at p. 48.) 

HP further maintains that where the delay in payment is due to wrongful or 

vexatious conduct, justice and fairness require the defendant to compensate for the 

damage brought by the unjustified delay. To bolster its point, HP draws from a 1933 
91

California Supreme Court decision, which says that “where delay in payment is due to 

vexatio[u]s conduct on the part of the defendant, ‘it is only just that he should repair the 

damage that has followed from the breach of his obligation’ although the balance due to 

the plaintiff is ‘in a certain sense unliquidated.’ ” (Hansen v. Covell (1933) 218 Cal. 622, 

630 (Hansen).) HP urges that the same principle applies here. It argues that the trial 

court abused its discretion by excusing Oracle’s delay based on uncertainty of damages, 

when in fact the postponement of the time to judgment was attributable entirely to 

Oracle’s “vexatious conduct” and deliberate delay in filing what this court deemed was a 

meritless appeal. 

The above-quoted language, though evocative of HP’s position, does not address 

the issue before us. Hansen both predates the amendment to section 3287 authorizing 

prejudgment interest on unliquidated damages and involves a different issue—whether 

the trial court could properly award prejudgment interest on liquidated damages, where 

the defendant claimed the amount owed was not ascertainable by reason of an 

unliquidated offset. (Hansen, supra, 218 Cal. at pp. 630–631.) Hansen does not dictate 

reversal of the trial court’s order, as “ ‘ “cases are not authority for propositions not 

considered.” ’ ” (B.B. v. County of Los Angeles (2020) 10 Cal.5th 1, 11.) 

Even assuming the cited authority is instructive, however, as a general admonition 

that willful delay warrants compensation to the injured party, Hansen does not alter our 

evaluation of the trial court’s decision. The primary feature of section 3287(b) is that it 

confers discretion, allowing “the trial court the flexibility to determine whether an award 

of prejudgment interest is appropriate in light of the particular facts and circumstances in 

the case.” (Faigin, supra, 211 Cal.App.4th at p. 751.) The trial court here was aware of 

the delay caused by the anti-SLAPP appeal in this case and of this court’s indictment of 

the reasons for that delay. We conclude on this record, given the trial court’s balanced 

consideration of the delay against other mitigating factors—including Oracle’s partial 

performance under the contract during the period of delay and the jury’s award of the full 
92

amount of damages requested “without reduction”—that HP has not demonstrated an 

abuse of discretion in the denial of its request for prejudgment interest. 

III. DISPOSITION

The judgment is affirmed. Each party shall bear its own costs on appeal.
______________________________________

Danner, J.

WE CONCUR:

____________________________________

Greenwood, P.J.

____________________________________

Elia, J.

H044371

Hewlett-Packard Company v. Oracle Corporation
Trial Court: Santa Clara County Superior Court

No. 2011-1-CV-203163

Trial Judge: Hon. Peter H. Kirwan

Counsel for Plaintiffs/Appellants 

Hewlett-Packard Company:

Theodore J. Boutrous, Jr.

Jeffrey T. Thomas

Samuel G. Liversidge

Rodney J. Stone

Brandon J. Stoker

Gibson, Dunn & Crutcher 

Robert S. Frank, Jr.

Choate, Hall & Stewart LLP

Counsel for Defendants/Appellants 

Oracle Corporation:

Margaret M. Crignon

Anne M. Grignon

Grignon Law Firm

Dorian Daley

Deborah K. Miller

Peggy Bruggman

Oracle Corporation

Fred Norton

Bree Hann

The Norton Law Firm PC

Sadik Huseny

Sarah M. Ray

Latham & Watkins LLP

Steven A. Ellenberg

Ellenberg & Hull 

William A. Isaacson

Karen L. Dunn

Boies, Schiller & Flexner LLP

H044371

Hewlett-Packard Company v. Oracle Corporation