T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on a nd i s notpr e c e de nt * e xc e pta s pr ovi de d by 9th C i r . R . 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T T E L E M A S T E R S , I N C , a C a lif o rn ia c orpor a t i on, P la in tif

f - A p p e lla n t, v. THE VI NTAG E C LUB M ASTE R A S S O C I A T I O N , a C a lif o rn ian o n p r o f

it c o rp o r a tio n ; e t a l., D efen d an t s - A p p el l ees. N o. 08- 56284 D. C . No . 2 : 0 5 - c v - 0 5 1 3 9 - R GK V BK ME MOR AN DU M *

T E L E M A S T E R S , I N C , a C a lif o rn ia c orpor a t i on, P l ai nt i ff

- A pp el l ee , v. THE VI NTAG E C LUB M ASTE R A S S O C I A T I O N , a C a lif o rn ian o n p r o f

it c o rp o r a tio n ; e t a l., D efen d an t s - A p p el l an t s. N o. 08- 56376 D. C . No . 2 : 0 5 - c v - 0 5 1 3 9 - R GK V BK 

# FI LED MA R 19 2010 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

T E L E M A S T E R S , I N C , a C a lif o rn ia c orpor a t i on, P la in tif

f - A p p e lla n t, v. THE VI NTAG E C LUB M ASTE R A S S O C I A T I O N , a C a lif o rn ian o n p r o f

it c o rp o r a tio n ; e t a l., D efen d an t s - A p p el l ees. N o. 08- 56571 D. C . No . 2 : 0 5 - c v - 0 5 1 3 9 - R GK V BK

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e C e n tr a l D is tr ic t o f C a lif o rn ia R . G a ry K l a us ne r , D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d M a r c h 3, 2010 P a s a d e n a , C a lif

o rn ia B efo re: S C H R O E D E R , R Y M E R an d W A R D L A W , C i rcu i tJu d g es. T e l e m a s t e r s , I nc . ( “ T e l e m a s t e r s ” ) , br oughtthi s a c t i on a ga i ns tT he V i nt a ge C l ub M a s t e rA s s oc i a t i on a nd A r thurA l l e n, V i nt a ge C l ub’ s e xe c ut i ve di r e c t or ( c ol l e c t i ve l y “ de f

e nda nt s ” ) , r a i s i ng c l a i m s of c opy r i ghti nf

r i nge m e nt , br e a c h of c ontr a c t , c onve r s i on, br e a c h of the c ove na ntof

good f a i th a nd f

a i rde a l i ng, m i sapp ropri at i on of tra de se cr et s, and q uantum m erui t . T he di stri ctcourtgrant ed s um m a ry j udgm e nta ga i ns tT e l e m a s t e r s on tw o of i t s c l a i m s . T he r e m a i ni ng c la im s w e r e tr ie d b e f

o r e a ju ry . A t th e c lo s e o f T e le m a s te r s ’ c a s e , d e f

e n d a n ts3

m ov ed for j ud gm entas a m att erof l aw un der F eder al R ul e of C i vi l P roce du re 50( a ) , w hi c h the di s tr i c tc our tgr a nt e d i n pa r t . T he j ury r e turne d a ve r di c ti n f a vor of T e l e m a s t e r s i n the a m ountof $698, 000 on e a c h of

T e l e m a s t e r s ’ r e m a i ni ng f our cl ai m s. D ef

endant s f i l ed re new ed m ot i on s f

or j ud gm entas a m att erof l aw un der F e d e r a l R u le o f

C iv il P r o c e d u r e 5 0 ( b ) , w h ic h th e d is tr ic t c o u r t g r a n te d in p a r t, re du ci ng the dam ages aw ar d t o $ 65 , 00 0. T he di stri ctcourtal so aw ar ded T el em as t er s $50 , 00 0 i n att orneys ’ fe es , w hi ch w as si gn i fi ca nt l y l es s than T e le m a s te r s h a d r e q u e s te d . T elem as ters ap p ea ls an d d ef en d an ts cr o ss -a p p ea l th e d istrict co u rt’s j u d g me n t . W e h a v e j u r i s d i c t i o n u n d e r2 8 U . S. C. § 1 2 9 1 a n d a f f i rm. I. D am ag es T he di s tr i c tc our tc orr e c t l y gr a nt e d i n pa r tthe R ul e 50( b) m ot i on a nd re du ce d the dam ages aw ar d from $6 98 , 00 0 t o $ 65 , 00 0 b ec ause the evi dence pr e s e nt e d a ttr i a l di d nots uppor tthe a m ountof da m a ge s a w a r de d by the j ury . T he j ury ’ s a w a r d of

$698, 000 i n da m a ge s f orbr e a c h of

the 1999 A gr e e m e nti s not supp ort ed by the al l eged i m prop eruse of i nt el l ec tual prop erty. T he j ury w as pr ope r l y i ns truc t e d t o a w a r d the f a i rm a rke tva l ue of

the e qui pm e ntl i s t e d i n the 1 9 9 9 A g r e e m e n t th a t d e f e n d a n ts s h o u ld h a v e , b u t d id n o t, r e tu rn to T e le m a s te r s . T h e 1 9 9 9 A g r e e m e n t d id n o t in c lu d e in te lle c tu a l p r o p e r ty in th is lis t o f e q u ip m e n t.4

F u r th e r , a lth o u g h th e r e w a s e v id e n c e th a t it w o u ld c o s t ju s t o v e r$ 9 8 ,0 0 0 to re cr ea t e the cabl e m appi ng re cords, the un contra di ct ed evi dence al so dem on stra t ed thatthe i nform at i on w as “ si t e s peci fi c, ” a nd thatthe fa i r m arketval ue of that in f o rm a tio n w a s z e r o . T he j ury ’ s a w a r d of

da m a ge s c a nnotbe ba s e d on qua ntum m e rui ti n r e l a t i on t o the c abl e m appi ng w ork. T he c abl e m appi ng w ork w a s c om pl e t e d i n c onne c t i on w ith th e 1 9 9 3 A g r e e m e n t, a n d a n y b r e a c h o f c o n tr a c t o rlo s s e s in c o n n e c tio n w ith tha ta gr e e m e ntw e r e nota ti s s ue a tthe tr i a l . F ur the rm or e , the ow ne r s of T e l e m a s t e r s a dm i tt e d a ttr i a l tha tbe c a us e the y ha d notpe r f orm e d a thor ough in v e s tig a tio n , th e y h a d to p a y f o rth e c ab le p a irm ap p in g th e m s e lv e s . T he j ury ’ s a w a r d of

da m a ge s c a nnotbe s uppor t e d unde ra the ory of conv er si on on the basi s of e i ther the val ue of T el em as t er s’ i nt el l ec tual prop erty that d efen d an t s u sed o r fai l ed t o retu rn , o r o n th e b asi s o f th e v al u e o f th e syst em as a w hol e . T he di s tr i c tc our tpr e vi ous l y he l d on s um m a ry j udgm e nttha ta ny c l a i m f or c onve r s i on of

i nt e l l e c tua l pr ope r ty i s pr e e m pt e d, a nd T e l e m a s t e r s ha s not chal l enged thatho l di ng . A dd i t i on al l y, al tho ug h P aul P hi l i pson , on e of the ow ners of T e l e m a s t e r s , t e s t i f

i e d tha tthe va l ue of

the w hol e s y s t e m w a s be tw e e n $500, 000 and $ 60 0, 00 0, he al so t es t i fi ed thatT el em as t er s r ec ei ved p artof the sy st em back5

f r o m d e f e n d a n ts . T h e ju ry w a s in s tru c te d to a w a r d th e f a irm a rk e t v a lu e o f

o n ly th o s e s p e c if

ic ite m s th a t d e f

e n d a n ts d id n o t r e tu rn to T e le m a s te r s . A s t o tho se i t em s thatdefe nd ant s di d n otre turn t o T el em as t er s, there w as e vi de nc e a ttr i a l tha tthe pow e rtr a ns f e rpa ne l s ha d a va l ue of be tw e e n $4, 000 a nd $5 , 00 0, and the am ph enol cabl es had a val ue of abou t$2 0, 00 0. P hi l i pson t es t i fi ed thatthe cr oss- conn ec tcabl es had a val ue of $2 00 , 00 0, bu tthe vastm aj ori ty of that va l ue w a s t i e d t o the l abori nvol ve d i n c onne c t i ng the c abl e s . O n thi s e vi de nc e , the d i stri ctco u rtap p ro p ri at el y d et erm i n ed th atth e fai r m ark etv al u e o f th e cro ssco n n ectcab l es w as 2 0 % o f th e $ 2 0 0 , 0 0 0 , o r $ 4 0 , 0 0 0 . V i ew ed i n th e l i g h tm o st f a v o r ab le to T e le m a s te r s , se e E . E . O . C . v. G o D addy So f tw are, Inc. , 581 F . 3d 951, 9 6 1 ( 9 th C ir . 2 0 0 9 ) , th is e v id e n c e s u p p o r ts a d a m a g e s a w a r d o f o n ly $ 6 5 ,0 0 0 . F u r th e r , th e d is tr ic t c o u r t d id n o t e rrin s u b m ittin g th e b r e a c h o f c o n tr a c t c la im to the j ury bec ause the di stri ctcourtnever prec l ud ed re covery for def endant s’ fa i l ure to r e tu rn e q u ip m e n t a s r e q u ir e d u n d e rth e 1 9 9 9 A g r e e m e n t. T he di s tr i c tc our tpr ope r l y gr a nt e d the R ul e 50( a ) m ot i on on puni t i ve d a m a g e s b e c a u s e th e e v id e n c e a t tr ia l, v ie w e d in th e lig h t m o s t f a v o r ab le to T el em as t er s, do es no tsupp orta f i nd i ng thatdefe nd ant s’ cond uctrose t o the l evel o f “o p p r e s s io n , f

r a u d , o rm a lic e ” n e c e s s a ry to r e c o v e rp u n itiv e d a m a g e s . See C a l. C iv . C o d e § 3 2 9 4 ( a ) .6

T he di s tr i c tc our ta l s o pr ope r l y gr a nt e d the R ul e 50( a ) m ot i on on T e le m a s te r s ’ c la im s f

o rb r e a c h o f

c o n tr a c t a n d f

o rq u a n tu m m e ru it in r e la tio n to w i re l es s s ervi ce s. V i ew ed i n the l i gh tm ostfa vo rabl e t o T el em as t er s, the evi dence doe s nots uppor ta f

i ndi ng tha tthe r e w a s m utua l a s s e ntbe tw e e n de f e nda nt s a nd T e le m a s te r s a s to th e e s s e n tia l te rm s o f a n a g r e e m e n t f

o rw ir e le s s s e rv ic e s , se e D i v. of L aborL aw E nf

or c e m e nt v . T r ans pac i f i c T r ans p. C o. , 137 C a l . Rptr . 855, 859 (C t . A pp . 19 77 ); thatT el em as t er s r es ea rc hed and devel op ed the w i re l es s i nt ernet sy st em w i th b oth p art i es ’ un ders t andi ng thatT el em as t er s w ou l d b e c om pensat ed f o rits s e rv ic e s , se e Str ong v . B e y doun , 83 C al . R ptr. 3d 63 2, 63 5 (C t . A pp . 20 08 ); o rth a t T e le m a s te r s ’ s e rv ic e s b e n e f itte d V in ta g e C lu b , se e O c hs v . P ac i f i C ar e of C a l. , 9 C a l. R p tr . 3 d 7 3 4 , 7 4 2 ( C t. A p p . 2 0 0 4 ) . T h e d i stri ctco u rtp ro p erl y g ran t ed th e R u l e 5 0 (a) m o t i o n as t o T el em ast ers’ c ontr i but ory c opy r i ghti nf r i nge m e ntc l a i m be c a us e the e vi de nc e , vi e w e d i n the lig h t m o s t f

a v o r ab le to T e le m a s te r s , d o e s n o t s u p p o r t af in d in g th a t d e f

e n d a n ts kne w orha d r e a s on t o know tha tT e l e m a s t e r s ha d c opy r i ght e d the i nf orm a t i on on the tra nsl at i on ca rd w hen D i gi t al S tre et s use d thati nform at i on i n A pri l or M ay 2 0 0 4 . Se e E l l is on v . R obe r t s on , 357 F . 3d 1072, 1076 ( 9th C i r . 2004) . F ur the r , the undi s put e d e vi de nc e a ttr i a l s how e d tha ti tw a s a T e l e m a s t e r s ’ e m pl oy e e , not7

V in ta g e C lu b , th a t p r o v id e d D ig ita l S tr e e ts w ith th e a lle g e d ly in f r in g in g m a te r ia l. See A &M

R ec ords, Inc. v. N

ap ster , Inc. , 2 3 9 F .3 d 1 0 0 4 , 1 0 1 9 ( 9 th C ir . 2 0 0 1 ) . F i nal l y, the di stri ctcourtdi d n otabuse i t s di sc re t i on w hen i tprec l ud ed P hi l i ps on f

r om t e s t i f

y i ng r e ga r di ng de f

e nda nt s ’ r e f

us a l t o pa y f

orD S L l i ne a nd c a l l e rI D s e rvi c e s , a nd the va l ue of the s e rvi c e s tha tT e l e m a s t e r s w i thdr e w f r om the i nvoi c e a tthe r e que s tof de f e nda nt s . B oth T e l e m a s t e r s a nd de f e nda nt s unde r s t ood tha tthe c ha r ge s f

orD S L l i ne a nd c a l l e rI D s e rvi c e s w oul d notbe pur s ue d. I n l i ght of thi s e vi de nc e , the di s tr i c tc our tdi d notabus e i t s di s c r e t i on i n pr e c l udi ng P h ilip s o n f

r o m te s tif

y in g r e g a r d in g th e r e m o v e d c h a r g e s . II . F ee s I n a w a r d in g a tto rn e y s ’ f e e s a n d c o s ts , th e d is tr ic t c o u r t w a s n o t r e q u ir e d to ma k e a s e p a r a t e d e t e rmi n a t i o n a s t o th e p r e v a i l i n g p a r ty f o rth e c o p y r i g h tc l a i ms a nd T e l e m a s t e r s ’ s t a t e l a w c l a i m s , be c a us e a l l of the c l a i m s i nvol ve d a c om m on c o r e o f f a c ts . See H

en sley v. E ckerh a rt , 4 6 1 U .S . 4 2 4 , 4 3 5 ( 1 9 8 3 ) . T e l e m a s t e r s ’ a r gum e nttha ti ti s e nt i t l e d t o the f ul l a m ountof

i t s f e e s a nd co sts is b as ed o n it s c o n ten ti o n th at th e d istrict co u rt er re d in re d u cin g th e ju ry ’s aw ar d o f dam ages . B ec ause the di stri ctcourt ’ s r educt i on of dam ages w as prop er , T el em ast ers’ req u estfo r ad d i t i o n al att o rn eys’ fees an d co st s fai l s.8

T he di s tr i c tc our tdi d notc l e a r l y e rri n f i ndi ng tha tT e l e m a s t e r s w a s the p r e v a ilin g p a r ty f

o rp u rp o s e s o f

a n a w a r d o f

a tto rn e y s ’ f

e e s . See San Francisc o N A A C P v . Sa n Fr a n c is c o U

n ifie d Sc h . D is t. , 2 8 4 F .3 d 1 1 6 3 , 1 1 6 6 ( 9 th C ir . 2 0 0 2 ) . F u rth er, b ecau se th e d i stri ctco u rtfo u n d th atT el em ast ers w as th e p rev ai l i n g p arty, and the 19 99 A gree m entspec i fi ca l l y provi des f or att orneys ’ fe es , the court prop er l y det erm i ned thatT el em as t er s w as ent i t l ed t o i t s r ea sonabl e a tt orneys ’ fe es a n d o th e rc o s ts . See C al . C i v . C o d e § 1 7 1 7 (a). M o reo v er, th e am o u n to f att o rn eys’ fe es thati taw ar ded w as re as on abl e. AF F I RME D.