FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED NATIONAL INSURANCE 

COMPANY, a Pennsylvania

corporation,

Plaintiff-Appellee,

v.

SPECTRUM WORLDWIDE, INC., a

California corporation; CELEBRITY No. 07-55833

PRODUCTS DIRECT, INC., a D.C. No. California corporation; LISA  CV-05-04610-SGL TREMAIN, a California citizen;

HOWARD SCHWARTZ, a California OPINION

citizen,

Defendants-Appellants,

and

MONTICELLO INSURANCE COMPANY, a

Delaware corporation,

Defendant. 

Appeal from the United States District Court

for the Central District of California

Stephen G. Larson, District Judge, Presiding

Argued and Submitted

October 21, 2008—Pasadena, California

Filed February 2, 2009

Before: Harry Pregerson and N. Randy Smith, Circuit

Judges, and Raner C. Collins,* District Judge.

*The Honorable Raner C. Collins, United States District Judge for the

District of Arizona, sitting by designation. 

1157
Opinion by Judge N.R. Smith

1158 UNITED NATIONAL v. SPECTRUM WORLDWIDE
COUNSEL

James C. Nielsen, Jennifer S. Cohn, and August L. Lohuaru,

Nielsen, Haley & Abbott LLP, Los Angeles, California, for

the plaintiffs-appellees. 

Peter W. Ross, Gene Williams, and Keith J. Wesley, Brown

Woods & George LLP, Los Angeles, California, for the

defendants-appellants. 

OPINION

N.R. SMITH, Circuit Judge: 

Spectrum Worldwide, Inc. (“Spectrum Worldwide”),

Celebrity Products Direct, Inc. and Celebrity Products, Inc.

(collectively “Celebrity”), Spectrum Worldwide’s president

Murray Moss (“Moss”), CEO Lisa Tremain (“Tremain”), and

CFO Howard Schwartz (“Schwartz”) (all of the defendants

hereinafter referred to as “Spectrum”) asks this court to determine whether the “first publication” exclusion found in the

United National Insurance Company’s (“United”) excess

insurance policy applies to infringement claims. We hold that

it does. Additionally, because Spectrum presents us with a

legal position that is clearly inconsistent with the position it

took and benefitted from in previous litigation, judicial estoppel prevents us from allowing Spectrum to argue that it first

published infringing material after purchasing its excess

insurance coverage. Further, the district court did not abuse its

discretion when it held Schwartz and Tremain jointly and severally liable for repayment of United’s contribution. 

1160 UNITED NATIONAL v. SPECTRUM WORLDWIDE
I

In December 1997, Sunset Health Products, Inc. (“Sunset”)

hired Spectrum to advertise and distribute the “Hollywood 48-

Hour Miracle Diet” drink (“Miracle Diet”). Soon thereafter,

Tremain and Schwartz formed Celebrity to market and sell a

similar product, “The Original Hollywood Celebrity Diet”

drink (“Celebrity Diet”). Spectrum then terminated its contract with Sunset and began marketing Celebrity Diet. 

In December 1998, and again in March 1999, Sunset

demanded that Spectrum cease infringing on its Miracle Diet

trademark. In October 2001, Sunset filed a trade dress

infringement claim against Spectrum, alleging that Spectrum

“deliberately” made Celebrity Diet’s packaging and labeling

so similar to Miracle Diet that it confused consumers and

damaged Sunset’s reputation (the “Sunset Action”). Sunset

applied for a temporary restraining order (“TRO”), wherein it

asked District Judge Nora Manella1 to compare Sunset’s 1998

label to Spectrum’s 1998 and 2001 labels to determine that

Spectrum’s 2001 label constituted an immediate harm to Sunset. In 1998, Sunset’s Miracle Diet label prominently featured

the word “Hollywood,” contained the phrase “Lose Up To 10

lbs. in 48 Hours!,” and included palm trees, gold stars, and

Hollywood-style searchlights—all set on a blue/purple background (“Sunset’s 1998 label”). Spectrum initially sold Celebrity Diet under a label featuring very similar phrasing, but set

against a black background with a large gold star

(“Spectrum’s 1998 label”). In 1999, Spectrum changed Celebrity Diet’s label, sporting the same large gold star and phrasing, but switching to a purple/blue background featuring

Hollywood-style searchlights (“Spectrum’s 1999 label”). In

May 2001, Spectrum again altered Celebrity Diet’s label,

1District Judge Nora M. Manella heard the Sunset Action and was originally assigned to hear United’s reimbursement claim. However, United’s

action was transferred to District Judge Stephen G. Larson upon Judge

Manella’s appointment to the California Court of Appeal. 

UNITED NATIONAL v. SPECTRUM WORLDWIDE 1161
changing the font and style of the word “Hollywood” to look

more like the Hollywood Hills sign, and modified the star and

searchlights (“Spectrum’s 2001 label”).

Judge Manella granted the TRO based on the dramatic

change between Spectrum’s 1998 and 2001 labels. In the subsequent preliminary injunction hearing, however, Spectrum

argued that it changed its 1998 label in 1999, and that its 1999

label was so similar to its 2001 label that Sunset was not in

danger of experiencing immediate harm. Judge Manella

accepted Spectrum’s position, and denied Sunset’s preliminary injunction action on this basis. Spectrum therefore continued profiting from the sale of Celebrity Diet, while

deepening potential insurers’ liability.

In 2001, United also issued Spectrum a one million dollar

excess third party liability policy (the “United Policy”) related

to an underlying policy issued by Monticello Insurance Company (the “Monticello Policy”). United’s policy became effective on April 26, 2001, and is “subject to definitions, terms,

conditions, exclusions and limitations contained in the [Monticello Policy],” which indemnifies Spectrum for damages

resulting from “advertising injury” liability, meaning injury

arising from: 

a. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods,

products, or services; 

b. Oral or written publication of material that violates a person’s right of privacy; 

c. Misappropriation of advertising ideas or style of

doing business; 

d. Infringement of copyright, title or slogan. 

1162 UNITED NATIONAL v. SPECTRUM WORLDWIDE
The United Policy does not, however, apply to an “advertising injury . . . arising out of oral or written publication of

material whose first publication took place before the beginning of the policy period.” 

After subsequent hearings on cross-motions for summary

judgment in the Sunset Action, the parties were left with Sunset’s core trade-dress infringement claim. Spectrum and Sunset then settled the Sunset Action for a total of $3,220,000

paid to Sunset, funded by Spectrum’s insurers. United contributed $420,000 to the settlement, pursuant to its obligations

under the United Policy. 

United sought reimbursement of its settlement contribution

through a Complaint filed against Spectrum on June 24, 2005.

United moved for summary judgment, arguing that the United

Policy’s first publication exclusion eliminated its indemnification obligations. Finding the first publication exclusion generally applicable to infringement claims, the district court

nonetheless denied United’s motion on September 6, 2006

because “triable issues of fact” prevented the court from

determining whether Spectrum’s offending actions occurred

prior to the United Policy’s effective date. 

United moved for reconsideration, based on its claim that

Sunset’s advertising injury had already been determined by

Judge Manella in the Sunset Action. After reviewing Judge

Manella’s findings, the district court reconsidered and granted

United’s motion for summary judgment, holding that Spectrum’s 1999 label formed the substance of Sunset’s advertising injury, and therefore that the first publication exclusion

eliminates United’s liability. The district court entered a judgment against Spectrum Worldwide, Schwartz, and Tremain in

the amount of $420,000 plus interest. Spectrum moved for

reconsideration, arguing first that the district court should not

have relied upon Judge Manella’s previous findings, and second that Schwartz and Tremain should not have been included

in the judgment. The district court denied Spectrum’s motion

UNITED NATIONAL v. SPECTRUM WORLDWIDE 1163
on May 11, 2007. Spectrum filed a Notice of Appeal on June

6, 2007, and satisfied the judgment. 

II

We review de novo a district court’s decision to grant summary judgment. Thomas v. City of Beaverton, 379 F.3d 802,

807 (9th Cir. 2004). We do not weigh the evidence or determine the truth of the matter, but only determine whether there

is a genuine issue of fact for trial. See Balint v. Carson City,

180 F.3d 1047, 1054 (9th Cir. 1999). We may affirm on any

basis supported by the record, Valdez v. Rosenbaum, 302 F.3d

1039, 1043 (9th Cir. 2002).

III

Spectrum argues that the United Policy’s first publication

exclusion does not apply to Sunset’s infringement claim,

because (1) first publication exclusions do not apply to

infringement actions in California and (2) even if the clause

applies to infringement actions, summary judgment was not

proper to determine whether Spectrum first published infringing material before the United Policy took effect. We find that

(1) the United Policy unambiguously applies to infringement

actions, and (2) summary judgment is proper to determine the

date of first publication in this case, because Spectrum is judicially estopped from presenting and prevailing on inconsistent

arguments before the district courts. 

A

[1] Insurance policy interpretation is a question of California law, which requires courts to initially look to the insurance policy language in order to ascertain its plain meaning.

Cal. Civ. Code § 1636; Waller v. Truck Ins. Exch., Inc., 900

P.2d 619, 627 (Cal. 1995). Because insurance policy interpretation must give effect to the parties’ “mutual intention” at the

time they formed the contract, Cal. Civ. Code § 1636, the par1164 UNITED NATIONAL v. SPECTRUM WORLDWIDE
ties’ intent should be inferred solely from the written provisions of the contract. Cal. Civ. Code § 1639. The written

provisions should be examined “together, so as to give effect

to every part, if reasonably practicable.” Cal. Civ. Code

§ 1641. If a written policy provision is “clear and explicit,” it

must be given proper effect. E.g., Fireman’s Fund Ins. Co. v.

Superior Court, 78 Cal. Rptr. 2d 418, 422 (Cal. Ct. App.

1997). 

On the other hand, if a policy provision is capable of two

or more reasonable constructions, it is “ambiguous,” Waller,

900 P.2d at 627 (citing Bay Cities Paving Grading, Inc. v.

Lawyers’ Mutual Ins. Co., 855 P.2d 1263, 1271 (Cal. 1993)),

and courts “must resolve the ambiguity in favor of the

insured, consistent with the insured’s reasonable expectations,” E.M.M.I. Inc. v. Zurich American Ins. Co., 84 P.3d

385, 391 (Cal. 2004) (citation omitted). However, “[c]ourts

will not strain to create an ambiguity where none exists.”

Waller, 900 P.2d at 627 (citing Reserve Ins. Co. v. Pisciotta,

640 P.2d 764, 768 (Cal. 1982)). In addition, insurance policy

exclusions must be “conspicuous, plain and clear,” otherwise

they are “strictly construed” in favor of the insured. E.M.M.I.

Inc., 84 P.3d at 389 (citations omitted) (emphasis in original).

[2] We find that the United Policy’s first publication clause

is clear and explicit, and must be given its proper effect. The

United Policy’s first publication exclusion asserts that “[t]his

insurance does not apply to . . . ‘advertising injury’ . . . (2)

Arising out of oral or written publication of material whose

first publication took place before the beginning of the policy

period.” The Policy further defines “advertising injury,” in

relevant part, as “injury arising out of . . . [i]nfringement of

copyright, title or slogan.” Plainly reading the first publication

exclusion and the relevant advertising injury definition

together indicates that the parties intended to exclude from

coverage any copyright infringement injury that arose from an

oral or written publication of material first published before

the policy became effective. 

UNITED NATIONAL v. SPECTRUM WORLDWIDE 1165
United argues that this language unambiguously applies to

infringement claims. Spectrum asserts that the language is

ambiguous, arguing that because the “advertising injury” definition only uses the word “publication” in sections (a) (slander, libel) and (b) (invasion of privacy), and not in sections (c)

defamation and (d) infringement, “it is reasonable to conclude

that the first publication exclusion only applie[s] to claims for

libel, slander and invasion of privacy because the exclusion

explicitly refer[s] to the ‘oral or written publication of material.’ ” See Arnette Optic Illusions, Inc. v. ITT Hartford Group,

Inc., 43 F. Supp. 2d 1088 (C.D. Cal. 1998)).2 Accordingly,

Spectrum concludes that because two reasonable interpretations exist (that the exclusion applies to infringement claims,

or it does not), the first publication exclusion is ambiguous

and must be interpreted in its favor. See id. at 1097 (citation

omitted). 

Spectrum’s argument would require us to ignore sections

(c) (misappropriation) and (d) (infringement) of the “advertising injury” definition in order to find an ambiguity. That argument contradicts California policy that instructs courts (1) to

“give effect to every part, if reasonably practicable,” Cal. Civ.

Code § 1641, and (2) not to “strain” to find ambiguities. See,

e.g., Waller, 900 P.2d at 627. In order to find Spectrum’s

interpretation reasonable, we would have to conclude that it

is reasonable to ignore Monticello’s3 efforts to carefully

define the term “advertising injury” to mean injury arising out

of defamation, invasion of privacy, misappropriation, and/or

infringement and set the term off in quotation marks throughout the policy. We would also have to conclude that it is rea2

In Arnette, the district court reviewed a first publication exclusion that

was identical to the United Policy exclusion, and found that both interpretations are reasonable. Arnette, 43 F. Supp. 2d at 1097. Accordingly, the

court concluded that the exclusion was ambiguous. Id. Spectrum relies on

Arnette’s reasoning throughout its argument. 

3Monticello drafted the United Policy; United referred to the original

Monticello policy for its excess coverage policy terms. 

1166 UNITED NATIONAL v. SPECTRUM WORLDWIDE
sonable to believe Monticello used “advertising injury” to

mean injury arising out of defamation, invasion of privacy,

misappropriation, and/or infringement in several places

throughout the policy, but not in the first publication exclusion, despite no language in the exclusion to that effect. We

cannot reasonably make these conclusions while complying

with California contract interpretation principles. 

[3] Moreover, under California law, a split in authority

does not necessarily render an exclusion ambiguous. See, e.g.,

MacKinnon v. Truck Ins. Exchange, 73 P.3d 1205, 1212 (Cal.

2003) (a policy exclusion “does not become ambiguous

merely because the parties disagree about its meaning, or

because they can point to conflicting interpretations of the

clause by different courts”). Accordingly, based on a plain

reading of the insurance policy, we find that the United first

publication exclusion is unambiguous and that it clearly

applies to infringement claims. 

B

Because we find that United Policy’s first publication

exclusion clearly applies to trade dress infringement claims,

we must next consider whether the exclusion applies to Sunset’s infringement claim. The district court found that “the

substance of the advertising injury claimed by Sunset were

those elements found on [Spectrum’s] January, 1999 label,”

and thus granted summary judgment that the first publication

of infringing material occurred prior to the policy’s effective

date. The doctrine of judicial estoppel requires that we affirm

the district court. 

[4] The doctrine of judicial estoppel is an equitable doctrine

a court may invoke to protect the integrity of the judicial process. Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990). It

was developed to prevent litigants from “playing fast and

loose” with the courts by taking one position, gaining advantage from that position, then seeking a second advantage by

UNITED NATIONAL v. SPECTRUM WORLDWIDE 1167
later taking an incompatible position. Risetto v. Plumbers and

Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir. 1996)

(holding that a plaintiff was judicially estopped from asserting

claims based on her ability to work where she had previously

received a favorable Workers’ Compensation settlement

based on assertions that she was unable to work). Judicial

estoppel not only bars inconsistent positions taken in the same

litigation, but “bar[s] litigants from making incompatible

statements in two different cases.” Hamilton v. State Farm

Fire & Cas. Co., 270 F.3d 778, 783 (9th Cir. 2001). 

In New Hampshire v. Maine, 532 U.S. 742 (2001), the

Supreme Court provided a blueprint for determining whether

judicial estoppel applies here. First, Spectrum’s current position must be “clearly inconsistent” with its earlier position. Id.

at 750. Second, Spectrum must have succeeded in persuading

the district court to accept the earlier position, so that accepting Spectrum’s current argument would create “the perception

that either the first or the second court was misled.” Id. Third,

we query whether Spectrum would derive an unfair advantage

if not estopped. Id. 

We follow this blueprint to find that judicial estoppel

should apply to prevent Spectrum from deriving an unfair

advantage by taking its current position. In the 2001 preliminary injunction hearing, Sunset argued that Spectrum’s recent

label change too closely resembled its trade dress and “motivated the [infringement] lawsuit,” though Sunset “claim[ed]

to have been aware of [Spectrum’s] alleged infringement by

December 1998.” Spectrum’s response focused on Sunset’s

“delay in seeking injunctive relief,” arguing that it had been

using the label elements Sunset complained of for almost

three years. In essence, Spectrum argued that any alleged

infringement began occurring when it adopted its label in January 1999, that any change thereafter was merely incremental

shifting of the 1999 label elements, and that the 2001 label did

not initially present the harm Sunset asserted—thus prelimi1168 UNITED NATIONAL v. SPECTRUM WORLDWIDE
nary injunction was not warranted, because Sunset waited

nearly three years to bring a claim that arose in 1999. 

Spectrum’s current argument more closely resembles Sunset’s 2001 position—that it was the 2001 label, not the 1999

version, that resulted in the Sunset action, and that the 2001

label constituted distinct infringing material. Moreover, Spectrum argued that if the court granted injunctive relief, it would

force them to abandon the label they had spent three years and

$4.7 million promoting, further supporting its argument that

the trade dress claim dated to 1999. Spectrum’s 2001 arguments helped convince Judge Manella that Sunset could not

identify any “new or immediate harm that would threaten its

livelihood,” because Spectrum’s 1999 to 2001 label “alterations [were] incremental,” and Spectrum’s “trade dress ha[d]

remained largely consistent since . . . January 1999.” In addition, Schwartz’s declarations led Judge Manella to conclude

that the 1999 label was “remarkably similar” to Sunset’s, and

thus by waiting to file until 2001, Sunset “waited almost three

years after [Spectrum] adopted a similar trade dress to seek

injunctive relief.” Spectrum relied on these arguments to convince the court that Sunset did not experience new or immediate harm, and thus an injunction was inappropriate. The

district court clearly accepted and relied upon these assertions

when making its ruling. Accordingly, if we accept Spectrum’s

current argument that the 2001 label was the basis for Sunset’s infringement claim, it may create the perception that

Spectrum misled either us or Judge Manella. See New Hampshire v. Maine, 532 U.S. at 750. 

[5] As the discussion set forth above illustrates, Spectrum

benefitted from arguing in 2001 that Sunset’s alleged

infringement claim arose from materials first published in

1999. If we now allow Spectrum to argue that the claim did

not arise until 2001, Spectrum’s “gaming” of the courts will

allow it the possibility of prevailing on the very position it

successfully discredited while attempting to avoid preliminary

injunction. The result would be unfair to Sunset, whose

UNITED NATIONAL v. SPECTRUM WORLDWIDE 1169
alleged harms increased as a result of Spectrum’s 1999 arguments. The result would also be unfair to United, whose

indemnification obligations increased as Sunset’s damages

widened after Spectrum successfully avoided an injunction,

then later settled. 

[6] Accordingly, because Spectrum obtained a favorable

decision in the district court as a result of its assertions that

the alleged infringement first arose in 1999, we find that

Spectrum is estopped from claiming before this court that the

2001 label formed the basis of Sunset’s claim. We thus affirm

the district court in its conclusion that Spectrum first published infringing material in 1999, before the United Policy

took effect, and uphold its decision to exclude the Sunset

claim from coverage under the Policy.

IV

After the district court entered judgment against Tremain

and Schwartz, Spectrum filed a motion to reconsider under

Federal Rules of Civil Procedure 59(e) and 60(b), arguing that

Tremain and Schwartz should not be held personally liable for

reimbursing United. The district court rejected this argument;

Spectrum argues that this was an error. Because Spectrum

first raised this issue in its motion for reconsideration, we

only address the argument within that context. 

A denial of a motion for reconsideration under Rule 59(e)

is construed as one denying relief under Rule 60(b) and neither will be reversed absent an abuse of discretion. Duarte v.

Bardales, 526 F.3d 563, 567 (9th Cir. 2008) (citations omitted). Under Rule 59(e), it is appropriate to alter or amend a

judgment if “(1) the district court is presented with newly discovered evidence, (2) the district court committed clear error

or made an initial decision that was manifestly unjust, or (3)

there is an intervening change in controlling law.” Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir. 2001).

1170 UNITED NATIONAL v. SPECTRUM WORLDWIDE
Rule 60(b) allows a district judge to provide relief from a

final judgment if the moving party can show 

(1) mistake, inadvertence, surprise, or excusable

neglect; (2) newly discovered evidence that, with

reasonable diligence, could not have been discovered

in time to move for a new trial under Rule 59(b); (3)

fraud . . . , misrepresentation, or misconduct by an

opposing party; (4) the judgment is void; (5) the

judgment has been satisfied, released, or discharged;

it is based on an earlier judgment that has been

reversed or vacated; or applying it prospectively is

no longer equitable; or (6) any other reason that justifies relief. 

Fed. R. Civ. Pro. 60(b). 

[7] Spectrum did not present any evidence that would allow

the district court to grant relief from a final judgment under

Rule 60(b). Neither did Spectrum present new evidence, nor

did controlling law change in the interim. The district court

rejected Spectrum’s contention that holding Tremain and Schwartz individually liable was unjust, concluding that since

“United raised the issue of [Tremain’s and Schwartz’s] liability in its motion for summary judgment,” and Spectrum did

not “interpose[ ] an argument against that claim,” Spectrum

could not raise it post-judgment. Because “[a] district court

does not abuse its discretion when it disregards legal arguments made for the first time” on a motion to alter or amend

a judgment, Zimmerman, 255 F.3d at 740 (citing Rosenfeld v.

U.S. Department of Justice, 57 F.3d 803, 811 (9th Cir. 1995)),

we affirm the district court with respect to this issue.

V

In sum, we hold that the district court properly granted

summary judgment to United on the issues of whether the

United Policy’s first publication exclusion applies to trade

UNITED NATIONAL v. SPECTRUM WORLDWIDE 1171
dress infringement claims, and whether Sunset’s claim arose

from information first published prior to the Policy’s effective

date. Additionally, we hold that the district court did not

abuse its discretion when it held Tremain and Schwartz individually liable for the judgment.

AFFIRMED. 

1172 UNITED NATIONAL v. SPECTRUM WORLDWIDE