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 and i s notpr e c e de nt * e xc e pta s pr ovi de d by9th 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 P A T R IC K C A L L IA R I, Pl a i n t i f

f - c o u n t e r - c l a i mdefe nd ant- A pp el l ee , v. SA RG EN TO FO O D S I N C, D e f

e n d a n t- c o u n te r - c la im a n tp la in tif f - A p p e lla n t, F L OR A D AMAS I O; AN T OI NE I O A N N I D ES; A N D REA S I O A N N I D ES; GA YL E K. GO OD R I C H; GI L L I AN OLSON; RI CHARD J . OLSON; BE TT Y CR OU SE , C o u n t er-d efen d an t s - A p p el l ees. N o. 10- 35736 D . C . N o . 2 : 0 8 -cv -0 1 1 1 1 -M JP ME MOR AN DU M *

P A T R IC K C A L L IA R I, Pl a i n t i f

f - c o u n t e r - c l a i md e f e n d a n t - A p p e lla n t, v. N o. 10- 35788 D . C . N o . 2 : 0 8 -cv -0 1 1 1 1 -M JP



# FI LED JU L 07 2011 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

SA RG EN TO FO O D S I N C, D e f

e n d a n t- c o u n te r - c la im a n tpl ai nt i ff - A pp el l ee , F L OR A D AMAS I O; AN T OI NE I O A N N I D ES; A N D REA S I O A N N I D ES; GA YL E K. GO OD R I C H; GI L L I AN OLSON; RI CHARD J . OLSON; BE TT Y CR OU SE , C o u n t er-d efen d an t s - A p p el l an t s. A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt

f orthe W e s t e rn D i s tr i c tof W a s hi ngt on M a r s haJ . P e c hm a n, D i s tr i c tJudge , P r e s i di ng A r gue d a nd S ubm i tt e d June 7, 2011 S e a tt l e , W a s hi ngt on B efo re: R E IN H A R D T , W . F L E T C H E R , an dR A W L IN S O N , C i rcu i tJu d g es. T hi s di vers i ty a ct i on ar i se s f rom the ac qu i si t i on of P ort i on abl es , Inc. (P ort i on abl es ), a W as hi ng t on fr ozen sauce m anufacturer , by S ar gent o F oo ds, Inc. ( S a r g e n t o ) , aWi s c o n s i n c h e e s e c o m p a n y . T h e tr a n s a c t i o n wa s g o v e rn e db ytwo a gr e e m e nt s : the S t oc k P ur c ha s e A gr e e m e nt( S P A ) a nd the E m pl oy m e nt A gree m ent(E A ).3

1. T he di s tr i c tc ourtpr ope r l ygr a nt e d s um m a ryj udgm e nti n f a vorof the S h a r e h o ld e r s o n S a r g e n to ’s b r e a c h o f w a rr an tyc o u n te r c la im s . T h e u n d is p u te df

a c ts e s tab lis h e dth a t P o rtio n ab le s d idn o t p r o d u c e o rs e ll m i l k pr oduc t s a s de f

i ne d bythe S outh D a kot aD e pa rtm e ntof A gr i c ul tur e a tthe tim e o f th e a c q u is itio n . T h e S h a r e h o ld e r s th e r e f o r e w e r e n o t r e q u ir e db yS o u th D akot a l aw t o o bt ai n a st at e dai ryl i ce nse and w er e, as w arrant ed, i n com pl i ance w i th ap p l i cab l e l aw s. T he e xtr i ns i c e vi de nc e pr of f e r e d byS a r ge nt o f

a i l e d t o r a i s e atr i abl e i s s ue of m a t e r i a l f

a c tr e ga r di ng the a de qua c yof P ort i onabl e s ’ e qui pm e nt , s truc tur e s , a nd c ap a c ity . See U. S. L i

f e Cr e d i t I n s . C o . v . Wi l l i a ms , 919 P . 2d 594, 597- 98 ( W a s h. 19 96 ) ( enforci ng contra ctas w ri tt en).

2. T he di stri ctcourtcorr ec t l y grant ed j ud gm entas a m att erof l aw pu rs uantt o F R C P 50 (a ) i n favor of C al l i ar i on S ar gent o’ s c l ai m se eki ng the re turn of C a l l i a r i ’ s s i gni ng a nd r e t e nt i on bonus . T he c ourtw a s r e qui r e d t o de t e rm i ne the o b je c tiv e m e a n in g o f

th e p a rtie s ’ w r itte n a g r e e m e n t b yin te rp r e tin g th e p la in l angu age of E A § 4 (d) and any t es t i m on y r egar di ng the part i es ’ un expres se d s u b je c tiv e u n d e r s ta n d in g w a s irr e le v a n t. Se e H e a rs t C o m m c ’ n s I

n c . v . Se a ttle T i m es C o. , 11 5 P . 3d 26 2, 26 7 (W as h. 20 05 ) ( en banc).4

3. T he di s tr i c tc ourtpr ope r l yde ni e d the S ha r e hol de r s ’ m ot i ons f or j u d g me n ta s ama tt e ro f l a w p u r s u a n tt o FRCP 5 0 ( a ) a n dFRCP 5 0 ( b ) o n th e c l a i ms alleg in g th at S ar g en to b re ac h ed th e E A an dS P A b y in terf er in g w ith C alli ar i’ s op er at i on al control ov erP ort i on abl es du ri ng the earnou tperi od . T he op er at i on al control prov i si on s of the part i es ’ agre em ent s w er e am bi gu ou s and subj ec tt o at le a s t tw o r e a s o n ab le in te rp r e ta tio n s . Se e T anne rE le c . C o- op. v . P uge t Sound P ow e r& L i

ght C o. , 911 P . 2d 1301, 1310- 11 ( W a s h. 1996) ( e n ba nc ) . T he j ury , by i t s ve r di c t , a dopt e d the de f i ni t i on of ope r a t i ona l c ontr ol pr of f e r e d a ttr i a l by S a r ge nt o. A l though i tm a yha ve be e n pos s i bl e t o dr a w ac ontr a ryc onc l us i on, the ve r di c tw a s s upport e d bys ubs t a nt i a l e vi de nc e a nd the S ha r e hol de r s ’ F R C P 50( b) m o tio n w a s p r o p e r lyd e n ie d . Se e Firs t N a t’ l M o r tg . C o . v . Fe d. R e a ltyI n v . T r u s t, 63 1 F . 3d 10 58 , 10 67 -68 (9th C i r. 20 11 ). 4. T he di stri ctcourtdi d n otabuse i t s di sc re t i on w hen i taw ar ded tri al cost s t o S ar gent o and deni ed the S hare ho l ders ’ m ot i on t o ret ax cost s. T he di stri ct c o u rt r e c o g n iz e dth a t it h a dd is c r e tio n to r e q u ir e e a c h p a rtyto b e a rits o w n c o s ts in the eventof a m i xed j ud gm ent , bu tdecl i ned t o d o so. T hi s c on cl usi on w as no tan ab u s e o f th e d is tr ic t c o u rt’s d is c r e tio n n o ra n e rr o n e o u s d e te rm in a tio n o f la w . See M a rt i n v. Ca l. D ep ’t

o f V etera n s A f f a i rs , 560 F . 3d 1042, 1047 ( 9th C i r . 2009) .5

5. T he di stri ctcourtdi d n otabuse i t s di sc re t i on w hen i taw ar ded att orney f e e s to th e S h a r e h o ld e r s a s p r e v a ilin g p a rtie s o n S a r g e n to ’s b r e a c h o f w a rr a n ty c o u n te r c la im s . See, e. g . , Crest In c. v. C o stco W

h o lesa le C o rp . , 115 P . 3d 349, 355 ( W a s h . C t. A p p . 2 0 0 5 ) . AF F I RME D.