Court Opinion

ID: 2643536
Source: CourtListenerOpinion
Date Created: 2013-11-21 21:06:29.419226+00
Date Added: 2024-06-11T12:52:01.789170
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                 NOV 21 2013

                                                                           MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

THE CITRI-LITE COMPANY,                          No. 11-17609

              Plaintiff – Appellant,             D.C. No. 1:07-CV-01075 OWW
                                                 JLT
  v.
                                                 MEMORANDUM*
COTT BEVERAGES, INC.,

             Defendant – Appellee.

                    Appeal from the United States District Court
                       for the Eastern District of California
                    Oliver W. Wanger, Senior Judge, Presiding

                     Argued and Submitted November 7, 2013
                            San Francisco, California

Before: REINHARDT and WATFORD, Circuit Judges, and LYNN, District
Judge.**

       The Citri-Lite Company (“Citri-Lite”) appeals the district court’s judgment,

resulting from its Findings of Fact and Conclusions of Law following a bench trial,

that the efforts of Cott Beverages, Inc. (“Cott”) to promote Slim-Lite, a Citri-Lite

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Barbara M. G. Lynn, District Judge for the U.S.
District Court for the Northern District of Texas, sitting by designation.
product, pursuant to an exclusive license agreement between the parties, were

commercially reasonable and that Cott did not violate the implied covenant of good

faith and fair dealing. We have jurisdiction pursuant to 28 U.S.C. § 1291. We

review the district court’s legal conclusions de novo. Husain v. Olympic Airways,

316 F.3d 829, 835 (9th Cir. 2002). We review its factual findings for clear error.

Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 878

(9th Cir. 2009). Having done so, we affirm.

      Citri-Lite contends that the district court erred in its interpretation of the

term “commercially reasonable efforts,” which is contained in paragraph 2.4 of the

parties’ license agreement. However, the district court fairly considered the

contract as a whole, the subject matter and objective of the contract, all the

circumstances surrounding the making of the contract, the subsequent acts and

conduct of the parties to the contract, and the reasonableness of respective

interpretations advocated by the parties, as well as the extrinsic evidence as to

industry standards and the parties’ prior relationship and negotiations, when it

concluded that the term “commercially reasonable efforts” permitted Cott to

consider its own economic business interests in rendering performance and that an

inquiry into commercial reasonableness must be evaluated in the context of the

totality of the business arrangement. See DP Aviation v. Smiths Indus. Aero. & Def.

                                           2
Sys., 268 F.3d 829, 838 (9th Cir. 2001); Gifford v. J & A Holdings, 54 Cal. App.
4th 996, 1005, 63 Cal. Rptr. 2d 253 (Cal. Ct. App. 1997). The district court found

that, under the agreement, “commercially reasonable efforts” with respect to

marketing were not restricted to product demonstrations. We agree. We conclude

that the determination of whether “commercially reasonable efforts” were

undertaken by Cott is a factual determination as to which the district court did not

clearly err.

       Citri-Lite also contends that the district court erred in its definition and

application of the implied covenant of good faith and fair dealing. The district

court properly found that the exclusive license agreement defined Cott’s marketing

obligations and that Cott did not breach any implied covenant.

       Accordingly, the district court properly interpreted and applied the

contractual term “commercially reasonable efforts” to conclude that Cott did not

breach that provision in the license agreement, and properly defined Cott’s duties

and evaluated its performance with respect to an implied covenant of good faith

and fair dealing.

       AFFIRMED.

                                            3