Court Opinion

ID: 4077355
Source: CourtListenerOpinion
Date Created: 2016-09-30 21:01:15.966891+00
Date Added: 2024-06-11T13:28:04.440198
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            SEP 30 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

URICA, INC.,                                     No.   14-56545

              Plaintiff-Appellant,               D.C. No.
                                                 2:11-cv-02476-MMM-RZ
 v.

MEDLINE INDUSTRIES, INC.;                        MEMORANDUM*

              Defendant-Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                  Margaret M. Morrow, District Judge, Presiding

                          Submitted September 2, 2016**
                              Pasadena, California

Before: TASHIMA, WARDLAW, and BYBEE, Circuit Judges.

      Urica, Inc. (“Urica”) asks us to reverse the district court’s grant of summary

judgment to defendant Medline Industries, Inc. (“Medline”) on Urica’s inducing

breach of contract claim. We have jurisdiction under 28 U.S.C. § 1291, and affirm.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Under California law, there are five elements for a claim of intentional

interference with contractual relations: “(1) a valid contract between plaintiff and a

third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional

acts designed to induce a breach or disruption of the contractual relationship; (4)

actual breach or disruption of the contractual relationship; and (5) resulting

damage.” Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1126

(1990). Each element must be established to succeed on the claim. The district

court correctly found that Urica failed to offer proof of resulting damages.

      “[D]amages for the loss of prospective profits are recoverable where the

evidence makes reasonably certain their occurrence and extent.” Grupe v. Glick,

26 Cal. 2d 680, 693 (1945). During trial, Urica conceded that it could not make an

admissible claim for lost profits. As Urica’s counsel stated: “[P]laintiffs must

concede to the Court that we cannot make an admissible case for lost profits . . .

where Pharmaplast continued to supply goods to existing customers, the Court

concluded that it would be too speculative. And we, of course, have no evidence to

the contrary . . . .” Reporter’s Transcript of Proceedings at 7, Urica, Inc. v.

Medline Indus., Inc., No. CV11-2476-MMM-RZ (C.D. Cal. Apr. 15, 2013).

Indeed, the evidence shows that Urica’s affiliate URI Health & Beauty LLC

(“URIHB”) did not lose any existing or future customers as a result of Medline’s

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alleged interference. Despite the 2008 agreement between Medline and

Pharmaplast S.A.E. (“Pharmaplast”), Pharmaplast continued to sell products to

URIHB for existing customers. And Pharmaplast decided to stop quoting prices

for new URIHB customers in late 2007 or early 2008 (before Medline’s alleged

interference) because of URIHB’s chronic late payments.

      Urica suggests that Medline’s profits from sales of Pharmaplast products

would be an appropriate measurement of damages. California courts have

permitted consideration of a defendant’s profits in measuring a plaintiff’s loss of

profits. See GHK Assocs. v. Mayer Grp., 224 Cal. App. 3d 856, 874 (1990);

Ramona Manor Convalescent Hosp. v. Care Enters., 177 Cal. App. 3d 1120, 1140

(1986). But using a defendant’s profits as a measurement of damages is

appropriate only when the plaintiff has first produced evidence that it was, in fact,

damaged by the defendant’s interference. See GHK, 224 Cal. App. 3d at 873

(using the defendant’s profits as a measurement of damages only after first finding

that “substantial evidence” showed that the plaintiff was damaged and noting that

“[w]here the fact of damages is certain, the amount of damages need not be

calculated with absolute certainty”).

      Urica failed to make the initial showing that it was damaged by Medline’s

alleged interference. As explained previously, Urica continued to place orders

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with Pharmaplast for existing customers through 2011, and Pharmaplast chose not

to quote prices for new URIHB customers for reasons independent of its later

agreement with Medline.

      As the district court also noted, California law generally does not allow

plaintiffs to recover more on an inducing breach of contract theory than they would

have had the contract been fully performed. See GHK, 224 Cal. App. 3d at

874–75. Notably, the district court granted summary judgment to Pharmaplast on

Urica’s breach of contract claim on the ground that Urica suffered no damages as a

result of that breach, and Urica does not appeal that holding. If Urica cannot

recover against Pharmaplast (the very party that allegedly breached the exclusivity

contract) because there were no resulting damages, then it necessarily follows that

it cannot recover against Medline for inducing that breach. Further, expert

testimony showed that, even if Pharmaplast would have been willing to supply

URIHB’s new customers, URIHB would not have been able to take on the clients

that Medline acquired because URIHB lacked the resources and management to

handle such a large increase in sales. Accordingly, any attribution of Medline’s

sales to URIHB for the purpose of calculating URIHB’s damages would likely

result in a windfall to URIHB.

      AFFIRMED.

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