Court Opinion

ID: 3035143
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:52:08.912132+00
Date Added: 2024-06-11T12:09:15.693445
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              MAR 19 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

TELEMASTERS, INC, a California                   No. 08-56284
corporation,
                                                 D.C. No. 2:05-cv-05139-RGK-
             Plaintiff - Appellant,              VBK

  v.
                                                 MEMORANDUM *
THE VINTAGE CLUB MASTER
ASSOCIATION, a California nonprofit
corporation; et al.,

             Defendants - Appellees.

TELEMASTERS, INC, a California                   No. 08-56376
corporation,
                                                 D.C. No. 2:05-cv-05139-RGK-
             Plaintiff - Appellee,               VBK

  v.

THE VINTAGE CLUB MASTER
ASSOCIATION, a California nonprofit
corporation; et al.,

             Defendants - Appellants.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
TELEMASTERS, INC, a California                   No. 08-56571
corporation,
                                                 D.C. No. 2:05-cv-05139-RGK-
             Plaintiff - Appellant,              VBK

  v.

THE VINTAGE CLUB MASTER
ASSOCIATION, a California nonprofit
corporation; et al.,

             Defendants - Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                    R. Gary Klausner, District Judge, Presiding

                       Argued and Submitted March 3, 2010
                              Pasadena, California

Before:      SCHROEDER, RYMER and WARDLAW, Circuit Judges.

       Telemasters, Inc. (“Telemasters”), brought this action against The Vintage

Club Master Association and Arthur Allen, Vintage Club’s executive director

(collectively “defendants”), raising claims of copyright infringement, breach of

contract, conversion, breach of the covenant of good faith and fair dealing,

misappropriation of trade secrets, and quantum meruit. The district court granted

summary judgment against Telemasters on two of its claims. The remaining

claims were tried before a jury. At the close of Telemasters’ case, defendants

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moved for judgment as a matter of law under Federal Rule of Civil Procedure

50(a), which the district court granted in part. The jury returned a verdict in favor

of Telemasters in the amount of $698,000 on each of Telemasters’ remaining four

claims. Defendants filed renewed motions for judgment as a matter of law under

Federal Rule of Civil Procedure 50(b), which the district court granted in part,

reducing the damages award to $65,000. The district court also awarded

Telemasters $50,000 in attorneys’ fees, which was significantly less than

Telemasters had requested.

      Telemasters appeals and defendants cross-appeal the district court’s

judgment. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

I.    Damages

      The district court correctly granted in part the Rule 50(b) motion and

reduced the damages award from $698,000 to $65,000 because the evidence

presented at trial did not support the amount of damages awarded by the jury. The

jury’s award of $698,000 in damages for breach of the 1999 Agreement is not

supported by the alleged improper use of intellectual property. The jury was

properly instructed to award the fair market value of the equipment listed in the

1999 Agreement that defendants should have, but did not, return to Telemasters.

The 1999 Agreement did not include intellectual property in this list of equipment.

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Further, although there was evidence that it would cost just over $98,000 to

recreate the cable mapping records, the uncontradicted evidence also demonstrated

that the information was “site specific,” and that the fair market value of that

information was zero.

      The jury’s award of damages cannot be based on quantum meruit in relation

to the cable mapping work. The cable mapping work was completed in connection

with the 1993 Agreement, and any breach of contract or losses in connection with

that agreement were not at issue at the trial. Furthermore, the owners of

Telemasters admitted at trial that because they had not performed a thorough

investigation, they had to pay for the cable pair mapping themselves.

      The jury’s award of damages cannot be supported under a theory of

conversion on the basis of either the value of Telemasters’ intellectual property that

defendants used or failed to return, or on the basis of the value of the system as a

whole. The district court previously held on summary judgment that any claim for

conversion of intellectual property is preempted, and Telemasters has not

challenged that holding. Additionally, although Paul Philipson, one of the owners

of Telemasters, testified that the value of the whole system was between $500,000

and $600,000, he also testified that Telemasters received part of the system back

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from defendants. The jury was instructed to award the fair market value of only

those specific items that defendants did not return to Telemasters.

      As to those items that defendants did not return to Telemasters, there was

evidence at trial that the power transfer panels had a value of between $4,000 and

$5,000, and the amphenol cables had a value of about $20,000. Philipson testified

that the cross-connect cables had a value of $200,000, but the vast majority of that

value was tied to the labor involved in connecting the cables. On this evidence, the

district court appropriately determined that the fair market value of the cross-

connect cables was 20% of the $200,000, or $40,000. Viewed in the light most

favorable to Telemasters, see E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951,

961 (9th Cir. 2009), this evidence supports a damages award of only $65,000.

Further, the district court did not err in submitting the breach of contract claim to

the jury because the district court never precluded recovery for defendants’ failure

to return equipment as required under the 1999 Agreement.

      The district court properly granted the Rule 50(a) motion on punitive

damages because the evidence at trial, viewed in the light most favorable to

Telemasters, does not support a finding that defendants’ conduct rose to the level

of “oppression, fraud, or malice” necessary to recover punitive damages. See Cal.

Civ. Code § 3294(a).

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      The district court also properly granted the Rule 50(a) motion on

Telemasters’ claims for breach of contract and for quantum meruit in relation to

wireless services. Viewed in the light most favorable to Telemasters, the evidence

does not support a finding that there was mutual assent between defendants and

Telemasters as to the essential terms of an agreement for wireless services, see Div.

of Labor Law Enforcement v. Transpacific Transp. Co., 137 Cal. Rptr. 855, 859

(Ct. App. 1977); that Telemasters researched and developed the wireless internet

system with both parties’ understanding that Telemasters would be compensated

for its services, see Strong v. Beydoun, 83 Cal. Rptr. 3d 632, 635 (Ct. App. 2008);

or that Telemasters’ services benefitted Vintage Club, see Ochs v. PacifiCare of

Cal., 9 Cal. Rptr. 3d 734, 742 (Ct. App. 2004).

      The district court properly granted the Rule 50(a) motion as to Telemasters’

contributory copyright infringement claim because the evidence, viewed in the

light most favorable to Telemasters, does not support a finding that defendants

knew or had reason to know that Telemasters had copyrighted the information on

the translation card when Digital Streets used that information in April or May

2004. See Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). Further, the

undisputed evidence at trial showed that it was a Telemasters’ employee, not

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Vintage Club, that provided Digital Streets with the allegedly infringing material.

See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019 (9th Cir. 2001).

      Finally, the district court did not abuse its discretion when it precluded

Philipson from testifying regarding defendants’ refusal to pay for DSL line and

caller ID services, and the value of the services that Telemasters withdrew from the

invoice at the request of defendants. Both Telemasters and defendants understood

that the charges for DSL line and caller ID services would not be pursued. In light

of this evidence, the district court did not abuse its discretion in precluding

Philipson from testifying regarding the removed charges.

II.   Fees

      In awarding attorneys’ fees and costs, the district court was not required to

make a separate determination as to the prevailing party for the copyright claims

and Telemasters’ state law claims, because all of the claims involved a common

core of facts. See Hensley v. Eckerhart, 461 U.S. 424, 435 (1983).

       Telemasters’ argument that it is entitled to the full amount of its fees and

costs is based on its contention that the district court erred in reducing the jury’s

award of damages. Because the district court’s reduction of damages was proper,

Telemasters’ request for additional attorneys’ fees and costs fails.

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      The district court did not clearly err in finding that Telemasters was the

prevailing party for purposes of an award of attorneys’ fees. See San Francisco

NAACP v. San Francisco Unified Sch. Dist., 284 F.3d 1163, 1166 (9th Cir. 2002).

Further, because the district court found that Telemasters was the prevailing party,

and the 1999 Agreement specifically provides for attorneys’ fees, the court

properly determined that Telemasters was entitled to its reasonable attorneys’ fees

and other costs. See Cal. Civ. Code § 1717(a). Moreover, the amount of attorneys’

fees that it awarded was reasonable.

      AFFIRMED.

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