Court Opinion

ID: 4534456
Source: CourtListenerOpinion
Date Created: 2020-05-14 20:00:35.642123+00
Date Added: 2024-06-11T12:36:54.889302
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       MAY 14 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PROSTAR WIRELESS GROUP, LLC,                    No.    19-15130

                Plaintiff-Appellant,            D.C. No. 3:16-cv-05399-WHO

 v.
                                                MEMORANDUM*
DOMINO’S PIZZA, INC.,

                Defendant-Appellee.

                  Appeal from the United States District Court
                       for the Northern District of California
                 William Horsley Orrick, District Judge, Presiding

                             Submitted May 12, 2020**
                             San Francisco, California

Before: THOMAS, Chief Judge, and FRIEDLAND and BENNETT, Circuit
Judges.

      Prostar Wireless Group, LLC (“Prostar”) brought ten claims under

California law against Domino’s Pizza, Inc. (“Domino’s”) after Domino’s declined

to provide the approval that would have been necessary to enable Prostar to sell,

      *
             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).
for use in Domino’s locations, a GPS-based driver-tracking solution that Prostar

had developed in collaboration with Domino’s over the course of several years.

The district court granted summary judgment in favor of Domino’s on all claims.

Reviewing de novo, we affirm.

      1. Prostar’s claims for breach of an implied-in-fact contract and breach of

the covenant of good faith and fair dealing fail. “An implied contract is one, the

existence and terms of which are manifested by conduct.” Cal. Civ. Code § 1621.

That conduct must show that there was “a mutual agreement and intent to

promise,” Retired Emps. Ass’n of Orange County, Inc. v. County of Orange, 266
P.3d 287, 290 (Cal. 2011) (quoting Silva v. Providence Hosp. of Oakland, 97 P.2d
798, 804 (Cal. 1939)), and, as with any contract, promises are enforceable only if

they are “definite enough that a court can determine the scope of the duty and the

limits of performance,” Ladas v. Cal. State Auto. Ass’n, 23 Cal. Rptr. 2d 810, 814

(Ct. App. 1993). Prostar’s claim for breach of the covenant of good faith and fair

dealing depends on the existence of an implied contract. See Avidity Partners,

LLC v. State, 165 Cal. Rptr. 3d 299, 320 (Ct. App. 2013) (“The implied covenant

of good faith and fair dealing rests upon the existence of some specific contractual

obligation.” (quoting Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 14
Cal. Rptr. 2d 335, 338 (Ct. App. 1993))).

      Prostar has failed to “make a showing sufficient to establish the existence”

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of key elements of its implied-in-fact contract claim: a mutual agreement between

it and Domino’s, the terms of which are definite enough to be enforceable. See

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (summary judgment standard).

Prostar contends that “the parties engaged in a lengthy development project based

on the mutual understanding that if the project proved successful—meaning that if

[Prostar’s technology] were successfully integrated into the [Domino’s point-of-

sale] system—Prostar would be allowed to market and sell [its technology] . . . to

Domino’s franchisees.” But the evidence only supports the inference that

Domino’s hoped that enough progress might be made on Prostar’s solution to

enable the parties to reach a future agreement. At the points during the parties’

commercial relationship when they considered the possibility of a concrete

agreement, Domino’s expressly declined to agree. The evidence may be sufficient

to show that Prostar believed there was an implied agreement, but there is not

enough evidence that any such belief was reasonable.1

      2. Prostar’s claims for deceit, negligent misrepresentation, and unfair

competition similarly fail. There is insufficient evidence to show that it was

reasonable for Prostar to conclude, based on anything Domino’s said or did, that

Domino’s had committed to ultimately approve Prostar’s solution. Prostar

      1
      In light of our conclusion that there was insufficient evidence of
agreement, we need not and do not decide whether the parties’ non-disclosure
agreement bears on Prostar’s contract-related claims.

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therefore cannot establish the justifiable reliance that is required for its claims for

deceit and negligent misrepresentation. See Small v. Fritz Cos., 65 P.3d 1255,

1258-59 (Cal. 2003) (deceit and negligent misrepresentation have similar elements,

including that both require justifiable reliance). And Prostar acknowledges that its

claim for unfair competition “stands or falls” with those claims.2

      3. Prostar’s claim for misappropriation of trade secrets also fails. Of the

nine alleged trade secrets that Prostar presses on appeal, eight relate to Prostar’s

algorithms. Prostar has not presented sufficient evidence that Domino’s ever had

access to those algorithms, as would be required to support its misappropriation

claim. See Cal. Civ. Code § 3426.1(b) (misappropriation requires “[a]cquisition of

a trade secret” by “improper means” or disclosure of a trade secret without

consent). Based on the record in this case, no reasonable factfinder could agree

with Prostar’s argument that, even though Prostar did not share its source code

with Domino’s, the algorithms associated with those eight alleged trade secrets

were nonetheless “discernible” from the material it did share.

      The final alleged trade secret is for the “architecture” of Prostar’s solution.

Prostar has not presented sufficient evidence that it kept this architecture secret, as

would be required to support its misappropriation claim. See Cal. Civ. Code

      2
        In light of our conclusion that there was insufficient evidence to establish a
necessary element of these claims, we need not and do not decide whether the
claims are preempted by the California Uniform Trade Secrets Act.

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§ 3426.1(d) (information is a trade secret only if it derives value “from not being

generally known” and “[i]s the subject of efforts that are reasonable under the

circumstances to maintain its secrecy”). For example, Prostar revealed aspects of

its architecture without making accompanying efforts to maintain secrecy.

Although it is theoretically possible that the architecture as a whole could have

nevertheless been maintained in secrecy, Prostar has not identified sufficient

evidence that any such secret architecture in fact exists and goes beyond what

Prostar did reveal.

      4. Because Domino’s is entitled to judgment in its favor regarding liability,

we need not and do not resolve the parties’ dispute about whether Prostar could

have obtained damages based on a calculation of its own lost profits if it were

entitled to a remedy.

      AFFIRMED.

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