United Nat'l Maint., Inc. v. San Diego Convention Ctr., Inc.

• Decision Date: 15 August 2014
• Docket Number: No. 12–56809.,12–56809.
• Citation: 766 F.3d 1002
• Parties: UNITED NATIONAL MAINTENANCE, INC., a Nevada corporation, Plaintiff–Appellant, v. SAN DIEGO CONVENTION CENTER, INC., a California corporation, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

766 F.3d 1002

UNITED NATIONAL MAINTENANCE, INC., a Nevada corporation, Plaintiff–Appellant,

v.SAN DIEGO CONVENTION CENTER, INC., a California corporation, Defendant–Appellee.

No. 12–56809.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 8, 2014.

Filed Aug. 15, 2014.

Leonard J. Feldman (argued), Jason T. Morgan, and J. Will Eidson, Stoel Rives LLP, Seattle, Washington; James R. Lance, Jacob M. Slania, and Micaela P. Banach, Kirby Noonan Lance & Hoge LLP, San Diego, CA, for Plaintiff–Appellant.

Joseph T. Ergastolo (argued), John H. L'Estrange, Jr., and Andrew E. Schouten, Wright & L'Estrange, San Diego, CA, for Defendant–Appellee.

Albert A. Foer, Randy M. Stutz, and Sandeep Vaheesan, American Antitrust Institute, Washington, D.C., for Amicus Curiae the American Antitrust Institute.

Kathleen M. O'Sullivan and Eric D. Miller, Perkins Coie LLP, Seattle, WA; Jacqueline E. Young, Perkins Coie LLP, San Francisco, CA, for Amici Curiae Exhibition Services & Contractors Association, Society of Independent Show Organizers, and International Association of Exhibitions & Events.

Sonya D. Winner and Cortlin H. Lannin, Covington & Burling LLP, San Francisco, CA; Deborah A. Garza, Covington & Burling LLP, Washington, D.C., for Amicus Curiae International Association of Venue Managers, Inc.

Appeal from the United States District Court for the Southern District of California, Anthony J. Battaglia, District Judge, Presiding. D.C. No. 3:07–cv–02172–AJB–JMA.

Before: MYRON H. BRIGHT,^*JEROME FARRIS, and ANDREW D. HURWITZ, Circuit Judges.

ORDER AND OPINIONORDER

The Opinion filed on May 14, 2014, is WITHDRAWN. Appellant's Petition for Panel Rehearing is DENIED AS MOOT.

OPINION

FARRIS, Senior Circuit Judge:

United National Maintenance, a nationwide vendor of trade show cleaning services, sued the San Diego Convention Center Corporation, alleging claims for 1) intentional interference with contractual relationship, 2) antitrust violations, and 3) intentional interference with prospective economic advantage. A jury returned a verdict in favor of United National on the intentional interference with contractual relationship claim but could not reach a verdict on the other claims. On a renewed motion for judgment as a matter of law by SDC, the district court found in favor of the convention center on all of the claims. The maintenance company appealed.

I

California has granted cities the statutory authority to construct public assembly or convention halls. Cal. Gov't Code §§ 37500–37506. Cities may appoint a commission to manage the use of the facilities. § 37506. Funds gained from operation of the convention center first go to paying the assorted expenses associated with its operation; any remaining money may then go to the city's general fund. § 37505.

In 1984, the San Diego City Council created the San Diego Convention Center Corporation to manage the operations of the San Diego Convention Center. SDC is a nonprofit public benefit corporation that is wholly owned by the city of San Diego. The San Diego City Council gave SDC the “exclusive authority to operate, market, and promote the Center.” The board of SDC is chosen by the mayor and city council of San Diego. The San Diego Municipal Code defines the city as including “Corporations wholly owned by the City ... such as [SDC].” SDC receives city funding and annually submits a five year rolling budget.

Companies and organizations license the Center from the SDC for a specific period to host events. Licensees hire a general services decorator to coordinate event-related services. Champion Exposition Services, Freeman, and Global Experience Specialists provide decorator services for the majority of events held at the center. Each of the companies operates nationwide. Exhibitors rent booths from decorators and may also contract for other services such as cleaning. Trade show cleaning companies provide a variety of cleaning services through contracts with decorators. These services include both facility cleaning and booth cleaning.

United National Maintenance is a trade show cleaning company that operates throughout the country. UNM has contracts with GES and Champion to provide nationwide trade show cleaning services. UNM has provided services since 1989 in San Diego. Most of its work in the area is done at the San Diego Convention Center. SDC also offers trade show cleaning services to decorators who use the convention center. In the fall of 2006, an SDC executive approached Champion and GES about them hiring SDC personnel to perform trade show cleaning services. Both companies declined the SDC proposal. In July 2007, SDC instituted a new cleaning services policy. The policy mandated that SDC would be the “exclusive provider of cleaning services staffing.” The policy also required that decorators pay SDC one half of all booth cleaning revenue that the decorator received as well as a $17 per hour wage for SDC employees that provided cleaning services. UNM continued to perform on its contracts with GES and UNM while using SDC personnel to provide the cleaning services. The new requirements significantly increased the costs of performance for UNM on its contracts with Champion and GES.

On November 13, 2007, UNM filed a complaint against SDC. UNM alleged claims for interference with contract, interference with prospective economic advantage and antitrust violations. The case proceeded to trial. At the end of UNM's case-in chief, SDC filed a motion for judgment as matter of law on each of UNM's claims. The district court rejected SDC's motion. On May 4, 2011, the jury returned a unanimous verdict on UNM's intentional interference with contractual relations claim. The jury awarded UNM damages of $668,905. The jury did not reach a verdict on UNM's remaining claims.

SDC then filed a motion for new trial on UNM's intentional interference with contractual relations claim and a renewed motion for judgment as a matter of law on UNM's other claims. The district court construed SDC's motion for new trial as a motion for judgment as a matter of law. The district court granted SDC's motion on each of UNM's claims. The district court held that UNM could not assert an intentional interference with contractual relationship claim against SDC as SDC had an economic interest in the contracts. In the alternative, the district court held that SDC was entitled to a new trial as the district court had previously erred in not giving a legal interpretation of UNM's contracts with the decorators. The district court also held that UNM's antitrust claim was barred based on SDC's state-action and local government immunity. In the alternative, the district court held that UNM had failed to present sufficient evidence on the specific elements of its antitrust claim. Finally, the district court dismissed UNM's claims for interference with prospective economic advantage and punitive damages as well as UNM's motion for injunctive relief. UNM timely appealed.

II

We review de novo a district court's order granting or denying judgment as a matter of law. See Byrd v. Maricopa Cnty. Sheriff's Dep't, 629 F.3d 1135, 1138 (9th Cir.2011) (en banc). We review de novo whether the district court committed instructional error in its statements of the law, Dang v. Cross, 422 F.3d 800, 804 (9th Cir.2005), as well as the district court's determinations of immunity from antitrust liability, Grason Elec. Co. v. Sacramento Mun. Util. Dist., 770 F.2d 833, 835 (9th Cir.1985).

III

Under California law, the elements for the tort of intentional interference with contractual relations are “(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, 270 Cal.Rptr. 1, 791 P.2d 587, 589–90 (1990).

After the jury returned its verdict in favor of UNM, the district court issued a judgment as matter of law on the basis that the tort of intentional interference only applies to parties that lack any “legitimate interest ... in the underlying contract.” The district court heavily relied on dictum from a prior opinion of this court that stated “California law has long recognized that the core of intentional interference business torts is interference with an economic relationship by a third-party stranger to that relationship, so that an entity with a direct interest or involvement in that relationship is not usually liable for harm caused by pursuit of its interests.” Marin Tug & Barge, Inc. v. Westport Petroleum, Inc., 271 F.3d 825, 832 (9th Cir.2001).

The district court's reading of Marin Tug to add an additional requirement to the tort of intentional interference with contractual relationship is not justified for several reasons. First, the plaintiff in Marin Tug sued under the tort of “intentional interference with prospective economic advantage,” and we specifically stated that the tort of “intentional interference with contractual relations” was “not at issue in [the] appeal.” Id. at 828 n. 3. That tort is distinct, and California law “draw[s] and enforce[s] a sharpened distinction” between the two. Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal.4th 376, 45 Cal.Rptr.2d 436, 902 P.2d 740, 750 (1995). Our statements in Marin Tug do not directly apply to the tort at issue in this appeal.

Second, under California law, the pertinent economic relationship is the one that exists between the two contracting parties. They are the ones that have a “direct interest or involvement in that relationship.” Id. at 832. Liability for this tort exists to protect the parties to that relationship from “interference by a stranger to the agreement.” Della Penna, 45 Cal.Rptr.2d 436, 902 P.2d at 750. Contractual liability, in turn,...