United National Maintenance, Inc. v. San Diego Convention Center, Inc. , 749 F.3d 869 ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED NATIONAL MAINTENANCE, No. 12-56809
INC., a Nevada corporation,
Plaintiff-Appellant, D.C. No.
3:07-cv-02172-
v. AJB-JMA
SAN DIEGO CONVENTION CENTER,
INC., a California corporation, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of California
Anthony J. Battaglia, District Judge, Presiding
Argued and Submitted
April 8, 2014—Pasadena, California
Filed May 14, 2014
Before: Myron H. Bright,* Jerome Farris,
and Andrew D. Hurwitz, Circuit Judges.
Opinion by Judge Farris;
Concurrence by Judge Hurwitz
*
The Honorable Myron H. Bright, Senior Circuit Judge for the U.S.
Court of Appeals for the Eighth Circuit, sitting by designation.
2 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
SUMMARY**
Antitrust/California tort law
The panel affirmed in part and reversed in part the district
court’s judgment after a jury trial in favor of the San Diego
Convention Center Corporation on claims by United National
Maintenance, a vendor of trade show cleaning services, for
intentional interference with contractual relationship, antitrust
violations, and intentional interference with prospective
economic advantage.
The panel reversed the district court’s grant of judgment
as a matter of law, which overturned the jury’s verdict in
favor of the maintenance company on its claim that the
convention center intentionally interfered with contracts
between the maintenance company and providers of trade
show decorator services when the convention center instituted
a policy mandating that it would be the exclusive provider of
cleaning services staffing. The panel held that under
California law, the tort of intentional interference with
contractual relations does not apply only to parties that lack
any legitimate interest in the underlying conduct.
The panel affirmed the district court’s holding that it
committed instructional error by not interpreting the terms of
the contracts to enable the jury to understand whether the
maintenance company’s performance was disrupted.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 3
The panel affirmed the district court’s grant of judgment
as a matter of law on the maintenance company’s Sherman
Act claim, holding that the convention center possessed state
action immunity from this antitrust claim.
The panel affirmed the dismissal of the maintenance
company’s claim for intentional interference with prospective
economic advantage because this claim turned on the antitrust
claim. The panel also affirmed the district court’s holding
that under California law, the convention center was excluded
from liability for punitive damages.
Concurring, Judge Hurwitz wrote separately to emphasize
that the judgment as a matter of law as to the antitrust claims
also comfortably rested on the district court’s holding that no
jury could reasonably find that the convention center engaged
either in monopolization or an attempt to monopolize by
mandating that its own employees clean its building.
COUNSEL
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, California, for
Plaintiff-Appellant.
Joseph T. Ergastolo (argued), John H. L’Estrange, Jr., and
Andrew E. Schouten, Wright & L’Estrange, San Diego,
California, for Defendant-Appellee.
4 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
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, Washington; Jacqueline E. Young, Perkins Coie
LLP, San Francisco, California, 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, California; Deborah A. Garza,
Covington & Burling LLP, Washington, D.C., for Amicus
Curiae International Association of Venue Managers, Inc.
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.
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 5
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.
6 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
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.
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 7
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).
8 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
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., 791 P.2d 587,
589–90 (Cal. 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, 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
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 9
“interference by a stranger to the agreement.” Della Penna v.
Toyota Motor Sales, U.S.A., Inc., 902 P.2d 740, 750 (Cal.
1995). Contractual liability, in turn, protects the contracting
parties from the actions of their contractual partners. See
Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 869 P.2d
454, 459–63 (Cal. 1994) (rejecting an attempt to create tort
liability under a theory of conspiracy for parties to the
contractual relationship). To shield parties with an economic
interest in the contract from potential liability would create an
undesirable lacuna in the law between the respective domains
of tort and contract. A party with an economic interest in a
contractual relationship could interfere without risk of facing
either tort or contract liability. This result is particularly
perverse as it is those parties with some type of economic
interest in a contract whom would have the greatest incentive
to interfere with it. Such a result would hardly serve the
established goal of protecting “a formally cemented economic
relationship … from interference by a stranger to the
agreement.” Della Penna, 902 P.2d at 750.
Second, Marin Tug represented a hesitant attempt to
clarify the unresolved question of the “precise type of
wrongfulness necessary to trigger liability for intentional
interference with prospective economic advantage.” Marin
Tug, 271 F.3d at 831–32 (noting that it proceeded “with some
trepidation into this area of California law”). Subsequent to
Marin Tug, California courts have repeatedly held that “in
California, the law is settled that ‘a stranger to a contract may
be liable in tort for intentionally interfering with the
performance of the contract.’” See e.g., Reeves v. Hanlon,
95 P.3d 513, 517 (Cal. 2004) (quoting Pacific Gas, 270 P.2d
at 589). In a detailed discussion, the California Court of
Appeal held that Marin Tug “was not extending immunity
from contract interference claims to an even broader, more
10 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
attenuated class of persons.” Woods v. Fox Broad. Sub., Inc.,
28 Cal. Rptr. 3d 463, 472 (Ct. App. 2005). Other California
Court of Appeal decisions have reached the same conclusion.
See Powerhouse Motorsports Grp., Inc. v. Yamaha Motor
Corp., 164 Cal. Rptr. 3d 811, 824–26 (Ct. App. 2013). This
court “must follow the decision of the intermediate appellate
courts of the state unless there is convincing evidence that the
highest court of the state would decide differently.” Owen ex
rel. Owen v. United States, 713 F.2d 1461, 1464 (9th Cir.
1983) (internal quotation marks omitted). SDC points to no
convincing evidence that the California Supreme Court would
change its long held position on the potential tort liability of
strangers to a contract. See e.g., Reeves, 95 P.3d at 517.
Third, California courts have repeatedly held that parties
with an economic interest in a contractual relationship may be
liable for intentional interference with that contract. See
Applied Equipment, 869 P.2d at 455–56; Woods, 28 Cal. Rptr.
3d at 465–67 (company potentially liable for interference in
a contract between a partially-owned subsidiary and several
of its employees); Powerhouse Motorsports, 164 Cal. Rptr.
3d at 824–26 (manufacturer may be liable for interference
with a sales contract between a franchise operator and a
potential new owner). SDC argues that there are several cases
where a party with an economic interest in a contract was
prevented from bringing an intentional interference claim.
Those cases are distinguishable. In Mintz v. Blue Cross of
California, the California Court of Appeal found that a claim
could not arise as the defendant was “either a contracting
party or its agent.” 92 Cal. Rptr. 3d 422, 430 n.3 (Ct. App.
2009). There is no suggestion here that SDC was the agent of
either Champion or GES. In PM Group, Inc. v. Stewart, the
California Court of Appeal reiterated that a contracting party
could not be tortiously liable for interfering with the
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 11
performance of its own contract; thus, by extension, a
contracting party could not be held liable for interfering with
the performance of subcontracts if that claim hinged on the
defendant’s failure to perform on the original contract.
64 Cal. Rptr. 3d 227, 235–36 (Ct. App. 2007). UNM’s theory
of liability in this case is not based on SDC’s failure to
perform on a contract with Champion or GES.
We therefore reverse the district court holding that under
California law, SDC cannot be held liable for the tort of
intentional interference with contractual relationship. The
JMOL granted on that ground is also reversed.
IV
During trial, the district court rejected SDC’s request for
a legal interpretation of potential conditions precedent in
UNM’s contracts with the decorators. The district court held
that the model jury instructions on an intentional interference
with contractual relationship claim were sufficient: the two
elements at issue were “1. That there was a contract between
plaintiff and defendant” and “4. That defendant’s conduct
prevented performance or made performance more expensive
or difficult.” California Civil Jury Instructions § 2201.
The fourth element examines whether plaintiff has
suffered “a disruption or breach of their contractual rights.”
Woods, 28 Cal. Rptr. 3d at 473. After the jury returned its
verdict, the district court held that a new trial was warranted
because he should have legally interpreted UNM’s contracts
with GES and Champion in order to allow the jury to
determine whether they contained relevant conditions
precedent to the ability of GES and Champion to hire UNM
for trade show cleaning services. If UNM’s contractual rights
12 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
were conditioned on the usage policies of SDC, then SDC’s
change in policy determined UNM’s contractual rights
instead of disrupting UNM’s performance of the contract.
The jury’s request for clarification on this point indicates the
importance of this issue.
UNM argues that a contract with a condition precedent
may still be a valid, enforceable contract. UNM’s argument
focuses on element one of the claim – the validity of the
contracts between UNM and the decorators. California law on
this topic is somewhat murky. Compare Reeves, 95 P.3d at
519–20 (no intentional interference claim for at-will
employment contracts) with SCEcorp v. Superior Court,
4 Cal. Rptr. 3d 372, 377 (Ct. App.1992) (potential claim for
contract that was conditioned on regulatory approval). SDC’s
proposed jury instructions, however, focus on the separate
element of disruption. For the jury to understand whether
UNM’s performance was disrupted required the district court
to determine what contractual rights UNM possessed. This
thus required a legal interpretation of the contract and the trial
court correctly concluded that it erred in this case by not
doing so.
In cases of instructional error, there is a presumption of
prejudice. Medtronic, Inc. v. White, 526 F.3d 487, 493 (9th
Cir. 2008). UNM has provided no argument for why the jury
“would have reached the same verdict had it been properly
instructed.” Id (quoting Galdamez v. Potter, 415 F.3d 1015,
1025 (9th Cir. 2005)) (internal quotation marks omitted). It
has failed to rebut the presumption of prejudice.
We therefore affirm the district court’s holding that it
committed instructional error by not interpreting the terms of
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 13
the contract and that this error constituted prejudicial error
that warrants a new trial.
V
States receive immunity from potential antitrust liability
as “‘nothing in the language of the Sherman Act or its
history’ . . . suggested that Congress intended to restrict the
sovereign capacity of the States to regulate their economies
. . . .” FTC. v. Phoebe Putney Health Sys., Inc., 133 S. Ct.
1003, 1010 (2013) (quoting Parker v. Brown, 317 U.S. 341,
350 (1943)). Nonstate actors may also receive “immunity
from the federal antitrust laws” if they are “carrying out the
State's regulatory program.” Id. at 1010.
The Supreme Court has articulated a two-part test to
determine whether nonstate actors are entitled to this
immunity: “First, the challenged restraint must be one clearly
articulated and affirmatively expressed as state policy;
second, the policy must be actively supervised by the State
itself.” Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum,
Inc., 445 U.S. 97, 105 (1980) (internal quotation marks
omitted). The requirement of active supervision, however,
does not apply “to the activities of local governmental
entities,” as “they have less of an incentive to pursue their
own self-interest under the guise of implementing state
policies.” Phoebe Putney, 133 S. Ct. at 1011.
In order to pass the clear-articulation test, the
“anticompetitive effect” in dispute should be the “foreseeable
result of what the State authorized.” Id (internal quotation
marks omitted). It is not necessary, however, for a state
legislature to “expressly state in a statute or its legislative
history that the legislature intends for the delegated action to
14 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
have anticompetitive effects.” Town of Hallie v. City of Eau
Claire, 471 U.S. 34, 43 (1985). We review each challenged
anticompetitive act to determine whether it was the
foreseeable result of what the state authorized. Phoebe
Putney, 133 S. Ct. at 1012; City of Columbia v. Omni
Outdoor Adver., Inc., 499 U.S. 365, 373 (1991). In applying
the “clear-articulation test,” the Supreme Court has
distinguished between general grants of either local authority
or corporate power and specific delegations of an authority to
act or regulate where “the displacement of competition . . . is
the foreseeable result of what the statute authorizes.” Omni,
499 U.S. at 372–73 (internal quotation marks omitted). Only
the latter qualifies for immunity. For example, the Court has
found that Georgia’s grant of general corporate powers to a
hospital authority did not also entail an authorization to use
those powers in an anticompetitive fashion. Phoebe Putney,
133 S. Ct. at 1014. By contrast, the “clear-articulation” test
was satisfied when Wisconsin expressly allowed cities to
limit the municipal provision of sewage services to
neighboring unincorporated areas and consequently gave
those cities the authority to make the provision of sewage
services contingent on annexation of the unincorporated
areas. Hallie, 471 U.S. at 41. Similarly the test was fulfilled
by South Carolina’s delegation of zoning authority over local
billboards to a city as “[t]he very purpose of zoning
regulation is to displace unfettered business freedom in a
manner that regularly has the effect of preventing normal acts
of competition . . . .” Omni, 499 U.S. at 373. The “clear
articulation” test thus requires both a specific delegation of
authority by the state and some indication that the state has
“affirmatively contemplated the displacement of
competition.” Phoebe Putney, 133 S. Ct. at 1006. The
indication must be more than mere neutrality but need not
rise to the level of explicit authorization. See id. at 1007.
 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 15
California’s delegation of authority satisfies both of these
elements with relation to SDC’s decision to hire cleaning
staff internally. California Government Code § 37506 states
that “by ordinance the legislative body may appoint a
commission to select the site for the building, supervise its
construction, and manage its use. By ordinance, the
legislative body shall prescribe the powers and duties of the
commission.” This grant of authority does not just give San
Diego permission to play in the market by building a
convention center. Rather, the legislature authorized San
Diego to create a commission that would “manage the use” of
the convention center. This type of managerial authorization
is distinct from a general grant of corporate authority that
simply allows a state subdivision to act.
There is also substantial evidence that the California
legislature contemplated that the Convention Center need not
hire outside contractors to clean its building. The California
legislature’s grant of statutory authority stated that funds
from the convention center would be used first to pay for the
convention center and second for the benefit of the
municipality. Cal. Gov’t Code § 37505. This specification
naturally contemplates that the convention center will be
operated in order to generate profits for the municipality. A
convention center represents a substantial financial
investment by a municipality. In order to ensure the success
of that investment, it is foreseeable that an operator of the
convention center may exclusively provide cleaning staff to
ensure the success of that financial commitment. The ensuing
profit-generating actions challenged here were the “ordinary
result of the exercise of authority delegated by the state
legislature.” Phoebe Putney, 133 S. Ct. at 1013.
16 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
The active supervision requirement “serves essentially an
evidentiary function: it is one way of ensuring that the actor
is engaging in the challenged conduct pursuant to state
policy.” Hallie, 471 U.S. at 46–47. It prevents private actors
from engaging in an anticompetitive activity solely to further
“[their] own interests, rather than the governmental interests
of the State.” Id. at 47. Those same concerns, however, do not
apply to a municipality, as “there is little or no danger that it
is involved in a private price-fixing arrangement.” Id. The
danger that it may seek “purely parochial public interests at
the expense of more overriding state goals” is satisfactorily
addressed by the clear-articulation test. Id.
UNM argues that the active supervision requirement
should be applied to SDC’s actions. UNM heavily
emphasizes that SDC is a public, non-profit corporation
rather than a municipality. San Diego’s municipal code,
however, defines the city itself as including SDC. In a similar
case, we found that a charitable corporation incorporated by
a county board of health that provided exclusive ambulance
services for the county served as an instrument of the
municipality. Ambulance Serv. of Reno, Inc. v. Nev.
Ambulance Servs., Inc., 819 F.2d 910, 913 (9th Cir. 1987)
(emphasizing that the district board of health supervised the
services of the corporation and retained rights to the
equipment of the corporation in the event of a corporate
default). SDC’s relationship with San Diego also shows that
SDC acts as the instrument of San Diego: (1) San Diego
appoints all of SDC’s board members, (2) upon dissolution,
SDC’s asserts revert back to San Diego; (3) SDC must
publicly account for its operations. Overall, SDC acts as an
agent that operates the convention center for the benefit of its
principal, the city of San Diego. It is an extension of the
municipality of San Diego and thus does not require active
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 17
supervision by the state in order to retain its immunity from
antitrust liability.
Furthermore, the specific facts indicate there is no need
for the evidentiary function of active supervision. Although
SDC’s actions may reflect the pursuit of parochial interests,
there is no evidence that it entered into any kind of private
price-fixing arrangement with other convention center
operators. This fact distinguishes SDC from other cases
where groups of private actors, entrusted with state regulatory
authority over a profession, may have taken actions to further
their own private interests. See e.g., N.C. State Bd. of Dental
Exam’rs v. FTC, 717 F.3d 359 (4th Cir. 2013), cert. granted,
134 S. Ct. 1491 (2014) (need to fulfill the active supervision
test where a state dental association, primarily composed of
dentists, prevented non-dentists from offering teeth whitening
services).
We affirm the district court’s holding that SDC possessed
state action immunity from UNM’s antitrust claim. Thus, it’s
unnecessary to address the district court’s alternative holding
on the merits of the antitrust claim.
VI
The district court dismissed UNM’s claim for intentional
interference with prospective economic advantage. This tort
requires UNM to establish “that [SDC’s] interference was
wrongful by some measure beyond the fact of the interference
itself.” Della Penna, 902 P.2d at 751(internal quotation marks
omitted). UNM’s assertion of independent wrongfulness is
based on the antitrust claims. That claim’s failure dooms this
claim.
18 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
UNM appeals the district court’s order denying it
permanent injunctive relief. No permanent injunction should
issue as we hold that a new trial is warranted on UNM’s
claim for intentional interference with contractual
relationship.
UNM also appeals from the district court’s order that
excluded any liability for SDC from punitive damages. In
California, a public entity is not liable for punitive damages.
Cal. Gov’t Code § 818. SDC is a public entity as it is a public
corporation that functions as the instrument or agent of San
Diego. Under California law, it cannot be liable for punitive
damages.
The judgment of the district court is AFFIRMED IN
PART AND REVERSED IN PART. Each party shall bear
its own costs on appeal.
HURWITZ, Circuit Judge, concurring:
I concur in Judge Farris’ thorough opinion. I write
separately only to emphasize that the judgment as a matter of
law as to UNM’s antitrust claims also comfortably rests on
another ground identified by the district judge: No jury could
reasonably find that SDC engaged either in monopolization
or an attempt to monopolize by mandating that its own
employees clean its building. See Cal. Computer Prods., Inc.
v. Int’l Bus. Machs. Corp., 613 F.2d 727, 734 (9th Cir. 1979)
(“[A] directed verdict is proper, even in an antitrust case,
when ‘there is no substantial evidence to support the claim.’”
(quoting Santa Clara Valley Distrib. Co. v. Pabst Brewing
Co., 556 F.2d 942, 945 n.1 (9th Cir. 1977))).
UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR. 19
To succeed on its Sherman Act monopolization claims,
UNM had the burden of proving that SDC possessed
monopoly power over a specific product in a specific
geographic market. 15 U.S.C. § 2; Allied Orthopedic
Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991,
998 (9th Cir. 2010). The district court concluded that the
relevant downstream market was, at best, trade show cleaning
services for exhibition and meeting spaces in the San Diego
area. Despite the testimony of UNM’s expert, no reasonable
finder of fact could conclude that the relevant geographic
market for cleaning services consisted only of the San Diego
Convention Center. It beggars reason to define the relevant
market as a single customer who decides to use its own
employees to perform routine cleaning services, rather than
hire others do so. See Brooke Grp. Ltd. v. Brown &
Williamson Tobacco Corp., 509 U.S. 209, 242 (1993)
(“Expert testimony is useful as a guide to interpreting market
facts, but it is not a substitute for them”). UNM
employees—who perform typical cleaning services, such as
vacuuming and wiping down exhibition booths—plainly
could clean other meeting spaces and convention facilities in
San Diego. See Todd v. Exxon Corp., 275 F.3d 191, 202 (2d
Cir. 2001) (Sotomayor, J.) (“A greater availability of
substitute buyers indicates a smaller quantum of market
power on the part of the buyers in question.”).
SDC represents only 43% of the cleaning services market
for convention and meeting facilities in the San Diego area.
That is not enough to establish actual monopolization. See
Twin City Sportservice, Inc. v. Charles O. Finley & Co.,
512 F.2d 1264, 1274 (9th Cir. 1975). Although SDC’s
market share might suffice in connection with an attempted
monopolization claim, see Rebel Oil Co. v. Atl. Richfield Co.,
51 F.3d 1421, 1438 (9th Cir. 1995), such a claim also requires
20 UNITED NAT’L MAINT. V. SAN DIEGO CONVENTION CTR.
“predatory or anticompetitive conduct,” Supermarket of
Homes, Inc. v. San Fernando Valley Bd. of Realtors, 786 F.2d
1400, 1405 (9th Cir. 1986). The district correctly held that no
rational finder of fact could conclude that SDC acted
anticompetitively and without a legitimate business purpose
by using its own employees to clean its own building.