Oracle America, Inc. v. Hewlett Packard Enterprise Co. ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 20 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ORACLE AMERICA, INC., a Delaware No. 19-15506
Corporation; ORACLE INTERNATIONAL
CORPORATION, a California Corporation, D.C. No. 4:16-cv-01393-JST
Plaintiffs-Appellants,
MEMORANDUM*
v.
HEWLETT PACKARD ENTERPRISE
COMPANY, a Delaware Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Jon S. Tigar, District Judge, Presiding
Argued and Submitted June 8, 2020
San Francisco, California
Before: M. SMITH and HURWITZ, Circuit Judges, and ROYAL,** District Judge.
Oracle America, Inc. and Oracle International Corporation (together, Oracle)
appeal the district court’s grant of summary judgment for Hewlett Packard
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable C. Ashley Royal, United States District Judge for the
Middle District of Georgia, sitting by designation.
Enterprise Company (HPE). We have jurisdiction pursuant to 28 U.S.C. § 1291.
We review a grant of summary judgment de novo. Shelley v. Geren, 666 F.3d 599,
604 (9th Cir. 2012). “We must determine, viewing the evidence in the light most
favorable to the nonmoving party, whether there are any genuine issues of material
fact and whether the district court correctly applied the substantive law.” Zabriskie
v. Fed. Nat’l Mortg. Ass’n, 940 F.3d 1022, 1026 (9th Cir. 2019) (citation and
quotation marks omitted). In this memorandum disposition, we affirm in part and
reverse in part summary judgment on the state law claims.1
1. We reverse summary judgment on the intentional interference with
contractual relations (IICR) claim. An IICR claim requires (1) a valid contract
between the plaintiff and a third party, (2) the defendant’s knowledge of this
contract, (3) the defendant’s intentional acts designed to breach or disrupt the
contractual relationship, (4) an actual breach or disruption, and (5) resulting damage.
Pac. Gas & Elec. Co. v. Bear Stearns & Co., 791 P.2d 587, 589–90 (Cal. 1990).
The district court erred in concluding that Oracle could not prove an actual
breach. Oracle support customers had at least two contracts: (1) a support contract
and (2) a corresponding agreement for accessing software patches. Oracle claims
that HPE and Terix induced breaches of those contracts by downloading, copying,
1
In a concurrently filed opinion, we address summary judgment on the statute
of limitations and the copyright infringement claims. Some of our conclusions in
the opinion bear on our analysis here.
2
and installing Solaris patches outside the scope of permitted use. Because we have
reversed summary judgment against Oracle on the infringement claims for pre-
installation and installation conduct, we reverse on this issue as well.
The district court also erred in concluding that Oracle could not show resulting
damages because customers prepay their Oracle support contracts. Lost profits are
a form of damages for a tort claim. See Little v. Amber Hotel Co., 136 Cal. Rptr. 3d
97, 118 (Ct. App. 2011) (explaining that a plaintiff may recover “lost profits from
prospective sales” “when a tort disturbs an established business practice” so long as
those “lost profits . . . flow[] from” interference with an existing contract (emphasis
added)); see also Urica, Inc. v. Medline Indus., 669 F. App’x 421, 421–22 (9th Cir.
2016) (unpublished). Oracle presented evidence concerning HPE’s profits between
2010 and 2015 from the diversion of server-support contract business from Oracle,
and evidence showing that Oracle suffered lost profits. This evidence suffices to
show resulting damages.
2. Oracle also claims that HPE disrupted its contractual relationships with
support customers who in turn failed to renew their support contracts.2 This claim
is properly construed as an intentional interference with prospective economic
advantage (IIPEA) claim because it concerns “an interference with the future
2
We reject HPE’s contention that Oracle raised this argument for the first time
on appeal and has thus waived it. Oracle’s discovery responses identified both
contract breaches and contract disruptions.
3
relation between the parties.” Reeves v. Hanlon, 95 P.3d 513, 519 (Cal. 2004); see
also Ixchel Pharma, LLC v. Biogen,—P.3d—, 2020 WL 4432623, at *6 (Cal. Aug.
3, 2020) (extending Reeves beyond the at-will employment context).
We reverse summary judgment on the IIPEA claim. An IIPEA claim requires
an intentionally wrongful act by the defendant designed to disrupt a prospective
business relationship. Roy Allan Slurry Seal, Inc. v. Am. Asphalt S., Inc., 388 P.3d
800, 803 (Cal. 2017). The act must be wrongful apart from the interference, pursuant
to “some constitutional statutory, regulatory, common law, or other determinable
legal standard.” Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 954 (Cal.
2003). Although the district court thought Oracle could show a wrongful act by
identifying “only misrepresentations after May 6, 2013,” Oracle has not relied on
common law fraud as the independently wrongful act. Instead, Oracle relies on
HPE’s and Terix’s alleged scheme to unlawfully access Solaris software, which
allegedly infringed Oracle’s copyrights and induced contract breaches of customer
support contracts. Our reversal of summary judgment on the infringement and IICR
claims compels us to reject the district court’s wrongful act analysis.3 We leave it
3
HPE argues that Oracle cannot rely on Terix’s conduct because an IIPEA
claim requires wrongful conduct on the part of the defendant. Oracle’s evidence,
however, concerns conduct by HPE. And although HPE argues that Oracle failed to
introduce evidence of a timely wrong, HPE’s argument relies on reasoning by the
district court that we have rejected, i.e., that Oracle had to introduce evidence of a
timely “misrepresentation.”
4
for the district court to consider the argument that Oracle cannot prove “that it is
reasonably probable that the lost economic advantage would have been realized but
for the defendant’s interference.” Youst v. Longo, 729 P.2d 728, 733 (Cal. 1987)
(emphasis omitted).
3. Lastly, we affirm in part and reverse in part summary judgment on the
California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, claim.
The UCL’s “unlawful prong” makes business practices that violate other laws
actionable. CRST Van Expedited, Inc v. Werner Enters., 479 F.3d 1099, 1107 (9th
Cir. 2007). Summary judgment was proper for the UCL claims predicated on
infringement because the Copyright Act preempts such claims.4 Norse v. Henry Holt
& Co., 991 F.2d 563, 568 (9th Cir. 1993). Summary judgment is no longer viable
for the UCL claims premised on the IICR and IIPEA claims in light of our foregoing
conclusions. See Samsung Elecs. Co. v. Panasonic Corp., 747 F.3d 1199, 1205 n.4
(9th Cir. 2014); CRST Van Expedited, 479 F.3d at 1107.
AFFIRMED IN PART; REVERSED IN PART; and REMANDED.
4
HPE argues that if any state law claims are revived, it will show that the
Copyright Act preempts them. HPE may raise this issue on remand.
5