United National Maintenance, Inc. v. San Diego Convention Center, Inc.
2014 U.S. App. LEXIS 16058
| 9th Cir. | 2014Background
- UNM sued the San Diego Convention Center Corporation (SDC) for intentional interference with contract, intentional interference with prospective economic advantage, and antitrust violations; a jury found for UNM on the contract claim but deadlocked on other claims, and the district court later granted JMOL for SDC on all remaining claims; UNM appealed; California authorizes cities to build convention halls and create commissions to manage them, with funds first used for center operation and then for the city; SDC is a nonprofit public benefit corporation wholly owned by the City of San Diego, with exclusive authority to operate, market, and promote the Center, and its board is appointed by the city; decorators hire a general services decorator to coordinate event services and most events use Champion, GES, and others for cleaning services; UNM has nationwide contracts with GES and Champion and has performed in San Diego since 1989, while SDC implemented a 2007 policy designating SDC as exclusive provider of cleaning staffing and requiring decorators to pay SDC a share of booth cleaning revenue and wages for SDC staff; SDC’s policy significantly increased UNM’s costs under existing contracts; the district court initially declined to interpret UNM’s contracts to determine possible conditions precedent governing hiring by GES and Champion, prompting substantive dispute over the proper legal interpretation at trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability for intentional interference with contract by a party with economic interest | UNM asserts a stranger-to-the-contract liability theory governs; SDC’s economic stake does not bar liability | SDC contends that California law bars interference claims where the defendant has an economic interest in the contract | SDC can be liable; JMOL reversed and claim revived |
| Instructional error on contract interpretation and impact on damages | Jury needed interpretation of UNM-decorator contracts and possible conditions precedent | District court should have interpreted the contracts as a matter of law | Instructional error prejudicial; new trial warranted |
| Antitrust immunity of SDC as a state action | SDC’s actions harmed competition; immunity should be denied | SDC is immune under state-action doctrine; active supervision not required for municipalities; no private anticompetitive motive shown | SDC possesses state-action immunity; antitrust merits need not be reached |
| Interference with prospective economic advantage | UNM alleges independent wrongfulness from antitrust violations | Antitrust failure defeats this claim | Doomed by antitrust failure; no independent wrongfulness shown |
Key Cases Cited
- Pacific Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal.3d 1118 (Cal. 1990) (elements of intentional interference with contract follow California law)
- Reeves v. Hanlon, 33 Cal.4th 1140 (Cal. 2004) (stranger to contract may be liable for interference with performance)
- Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal.4th 376 (Cal. 1995) (protects contracting parties from interference by a third party)
- Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503 (Cal. 1994) (economic interest in contract does not immunize interference claims)
- Woods v. Fox Broad. Sub., Inc., 129 Cal.App.4th 344 (Cal. Ct. App. 2005) (stranger-to-contract interference liability recognized in California)
- Powerhouse Motorsports Grp., Inc. v. Yamaha Motor Corp., 221 Cal.App.4th 867 (Cal. Ct. App. 2013) (economic-interested party can be liable for interference)
- Marin Tug & Barge, Inc. v. Westport Petroleum, Inc., 271 F.3d 825 (9th Cir. 2001) (tort of interference with contract; limitations discussed)
- Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (U.S. 1980) (two-part state-action antitrust test (clear articulation and active supervision))
- Omni Outdoor Adver., Inc. v. City of Columbia, 499 U.S. 365 (U.S. 1991) (clarifies state-action framework for local delegations)
- Town of Hallie v. City of Eau Claire, 471 U.S. 34 (U.S. 1985) (clear-articulation test concept in state-action immunity)