United National Maintenance, Inc. v. San Diego Convention Center Corporation, Inc

Filing 263

ORDER denying Plaintiff's [240-1] Motion for Permanent Injunction. Signed by Judge Anthony J. Battaglia on 9/5/12. (All non-registered users served via U.S. Mail Service)(cge)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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UNITED NATIONAL MAINTENANCE,
INC., a Nevada Corporation,

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Plaintiff,
v.

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SAN DIEGO CONVENTION CENTER
CORPORATION, INC., a California
Corporation,

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Defendants.
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Civil No.07cv2172 AJB
ORDER DENYING PLAINTIFF’S
MOTION FOR A PERMANENT
INJUNCTION
[Doc. No. 240-1]

Plaintiff United National Maintenance, Inc (“United”) filed a Motion for a Permanent Injunction

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enjoining Defendant San Diego Convention Center, Inc. (“SDC”) from enforcing an exclusive policy

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which a federal jury unanimously found to be an intentional interference with contracts between United

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and its customers Global Exposition Services, Inc. (“GES”) and Champion Exposition Services

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(“Champion”). The Defendant filed an opposition and the Plaintiff filed a reply. The hearing on the

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motion was held on July 1, 2011 before Judge Battaglia. James Lance appeared on behalf of the

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Plaintiff. Jacob Slania, John L’Estrange, Joseph Ergastolo, and Andrew Schouten appeared on behalf of

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the Defendant. Based upon the parties’ moving papers, arguments made during the hearing, and for the

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reasons set forth below, the Plaintiff’s motion is hereby DENIED.

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07cv2172

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Background
This action arose in response to the Cleaning Services Policy established by SDC on July 1,

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2007, that required all cleaning services at trade shows at the San Diego Convention Center be

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performed exclusively by SDC’s in-house cleaning staff. Prior to July 1, 2007, these services were

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either performed by SDC’s in-house cleaning staff or, at the trade show decorator’s option, outsourced

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to vendors like United. In its Complaint filed on November 13, 2007, United challenged the Cleaning

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Services Policy in four claims: (1) actual monopolization, under section 2 of the Sherman Act; (2)

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attempted monopolization, under section 2 of the Sherman Act (“the essential facilities claim”); (3)

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intentional interference with contract; and (4) intentional interference with prospective business

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relations. (Doc. No. 1).
The case proceeded to trial on March 21, 2011. United sought both economic damages and

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injunctive relief. SDC denied all of the alleged antitrust violations and the contract claims and asserted

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affirmative defenses based on United’s failure to mitigate damages as well as business justification and

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immunity from liability for the antitrust claims under the Local Government Antitrust Act and the State

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Action Doctrine.

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After a lengthy trial, the jury returned a verdict for United on the Intentional Interference with
Contract Claim on May 4, 2011. In the special verdict form (Doc. No. 219) the jury found:

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(A)

There was a contract between United and GES/Champion (Doc. No. 219 ¶ 33);

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(B)

SDC knew of the contacts between United and GES/Champion (Doc. No. 219 ¶ 34);

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(C)

SDC intended to disrupt performance of the contracts between United and

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GES/Champion (Doc. No. 219 ¶ 35);
(D)

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more expensive or difficult (Doc. No. 219 ¶ 36);
(E)

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SDC’s conduct actually prevented performance or made performance of said contracts

SDC’s conduct with respect to GES and Champion was a substantial factor in causing
harm to United (Doc. No. 219 ¶ 37); and

(F)

SDC’s interference with United’s contracts was not justified (Doc. No. 219 ¶ 38).

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07cv2172

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Based on these findings, the Jury awarded United $668,905. The jury could not reach a verdict on the

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other claims, and a mistrial on those claims resulted. In the instant motion, United seeks a permanent

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injunction in order to enforce the jury’s verdict on the contractual interference claim. (Doc. 240-1.)

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Discussion

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As a preliminary matter and in light of the Court’s rulings granting SDC’s motion for judgment

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as a matter of law, [Doc. No. 239-3], and granting in part SDC’s motion for new trial, [Doc. No. 239-1],

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the Court finds the instant motion to be moot. However, since the parties have made it clear that they

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intend to appeal the Court’s rulings on these motions, the Court will out of an abundance of caution,

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address the instant motion on the merits.

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I. The Power of the Court to Grant the Injunction

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Although a district court may exercise its discretion to grant a permanent injunction where the

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plaintiff has prevailed on the merits of a cause of action and where equitable relief is appropriate, “an

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injunction is a matter of discretion [and] does not follow from success on the merits as a matter of

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course.” Winter v. Natural Res. Def. Council, 555 U.S. 7, 32 (2008) (citing Weinberger v. Romero-

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Barcelo, 456 U.S. 305, 311-12 (1982)). Thus, the fact that United prevailed on the intentional

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interference with contract claim at trial does not mean that it is automatically entitled to a permanent

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injunction. In resolving this matter, the Court must ensure that issuing a permanent injunction would

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not deprive SDC of its constitutional right to a jury trial.

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A. Doctrine of Res Judicata and the Right to Jury Trial

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The Seventh Amendment of the Constitution provides that “in suits at common law where the

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value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” U.S.

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CONST. amend. VII. The Supreme Court has long emphasized the importance of preserving a party’s

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right to jury trial. See, e.g., Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 508-11 (1959); Scott v.

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Neely, 140 U.S. 106, 109-10 (1891); Parsons v. Bedford, Breedlove & Robeson, 28 U.S. 433, 446

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(1830). While a party has the right to a jury trial on the merits of legal claims, no such right to a jury

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exists for equitable claims. Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 170 (9th Cir.

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1989).

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07cv2172

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Resolving a request for injunctive relief presents no constitutional problems as long as the legal

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and equitable issues are distinct. Danjaq LLC v. Sony Corp., 263 F.3d 942, 962 (9th Cir. 2001).

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However, when the legal and equitable issues overlap such that the same evidence supports both issues,

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“the district court must take care not to impinge on the right to a jury.” Id. Because the issuance of a

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permanent injunction is a final order, Golden Gate Hotel Ass’n v. City & County of San Francisco, 18

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F.3d 1482, 1483 (9th Cir. 1994), it carries res judicata effect that will preclude the parties from

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relitigating a subsequent legal claim where common issues exist between the equitable and legal claims.

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Ross v. Bernhard, 396 U.S. 531, 537-38 (1970); Calnetics Corp. v. Volkswagen of Am., Inc., 532 F.2d

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674, 690 (9th Cir. 1976) (citing Heyman v. Kline, 456 F.2d 123, 130 (2d Cir. 1972)). Thus, in order to

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preserve a defendant’s right to trial by jury, the court must first resolve the legal claims arising out of

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the same facts as the equitable claims. Danjaq, 263 F.3d at 962; Dollar Sys., 890 F.2d at 170; Trans-

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World Int’l v. Smith-Hemion Prods., 952 F. Supp. 667, 673 (C.D. Cal. 1996).

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United seeks a permanent injunction to enforce the jury verdict in its favor on the intentional

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interference with contract claim. Despite the jury resolution of this claim, the remaining three mistried

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claims await possible retrial. United argues that a permanent injunction should issue on the intentional

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interference with contract claim simply because the elements of that claim differ from the elements of

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the three antitrust claims. However, in order to preserve SDC’s right to jury trial, the Court cannot issue

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a permanent injunction if there are common factual issues shared by the claim resolved by the jury and

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the three claims awaiting possible retrial. See, e.g., Ross, 396 U.S. at 537-38; Calnetics, 532 F.2d at

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690.

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B. Interwoven Claims

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The intentional interference claim shares the same factual support as the three mistried claims.

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First, all four claims at issue concern the effect of the Cleaning Services Policy on United, allege the

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same set of underlying facts, and require the same proof. (Complaint ¶¶ 70, 81, 97, 103.) For example,

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United introduced invoices corresponding to its written and oral contracts under both interference claims

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in order to establish booth and facilities cleaning rates, market data, business relationships, and damages

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on the antitrust and interference claims. (Exh. 556.) Moreover, during trial, United’s counsel argued

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that the structure of the rights and relationships at issue in the contract interference claim proved that the
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San Diego Convention Center was an “essential facility” as alleged in the monopolization claims.

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(4/20/11 Trial Tr. 100:13-23.)

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Second, the two interference claims share essential elements. Throughout the trial, United

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presented evidence of the terms in the written contracts for the contract interference claim and then later

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used the same terms of the same contract for the prospective economic advantage claim. (3/28/2011

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Trial Tr. 100:16-20.) As the Court recognized in ruling on SDC’s Rule 50(a) motion, evidence of

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damages as presented by expert witness Patrick Kennedy leads to the inference of actual disruption of

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United’s contracts as well as its economic advantages. (4/07/2011 Trial Tr. 67:4-25; 80:4-16.)

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Third, in response to SDC’s Rule 50(a) motion, United argued that SDC’s exercise of its

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property rights demonstrated monopoly power. (04/07/2011 Trial Tr. 77:10-17.) United argued that

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because of the anti-competitive conduct at issue in the two antitrust claims, SDC’s licenses and policies

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were void as an unlawful exercise of monopoly power and not property rights. (04/07/2011 Trial Tr.

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77:10-17.) The Court agreed with United that any exercise of property rights or first tier contract rights

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by SDC would be unlawful if it were proved to be anti-competitive. (4/07/11 Trial Tr. 79:18-80:21.)

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Later, in United’s closing argument, United combined the antitrust claims with the contract interference

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claim by arguing that SDC’s reservation of rights demonstrated that the San Diego Convention Center is

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an essential facility and that SDC had monopoly power in the relevant market. (04/20/11 Trial Tr. 47:1-

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52:8; 100:13-23.)

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According to United’s theory of the case and presentation of the facts, the contract interference

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claim is interwoven with the antitrust claims left to be retried. Because the Court would be required to

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make factual findings and conclusions of law regarding application of an equitable remedy to the

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contract interference claim, granting the permanent injunction prior to resolution of the remaining legal

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issues would impair SDC’s right to a jury trial on the mistried claims. Therefore, United’s request for

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permanent injunctive relief is inappropriate on the grounds of res judicata.

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II. Choice of Law

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United and SDC agree that a permanent injunction may only issue if it is permissible under state

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law, but they disagree about whether the Court may still exercise its discretion following the application

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of state law. Under the principles set forth in Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), a federal
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court with diversity jurisdiction or pendent jurisdiction over state law claims must apply state law to

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substantive claims. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966). However, federal

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courts with diversity or pendent jurisdiction may apply federal law to procedural issues. See Hanna v.

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Plumer, 380 U.S. 460, 464-66 (1965).

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A permanent injunction, as a method to enforce substantive law rights, “is an integral component

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of the [underlying] substantive law right.” Sullivan v. Vallejo City Unified Sch. Dist., 731 F. Supp. 947,

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956 (E.D. Cal. 1990). Where the underlying claim is based on state law, the applicability of injunctive

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relief must also be based on state law in order to avoid the risk of different outcomes in federal and state

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court. See Guaranty Trust Co. of New York v. York, 326 U.S. 99, 109 (1945); Compass Bank v. Hartley,

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430 F. Supp. 2d 973, 978 n.9 (D. Ariz. 2006); Sullivan, 731 F. Supp. at 956. Thus, in the Ninth Circuit,

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the availability of injunctive relief is a substantive issue and is therefore governed by state law. See

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Sims Snowboards, Inc. v. Kelly, 863 F.2d 643, 647 (9th Cir. 1988); Fansler Found. v. Am. Realty

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Investors, Inc., No. CV-F-04-5285 LJO DLB, 2007 WL 1302742, *2 (E.D. Cal. May 2, 2007); Sullivan,

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731 F. Supp. at 956. Accordingly, this Court must first ascertain and apply California law to determine

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whether a permanent injunction may issue. See Sims Snowboards, 863 F.2d at 646-47.

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Many federal courts have held that a district court may apply federal law principles in

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determining whether to exercise discretion to grant or deny an injunction that is available under state

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law. Compare Interbake Foods, L.L.C. v. Tomasiello, 461 F. Supp. 2d 943, 955 (W.D. Iowa 2006)

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(applying federal equitable principles to determine whether an injunction should issue under state law);

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Curtis 1000, Inc. v. Youngblade, 878 F. Supp. 1224, 1243-44 (N.D. Iowa 1995) (same); Sullivan, 731 F.

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Supp. at 957 (same); Kaiser Trading Co. v. Associated Metals & Minerals Corp., 321 F. Supp. 923, 931

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n.14 (N.D. Cal. 1970) (same), with MicroStrategy, Inc. v. Business Objects, S.A., 369 F. Supp. 2d 725,

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(E.D. Va. 2005) (noting that only state law determines whether an injunction may issue). Therefore,

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even if a permanent injunction is permissible under state law, this Court may still exercise its discretion

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to deny the permanent injunction.

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III. State Law Grounds for Equitable Relief

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Assuming that a permanent injunction as to the contract interference claim would not bar future

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litigation of the remaining three claims, United argues that it is entitled to relief under state law. Under
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California law, the plaintiff must first prove the elements of the cause of action involving the wrongful

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act sought to be enjoined, and then prove the grounds for equitable relief. City of S. Pasadena v. Dep’t

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of Transp., 29 Cal. App. 4th 1280, 1293 (1994). A court has discretion to grant a permanent injunction

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to prevent the breach of an obligation that exists in the applicant’s favor as long as one of the following

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four conditions is met:

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(1) Where pecuniary compensation would not afford adequate relief; (2) Where it would
be extremely difficult to ascertain the amount of compensation that would afford
adequate relief; (3) Where the restraint is necessary to prevent a multiplicity of judicial
proceedings; or (4) Where the obligation arises from a trust. Cal. Civ. Code § 3422.

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A. Permanent Injunction Must Prevent Breach

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A permanent injunction may issue in order “to prevent the breach of an obligation existing in

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favor of the applicant[.]” Cal. Civ. Code § 3422. This standard generally requires that injunctive relief

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must be necessary to prevent threatened injury, not to address completed wrongs. Gafcon, Inc. v.

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Ponsor & Assocs., 98 Cal. App. 4th 1388, 1402-03 & n.6 (2002). The jury found that SDC wrongfully

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interfered with United’s contracts with GES and Champion. However, because the contracts have

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already expired and have not been renewed, an injunction could not prevent a future breach of the

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contracts. Further, the jury failed to reach a verdict on United’s claim for intentional interference with

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prospective economic relations.

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1. Contracts in Existence on July 1, 2007
On July 1, 2007, SDC implemented its Cleaning Services Policy, requiring SDC employees to

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perform cleaning services at the Convention Center. (Doc. No. 18 at 16.) On the same date, United had

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existing contracts with GES and Champion. (3/30/11 Trial Tr. 24:13-26:18 (Robbins); 3/23/11 Trial Tr.

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6:3-6, 7:15-17, 9:11-21 (Epstein).) The jury found that SDC intentionally interfered with United’s

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contracts with GES and Champion through the implementation of the Cleaning Services Policy on July

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1, 2007. (Doc. No. 219 at 9:1-11:26.) However, United’s contract with GES expired on April 30, 2011,

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and United’s contract with Champion expired on June 30, 2011. (Exhs. 83 at 5; 84 at 1.) By the terms

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of these contracts and based on the factual record, the original contracts underlying the jury’s verdict are

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no longer in effect.

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The jury’s factual findings demonstrate that SDC’s interference with the contracts was wrongful,

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but, contrary to United’s argument, this is insufficient alone to support a permanent injunction. Because

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the contracts have already expired, there is no threatened injury and nothing left to enjoin. See Lans v.

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Digital Equip. Corp., 252 F.3d 1320, 1328 (Fed. Cir. 2001) (stating that district court cannot enjoin a

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party from infringing a patent that had already expired); Griffith v. Dep’t of Public Works, 52 Cal. 2d

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848, 853 (1959) (affirming the denial of an injunction to prevent the construction of a freeway that had

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already been built); Dryden v. Tri-Valley Growers, 65 Cal. App. 3d 990, 997-98 (1977) (finding no

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liability for intentional interference with contract where the contracts had already expired); Lemat Corp.

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v. Barry, 275 Cal. App. 2d 671, 676, 680 (1969) (affirming denial of permanent injunction beyond the

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term of the contract where the contract had already expired).
2. Contracts After July 1, 2007
United attempts to preserve its claim for injunctive relief by offering evidence that United

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entered into renewal contracts with GES and Champion after the original contracts with which SDC

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interfered had expired. (Exh. 553; 3/28/2011 Trial Tr. 85:21-86:8.) A contract continues to remain in

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force after the termination date only if the parties renew the terms of the original contract. East Bay

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Union of Machinists, Local 1304 v. Fibreboard Paper Prods. Corp., 285 F. Supp. 282 (N.D. Cal. 1968),

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aff’d, 435 F.2d 556 (9th Cir. 1970). However, once one of the parties decides to modify the original

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contract, that contract is not “renewed” but is rather a new contract. Id.; see also Int’l Ass’n of

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Machinists & Aerospace Workers v. Int’l Longshoremen’s and Warehousemen’s Union, 781 F.2d 685,

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691 (9th Cir. 1986); Seymour v. Coughlin Co., 609 F.2d 346, 350-51 (9th Cir. 1979). Accordingly,

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injunctive relief is only proper if United renewed its contracts with GES and Champion without making

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any changes to the terms of the original contracts.

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a. United’s Contract with GES
United first entered into its contract with GES on May 1, 2001, for a five year period ending

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April 30, 2006. (Exh. 83 at 1, 5.) The terms of the contract specify that the contract will automatically

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renew unless either party notifies the other party at least six months prior to the end of the term. (Exh.

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83 at 1, 5.) The contract did in fact renew for a subsequent five year period to end on April 30, 2011.

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(03/28/2011 Trial Tr. at 84:11-20, 85:21-25.) According to the testimony of Richard Simon, United’s
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President and CEO, United’s current and only contract with GES was set to expire on April 30, 2011.

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(03/28/2011 Trial Tr. at 85:23-25.) He further testified that, at the time of the trial, United and GES

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were negotiating for an extension of the contract as well as the possibility of providing additional

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services. (03/28/2011 Trial Tr. at 86:1-8.) There is no evidence in the record to suggest that an

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agreement had been reached regarding the proposed changes to the original contract, in which case there

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would be a new contract. In any event, because the parties were aware of United’s desire to change the

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terms of the contract, the contract was not renewed. Based on the facts in the record, United’s contract

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with GES expired on April 30, 2011, and as an expired contract, it cannot serve as the basis for

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injunctive relief.

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b. United’s Contract with Champion

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On July 1, 2005, United entered into a contractual agreement with Champion. (Exh. 84 at 1.)

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The contract would remain in effect for five years and expire on June 30, 2010. (Exh. 84 at 1.) This

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contract was still in effect when SDC implemented the Cleaning Services Policy on July 1, 2007.

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(03/28/2011 Trial Tr. at 93:14-20.) Because this original contract did not provide for automatic renewal

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or modification of the original contract, the contract expired on June 30, 2010. (Exh. 84 at 1.)

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However, on March 30, 2010, United and Champion negotiated to continue their contractual

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relationship for a subsequent five-year period beginning on July 1, 2011, and expiring on June 30, 2015.

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(Exh. 553 at 1.) Therefore, this 2011 contract is a new contract.

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Even if the 2005 contract had permitted a renewal of the original contract, the 2011 contract was

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not a renewal because it contains new and changed terms. When the parties agreed to the new contract

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on March 30, 2010, they not only included new terms and agreements, but they also changed some of

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the terms under which the original contract had operated. (Exh. 84; Exh. 553.) Thus, it is an entirely

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different contract and not merely a renewal of the contract that was in place on July 1, 2007.

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Accordingly, United’s current relationships, if any, with GES and Champion, are not based on the same

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contracts that were in effect when SDC instituted the Cleaning Services Policy on July 1, 2007. As a

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result, the contracts with which SDC interfered have expired and there is nothing left to enjoin.

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B. Statutory Grounds for Relief

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For a permanent injunction to issue, United’s motion for injunctive relief must be supported by

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the statutory grounds for relief available under section 3422 of the California Civil Code. Even if

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United had renewed the contracts that were in place on July 1, 2007, a permanent injunction is not

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warranted because it would not prevent a multiplicity of judicial proceedings and because monetary

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damages are adequate.

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1. Multiplicity of Actions

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Section 3422 permits the issuance of a permanent injunction if it is necessary to prevent a

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multiplicity of actions. Cal. Civ. Code § 3422. This statutory basis requires the permanent injunction to

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address an interference with contract of such a continuing nature that the only remedy at law would be

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repeated judicial proceedings for damages. See Mendelson v. McCabe, 144 Cal. 230, 233 (1904).

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Although United argues that irreparable harm is not required, this statutory basis is essentially an

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expression of irreparable harm. Where the plaintiff will have to litigate multiple suits in the future,

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monetary damages are deemed to be insufficient and thus, an injunction may issue. See Intel Corp. v.

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Hamidi, 30 Cal. 4th 1342, 1352 (2003); McLaughlin v. Del Re, 64 Cal. 472, 473 (1884). Nevertheless,

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if the harm that will result from having to litigate multiple suits in the future is self-inflicted, equitable

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relief is not justified. See United States v. Superior Court, 19 Cal. 2d 189, 197 (1941) (finding no future

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injury where the injury was self-inflicted); K.D. v. Oakley Union Elementary Sch. Dist., 2008 WL

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360460, No. C 07-00920, at *11 (N.D. Cal. Feb. 8, 2008); Ventura Cnty. Christian High Sch. v. City of

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Buenaventura, 233 F. Supp. 2d 1241, 1253 (C.D. Cal. 2002); see also Salt Lake Tribune Publ’g Co.,

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LLC v. AT&T Corp., 320 F.3d 1081, 1106 (10th Cir. 2003); Caplan v. Fellheimer Eichen Braverman &

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Kaskey, 68 F.3d 828, 839 (3d Cir. 1995).

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United asserts that a permanent injunction is justified because if SDC is not enjoined, SDC will

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continue to interfere with United’s contracts with GES and Champion. United further argues that it will

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be forced to initiate a lawsuit for damages that will occur in the future, causing United and SDC

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unnecessary expense as well as burdening the Court’s docket. Indeed, without a permanent injunction,

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United will likely have to file future suits to recover damages if SDC continues to interfere with

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United’s contracts. But United’s harm is self-inflicted. Before trial, United sought to rely on the
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testimony of its damages expert, Dr. Patrick Kennedy, to establish future damages. The Court excluded

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the testimony of Dr. Patrick as well as the future damages theory because United failed to timely

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disclose the opinion and theory. (Doc. No. 146.) Although this Court recognized the possibility that a

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permanent injunction would resolve the issue of future lost profits, this Court also noted that any need to

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file future lawsuits in the absence of an injunction “is by plaintiff’s own doing.” (Doc. No. 146 at 8:8-

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13.) Even if this ruling forecloses United’s future damages theory in this or any other litigation, any

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harm that arises is the result of United’s own failure to comply with its disclosure and discovery

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obligations. See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001).

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2. Damages Inadequate
A permanent injunction may also issue “[w]here pecuniary compensation would not afford

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adequate relief.” Cal. Civ. Code § 3422; Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118,

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1130 n.9 (1990); Syngenta Crop Prot., Inc. v. Helliker, 138 Cal. App. 4th 1135, 1167 (2006). This

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standard applies to ordinary tort actions, like the cause of action for interference with contract. See AIU

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Ins. Co. v. Superior Court, 51 Cal. 3d 807, 838 (1990). Generally, monetary damages are adequate to

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compensate the plaintiff for pecuniary losses, consequential losses, and actual harm to reputation

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resulting from interference with contract. See Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal.

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4th 376, 392 (1995) (“The courts provide a damage remedy against a third party conduct intended to

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disrupt an existing contract[.]”); Bardis v. Oates, 119 Cal. App. 4th 1, 10-16 (2004) (affirming award of

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compensatory damages for interference with economic advantage claim); 6 WITKIN, § 1709 (10th ed.

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2005). Despite this general rule, United argues simply that monetary damages will be insufficient to

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remedy the loss of its market share, business relationships, and workforce.

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The jury did not make a factual finding regarding the scope of the relevant market or the parties’

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shares of the relevant market. (Doc. No. 219 at 2:4-13.) Even if the jury had reached a conclusion on

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this factual issue, loss of market share that would result in the diminution of the value of the business is

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generally compensable through monetary damages. See Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244,

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257 (1968) (explaining that compensatory damages for wrongful interference with business must be

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demonstrated by concrete evidence of injury, including loss of employees and customers); 40 CAL. JUR.

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3d § 48 (2012); see also Oakland Tribune, Inc. v. Chronicle Publ’g Co., 762 F.2d 1374, 1376 (9th Cir.
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1985) (finding that a newspaper’s alleged loss of readers and decreased revenue constitute solely

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monetary harm even though the newspaper argued that no money damages could adequately repair the

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damage to the business); Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 723 F. Supp. 2d

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1284, 1338 (S.D. Cal. 2010) (denying an injunction because future infringement resulting in lost market

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share and future lost opportunities were compensable by money damages). Furthermore, loss of

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business relations due to a dwindling workforce and loss of goodwill are also compensable by monetary

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damages. Della Penna, 11 Cal. 4th at 392; Diodes, 260 Cal. App. 2d at 257; 23 CAL. JUR. 3d § 89

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(2012); see also Oakland Tribune, 762 F.2d at 1376; OAO Corp. v. United States, 49 Fed. Cl. 478, 480

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(2001).

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Although the district court in Signature Flight Support Corp. v. Landlow Aviation Ltd. P’ship,

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698 F. Supp. 2d 602, 624 (E.D. Vir. 2010), held that the plaintiff had demonstrated irreparable harm and

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the inadequacy of monetary damages where it would suffer a permanent loss of customers and goodwill

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without the injunction, the court noted that it would be extremely difficult to measure the future

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damages. The court also relied on the fact that the plaintiff would have to file breach of contract actions

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in the future in order to prevent future harm. Signature, 698 F. Supp. 2d at 624. While the court in

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Signature was persuaded by the difficulty of measuring damages, United already set forth a future

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damages theory and proposed an expert to establish the damages that will result in the future as a result

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of SDC’s interference with the contracts. Not only does this demonstrate that United previously

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believed that its injury could be compensated by monetary damages, but it also demonstrates that

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determining future damages would not be difficult to measure. Moreover, unlike in Signature, this

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Court has already concluded that the possibility that United will have to litigate multiple claims in the

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future is the result of United’s failure to comply with its disclosure and discovery obligations.

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Accordingly, United has failed to demonstrate that monetary damages would be inadequate.

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IV. California Civil Code Section 3423

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SDC argues that granting a permanent injunction would violate the contracts clause of the

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California Constitution and the anti-injunction statute of section 3423 of the California Civil Code.

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However, because the Court has already denied the injunction on various grounds, it need not consider

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the application of the contracts clause or the anti-injunction statute.
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V. The Equities
Assuming federal equitable principles apply, this Court has discretion to grant permanent

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injunctive relief where: (1) the party has suffered irreparable injury; (2) remedies available at law are

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inadequate; (3) the balance of the hardships between the plaintiff and defendant indicate that equitable

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relief is warranted; and (4) the public interest will not be disserved by issuing the permanent injunction.

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Reno Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126, 1137 n.11 (9th Cir. 2006) (quoting eBay Inc. v.

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MercExchange, LLC, 547 U.S. 388, 391 (2006)); see also Amoco Prod. Co., 480 U.S. 531, 546 n.12

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(1987) (noting that the standard for a preliminary injunction is the same as for a permanent injunction

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except that the plaintiff must demonstrate actual success for a permanent injunction).

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A. Irreparable Harm

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The basis for injunctive relief “in the federal courts has always been irreparable harm and

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inadequacy of legal remedies.” Beacon Theatres, 359 U.S. at 506-07. The plaintiff has the burden to

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prove that there is a likelihood of present or imminent irreparable harm that would result absent an

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injunction. Monsanto Co. v. Geertson Seed Farms, 130 S. Ct. 2743, 2760 (2010); Ctr. for Food Safety

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v. Vilsack, 636 F.3d 1166, 1172 (9th Cir. 2011). For the same reasons United has failed to prove a claim

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for equitable relief under section 3422, this Court finds that United has failed to demonstrate irreparable

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harm. First, because the contracts with which SDC interfered have already expired, there is no present

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or immediate harm that SDC will continue to interfere with the contracts. Second, to the extent that

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SDC may interfere with similar contracts between United and GES or Champion in the future, any risk

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that United will have to enforce its rights through future litigation was caused by United’s failure to

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comply with discovery obligations.

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B. Inadequate Remedies at Law

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The first element of irreparable harm is closely related to the second element, which requires that

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remedies available at law, such as monetary damages, must be inadequate to compensate the plaintiff for

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the harm suffered. eBay, 547 U.S. at 391; Apple Inc. v. Pystar Corp., 673 F. Supp. 2d 943, 949 (N.D.

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Cal. 2009). Monetary harm is not irreparable harm because the injury could be remedied by a damage

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award. As the Court stated in the discussion of section 3422, a permanent injunction is not necessary
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07cv2172

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because United’s claims of loss of market share, workforce, and goodwill are compensable through

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monetary damages. See, e.g., Oakland Tribune, 762 F.2d at 1376; Presidio Components, 723 F. Supp.

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2d at 1338; OAO Corp, 49 Fed. Cl. at 480; Della Penna, 11 Cal. 4th at 392; Diodes, 260 Cal. App. 2d at

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257. Furthermore, if SDC interferes with United’s future contracts, any harm that may arise will be

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compensable by monetary damages.

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The Ninth Circuit has held that a district court need not analyze the remaining elements of the

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injunction standard where the plaintiff has not demonstrated the prerequisite factors of irreparable harm

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and inadequacy of legal remedies. Vilsack, 636 F.3d at 1174; LaDuke v. Nelson, 762 F.2d 1318, 1330

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(9th Cir. 1985). Accordingly, permanent injunctive relief is not warranted.

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Conclusion

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As set forth above, the Court finds the instant motion to be moot in light of the Court’s rulings

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granting SDC’s motion for judgment as a matter of law, [Doc. No. 239-3], and granting in part SDC’s

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motion for new trial, [Doc. No. 239-1]. However, even in the absence of these rulings, the Court finds

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that United’s request for injunctive relief fails for three alternative reasons: first, the doctrine of res

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judicata bars the Court from addressing an equitable claim prior to the final resolution of the three

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remaining legal claims; second, United has failed to demonstrate that it is entitled to relief under state

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law; and third, the federal court exercises its discretion to deny the request for injunctive relief because

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United has not demonstrated irreparable harm or inadequacy of legal remedies.

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IT IS SO ORDERED.

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DATED: September 5, 2012

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Hon. Anthony J. Battaglia
U.S. District Judge

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