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

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.