City of Oakland v. The Oakland Raiders ( 2022 )

Filed 9/15/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
CITY OF OAKLAND, B313388
Plaintiff and Appellant, (Los Angeles County
Super. Ct.
v. No. 20STCV20676)
THE OAKLAND RAIDERS, et al.
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Craig D. Karlan, Judge. Affirmed.
Barbara Parker, City Attorney (Oakland), and Maria Bee
and Malia J. McPherson; Berg & Androphy, Michael Fay, pro hac
vice; Pearson, Simon & Warshaw, Clifford H. Pearson and
Michael H. Pearson for Plaintiff and Appellant.
Arnold & Porter Kaye Scholer, Steven L. Mayer and Daniel
B. Asimow for Defendant and Respondent Oakland Raiders.
Covington & Burling and John E. Hall for Defendants and
Respondents the National Football League, Arizona Cardinals
Football Club LLC, Atlanta Falcons Football Club, LLC,
Baltimore Ravens Limited Partnership, Buffalo Bills, LLC,
Panthers Football, LLC, The Chicago Bears Football Club, Inc.,
Cincinnati Bengals, Inc., Cleveland Browns Football Company
LLC, Dallas Cowboys Football Club, Ltd., PDB Sports, Ltd., The
Detroit Lions, Inc., Green Bay Packers, Inc., Houston NFL
Holdings, LP, Indianapolis Colts, Inc., Jacksonville Jaguars,
LLC, Kansas City Chiefs Football Club, Inc., Chargers Football
Company, LLC, The Rams Football Company, LLC, Miami
Dolphins, Ltd., Minnesota Vikings Football, LLC, New York
Football Giants, Inc., New York Jets LLC, Philadelphia Eagles,
LLC, Pittsburgh Steelers LLC, Forty Niners Football Company
LLC, Football Northwest LLC, Buccaneers Team LLC, Tennessee
Football, Inc., Pro-Football, Inc., New England Patriots LLC,
New Orleans Louisiana Saints, LLC.
______________________
INTRODUCTION
This appeal arises out of a lawsuit filed by the City of
Oakland against the National Football League (the League or the
NFL) and its 32 member clubs (collectively, the defendants) after
one member club, the Raiders, relocated from Oakland to Las
Vegas. The City alleged the defendants did not comply with the
process for approving club relocations set forth in the NFL
Constitution and related documents. The City asserted causes of
action for breach of contract as a third party beneficiary, breach
of the implied covenant of good faith and fair dealing, and unjust
enrichment. The trial court sustained the defendants’ demurrer
to all three causes of action without leave to amend and entered
judgment for the defendants.
2
The City argues the trial court erred in ruling it was not a
third party beneficiary of the NFL Constitution and related
documents and therefore did not have standing to enforce those
documents. The City also argues the court applied an incorrect
legal standard in ruling on the demurrer to its cause of action for
unjust enrichment.
We conclude that, because the City did not and cannot
allege it is a third party beneficiary of the alleged contracts, its
causes of action for breach of contract and breach of the implied
covenant of good faith and fair dealing fail. We also conclude the
City has not and cannot allege facts sufficient to state a cause of
action based on a theory of unjust enrichment. Therefore, we
affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
A. The League Commissioner Issues a Relocation Policy
The Raiders football team is a member club of the National
Football League, an unincorporated association. (Oakland
Raiders v. National Football League (2005) 131 Cal.App.4th 621,
626, 637.) The NFL Constitution governs the League’s
operations. Article 4.1 of the Constitution defines the “home
territory” of each club as “the city in which such club is located
and for which it holds a franchise and plays its home games and
includes the surrounding territory to the extent of 75 miles in
every direction from the exterior corporate limits of such city,”
except in circumstances not relevant here. Article 4.3 precludes
any member club from moving its franchise or playing site to a
different city “without prior approval by the affirmative vote of
three-fourths of the existing member clubs of the League.”
3
In 1984 the United States Court of Appeals for the Ninth
Circuit held the provision in Article 4.3 imposing a restraint on
relocations subjected the League to liability under federal
antitrust law when the League rejected the Raiders’ proposed
move to Los Angeles in 1980. (Los Angeles Memorial Coliseum
Com. v. National Football League (9th Cir. 1984) 726 F.2d 1381,
1398.)1 The court stated that Al Davis, then the general manager
of the Raiders, suggested in 1978 the League replace its
“subjective voting procedure” with “a set of objective guidelines to
govern team relocation.” (Id. at p. 1397.) The court appeared to
endorse that suggestion by stating the League, to avoid antitrust
liability, might have to adopt “[s]ome sort of procedural
mechanism to ensure consideration of” objective factors relevant
to relocation decisions. (Ibid.)
Soon after the Ninth Circuit’s decision in Los Angeles
Memorial Coliseum, United States Senator Slade Gorton
introduced Senate Bill No. 2505, which would have created an
independent arbitration board with discretion to deny the
proposed relocation of a professional sports franchise based on
nine objective factors. (Sen. No. 2505, 98th Cong., 2nd Sess., 130
Cong. Rec. 7076, 23857-23860 (1984).) Those factors included
“important community interests” that could be “inconsistent with
immediate financial gain” for the owner of a team that wanted to
relocate. (Id. at pp. 23857-23858.) More specifically, under the
1 The team did relocate to Los Angeles in 1982, after the
United States District Court issued an order enjoining the NFL
and its member clubs from interfering with the move, before
moving back to Oakland in 1995. (See Oakland Raiders v.
National Football League (2007) 41 Cal.4th 624, 629; Los Angeles
Memorial Coliseum Com. v. National Football League, supra, 726
F.2d at p. 1386.)
4
proposed legislation the independent board would consider things
like existing fan support for the team, the extent of public
financial support for playing facilities, and the degree to which
the club engaged in good faith negotiations with community
leaders over terms and conditions that would allow the club to
remain in its home territory. (Id. at p. 23858.) The factors
reflected the bill’s proposed findings, which included that a
professional sports team could decide to relocate “without regard
to important interests and considerations” of the existing host
community and that such communities did not have “adequate
protection” against relocations that “are not consistent with the
public interest.” (Id. at pp. 23857-23858.) Members of Congress
introduced several other bills around the same time to regulate
professional sports franchise relocations, including the
Professional Sports Team Community Protection Act proposed by
Senator Gorton in 1985, but Congress did not enact any of them.2
Perhaps in response to the prospective loss of autonomy
and control over relocation decisions, League Commissioner Pete
Rozelle issued a policy in December 1984 that established new
procedures for proposed transfers from a club’s home territory
2 See Stein, How the Home Team Can Keep from Getting
Sacked: A City’s Best Defense to Franchise Free Agency in
Professional Football (2003) 5 Tex. Rev. Ent. & Sports L. 1, 12-14;
Note, Consumer Advocacy in the Sports Industry: Recognizing
and Enforcing the Legal Rights of Sports Fans (1998) 21 Hastings
Comm. Ent. L.J. 809, 820-822; Note, The Professional Sports
Community Protection Act: Congress’ Best Response to Raiders?
(1987) 38 Hastings L.J. 345, 354-371.
5
(the Relocation Policy).3 (See Hearings before Sen. Com. on
Commerce, Science, and Transportation on Sen. No. 287, 99th
Cong., 1st Sess., at p. 69 (1985).) The Relocation Policy required
a club proposing to transfer its franchise or playing site to a
different city to present to the Commissioner the club’s position
on the nine factors listed in Senate Bill No. 2505 and to state why
the club believed its proposed transfer was justified under the
factors. (Hearings before Sen. Com. on Commerce, Science, and
Transportation on Sen. No. 287, supra, pp. 70-71.) The policy
provided that the Commissioner would evaluate the proposed
transfer and report to the full membership and that all member
clubs would vote on the proposed transfer under Article 4.3.
(Ibid.) According to Paul Tagliabue, who served as League
Commissioner from 1989 to 2006, the member clubs “agreed by
contract to be bound by the [L]eague’s internal procedures for
determining franchise location.” (Hearings before Sen. Com. on
the Judiciary on Sen. No. 952, 106th Cong., 1st Sess., at p. 84
(1999).)
B. The League and the United States Conference of
Mayors Issue a Joint Statement of Principles, and the
League Amends the Relocation Policy
In 1996 the League and the United States Conference of
Mayors4 issued a draft Joint Statement of Principles (the Joint
3 Article 8.5 of the NFL Constitution gave the Commissioner
authority to “establish policy and procedure in respect to the
provisions of the Constitution and Bylaws.”
4 The Conference of Mayors is “a non-partisan organization
of cities with populations of 30,000 or more,” each represented by
its mayor or other chief elected official. (United States Conf. of
6
Statement) following “many months” of work to develop “a fair
process to consider requests for franchise relocations.” (Hearings
before Sen. Com. on the Judiciary on Sen. No. 952, supra, p. 78.)
The Joint Statement followed “a series of team relocations
. . . culminating in the November, 1995, announcement that the
Cleveland Browns would move to Baltimore.” (Id. at p. 80.) The
Joint Statement acknowledged “stable team-community
relations” were “good for fans, good for home cities and good for
professional sports.” Thus, the Joint Statement provided that
“[c]ommunities, teams and the [League] should work together to
identify and resolve issues pertaining to team relocations . . . .”
In the Joint Statement, the League acknowledged it
“should” maintain rules and procedures for proposed relocations
that recognize “both the private interest of team owners to
maintain a profitable business and [the] public interest to enjoy
the direct and indirect benefits of having a professional sports
franchise.” The Joint Statement recognized such public interests
included a community’s “financial, psychological and emotional
investment in [a] professional sports team.” Thus, the Joint
Statement provided, the League “should” make relocation
decisions based on “objective criteria that account for the interest
of fans, communities, taxpayers and owners.”
The Joint Statement identified 10 objective criteria that
largely mirrored the criteria listed in the Relocation Policy, but
added whether the current community stadium authority
opposed the relocation and whether there was an investor willing
to buy the club and keep it in the current community. The Joint
Statement also required the League to “give fair consideration to
Mayors v. Great-West Life & Annuity Ins. Co. (D.D.C. 2018)
327 F.Supp.3d 125, 127).
7
the information presented by a community in each of the ten
criteria” and to “give the most careful consideration to any
proposal from the current home community that [would] preserve
the existing relationship in an economically-realistic way.” The
Joint Statement also stated, however, that “team location is a
matter for the League members to determine” and that the
“League should have the ability to enforce its own rules.”
In 1999 League executive Joe Browne wrote to Mayor Marc
Morial of New Orleans, the chairman of the committee of the
Conference of Mayors that negotiated the Joint Statement.
(Hearings before Sen. Com. on the Judiciary on Sen. No. 952,
supra, p. 78.) Browne stated that the League amended its
“franchise movement guidelines” as a “direct result” of the
League’s discussions with the Conference of Mayors and that the
amended guidelines “balance and protect the interest of the
cities, the League and individual teams.” (Ibid.) Browne also
said the amended guidelines established an “orderly process,
ensuring municipal interests [would] be heard and addressed,”
and allowed a club to relocate “only after exhausting all
reasonable options in a team’s existing home territory.” (Ibid.)
Several days later Mayor Morial wrote to Commissioner
Tagliabue and expressed gratitude for the amended franchise
movement guidelines, which, according to Mayor Morial, “should
give city interests a greater measure of recognition and
protection.” (Id. at p. 79.)5
5 The correspondence to and from Mayor Morial referred to
the Joint Statement of Principles as a “draft.” (Hearings before
Sen. Com. on the Judiciary on Sen. No. 952, supra, pp. 78-79.) It
is unclear from the record when, if ever, the League and the
8
According to Commissioner Tagliabue, the League revised
the Relocation Policy “to reflect the specific concerns expressed by
the U.S. Conference of Mayors.” (Hearings before Sen. Com. on
the Judiciary on Sen. No. 952, supra, p. 85.) The new Relocation
Policy’s preamble emphasizes that “each club’s primary
obligation to the League and to all other member clubs is to
advance the interests of the League in its home territory” and
that this obligation includes “maximizing fan support, including
attendance, in its home territory.” The preamble also states:
“League traditions disfavor relocations if a club has been well-
supported and financially successful and is expected to remain
so. Relocation pursuant to Article 4.3 may be available, however
if . . . compelling League interests warrant a franchise
relocation.”
The revised Policy provides that, before the League will
consider a proposed transfer, clubs seeking to transfer must
“work diligently and in good faith to obtain and to maintain
suitable stadium facilities in their home territories.” This is
because, according to the Policy, “League policy favors stable
team-community relations.” The Policy, however, does not
restrict clubs from discussing a possible relocation or negotiating
a proposed lease in a community outside its home territory at any
time, nor does it apply to a club that wants to relocate its
franchise or playing site to another city within its home territory.
If a club still proposes to transfer locations outside its home
territory, the club must provide written notice to the
Commissioner, who will give notice to government and business
representatives of the current and proposed home territories and
Conference of Mayors formally adopted or finalized the Joint
Statement.
9
the stadium authority of the current home territory. The
Relocation Policy refers to these third parties as “‘interested
parties.’” The notice must include a statement of reasons in
support of the transfer that addresses each of 12 factors listed
below. Interested parties may also submit comments to the
League. After the Commissioner reports to member clubs on the
proposed transfer, the clubs vote on the proposal pursuant to
Article 4.3.
The Relocation Policy calls the 12 relevant factors the
“Factors That May Be Considered In Evaluating The Proposed
Transfer” and states that other factors not listed may be relevant
in evaluating a proposed transfer. The Policy directs clubs that
want to transfer to address each of the factors and state “why
such a move would be justified with reference to these
considerations.” The Policy describes the factors as “[g]uidelines”
that help member clubs “to organize data and to inform [their]
business judgment” on whether to approve a proposed transfer.
The 12 factors in the Relocation Policy are:
“1. The extent to which the club has satisfied,
particularly in the last four years, its principal obligation of
effectively representing the [League] and serving the fans in its
current community; whether the club has previously relocated
and the circumstances of such prior relocation;
2. The extent to which fan loyalty to and support for the
club has been demonstrated during the team’s tenure in the
current community;
3. The adequacy of the stadium in which the club played
its home games in the previous season; the willingness of the
stadium authority or the community to remedy any deficiencies
in or to replace such facility, including whether there are
10
legislative or referenda proposals pending to address these
issues; and the characteristics of the stadium in the proposed
new community;
4. The extent to which the club, directly or indirectly,
received public financial support by means of any publicly
financed playing facility, special tax treatment, or any other form
of public financial support and the views of the stadium authority
(if public) in the current community;
5. The club’s financial performance, particularly
whether the club has incurred net operating losses (on an accrual
basis of accounting), exclusive of depreciation and amortization,
sufficient to threaten the continued financial viability of the club,
as well as the club’s financial prospects in its current community;
6. The degree to which the club has engaged in good
faith negotiations (and enlisted the League office to assist in such
negotiations) with appropriate persons concerning terms and
conditions under which the club would remain in its current
home territory and afforded that community a reasonable
amount of time to address pertinent proposals;
7. The degree to which the owners or managers of the
club have contributed to circumstances which might demonstrate
the need for such relocation;
8. Whether any other member club of the League is
located in the community in which the club is currently located;
9. Whether the club proposes to relocate to a community
or region in which no other member club of the League is located;
and the demographics of the community to which the team
proposes to move;
10. The degree to which the interests reflected in the
League’s collectively negotiated contracts and obligations (e.g.,
11
labor agreements, broadcast agreements) might be advanced or
adversely affected by the proposed relocation, either standing
alone or considered on a cumulative basis with other completed
or proposed relocations;
11. The effect of the proposed relocation on [League]
scheduling patterns, travel requirements, divisional alignments,
traditional rivalries, and fan and public perceptions of the
[League] and its member clubs; and
12. Whether the proposed relocation, for example, from a
larger to a smaller television market, would adversely affect a
current or anticipated League revenue or expense stream (for
example, network television) and, if so, the extent to which the
club proposing to transfer is prepared to remedy that adverse
effect.”
If League membership approves a proposal to relocate a
club, the relocating club generally pays a “transfer fee” to the
League to compensate other member clubs “for the loss of the
opportunity appropriated by the relocating club and/or the
enhancement (if any) in the value of the franchise resulting from
the move.” Member clubs determine the amount of the fee, or a
binding method for determining the amount of the fee, at the
time they approve a club’s relocation.
C. The City Files This Action, and the Trial Court
Sustains the Defendants’ Demurrer Without Leave To
Amend
The Raiders played home games at the Oakland-Alameda
County Coliseum from 1995 until the team moved to Las Vegas
following a vote of member clubs in 2017. According to the City,
the Raiders were financially successful in Oakland, received
12
significant support from the City, and had one of the most loyal
fan bases in the League. The Raiders renewed the team’s lease to
play games at the Coliseum in 2014, but team executive Mark
Davis announced his intention to move the team to Las Vegas
that same year. Davis simultaneously negotiated competing
stadium deals with Las Vegas and Oakland. The State of Nevada
offered $750 million in public funds toward a $1.9 billion stadium
in Las Vegas, while Oakland pledged $350 million in public funds
as part of a $1.3 billion public-private venture to replace the
aging Coliseum with a new stadium. The City alleged Davis
never took its proposal seriously and negotiated in bad faith.
In 2017 the Raiders submitted a proposal with the League
to relocate to Las Vegas. The City alleged member clubs “went
through the motions” of voting on the proposal, which the
membership approved 31 to 1. According to the City, the value of
the Raiders franchise increased by $1.6 billion, and the Raiders
paid the League a relocation fee of $378 million. Meanwhile, the
City claimed it lost the value of its investments in the Coliseum
that were associated with the Raiders’ presence in Oakland,
income from ticket sales and the Coliseum lease, and tax
revenues associated with Raiders games.
The City sued the League and its member clubs alleging
three causes of action. First, the City alleged the defendants
breached the NFL Constitution and the Relocation Policy by
failing to “‘work diligently and in good faith to obtain and to
maintain suitable stadium facilities’” in Oakland and to consider
the 12 factors listed in the Relocation Policy before approving the
Raiders’ relocation. The City alleged it had standing to sue for
breach of contract as a third party beneficiary of those alleged
agreements. Second, the City alleged the defendants breached
13
the implied covenant of good faith and fair dealing by failing to
consider the 12 factors listed in the Relocation Policy before
approving the Raiders’ relocation or by considering them in bad
faith. The City also alleged all 12 factors “supported the Raiders’
continued presence in Oakland.” Third, the City alleged the
defendants were unjustly enriched to the City’s detriment.
The defendants demurred to all three causes of action. For
the cause of action for breach of contract, the defendants argued
that the Relocation Policy did not contain binding promises and
that the City did not sufficiently allege any breach of a binding
promise or recoverable damages. For the cause of action for
breach of the implied covenant of good faith and fair dealing, the
defendants argued that the Relocation Policy allowed member
clubs to consider “none, some, or all” of the relocation factors and
that a party cannot breach the covenant of good faith and fair
dealing by engaging in conduct the agreement permits. The
defendants also argued that the City was not a third party
beneficiary of the Relocation Policy and that therefore the City
did not have standing to allege causes of action for breach of
contract or breach of the implied covenant of good faith and fair
dealing. Finally, the defendants argued the City could not state a
cause of action for unjust enrichment because there is no such
cause of action in California and because a lease agreement
between the City and the Raiders defined the rights of the
parties.
The trial court sustained the demurrer without leave to
amend. The court ruled that “the Relocation Policy does not
contain a promise that Defendants will consider anything” and
that the promise to negotiate in good faith “is belied by the
language” that makes compliance with that obligation no more
14
than another optional factor clubs may consider. The trial court
stated that the Relocation Policy’s 12 factors “simply inform the
[member] clubs’ judgment in evaluating a proposed relocation”
and that “there is no affirmative promise or duty to consider
those factors.”
The trial court also agreed with the defendants that, even if
the Relocation Policy contained enforceable promises, the City
could not enforce them because it is not a third party beneficiary
of the Relocation Policy. The trial court stated that “the NFL
Constitution and Relocation Policy make clear that the purpose
behind these documents is to protect and benefit [the League]
and the [member] clubs; there is simply no reading of the
purported agreements which would allow the trier of fact to
conclude that a motivating purpose of the [League] and its
member clubs in entering into the Relocation Policy was to
provide a benefit to host cities such as Oakland.” The court also
concluded the purpose of the Relocation Policy was to ensure the
League maintained control of its business and to prevent
government oversight. Therefore, the court ruled, it would be
“illogical” for the League and its member clubs to implement a
policy “intending to benefit host cities like Oakland, thereby
permitting the very government intervention the Relocation
Policy sought to avoid. . . .”
The trial court sustained the demurrer to the cause of
action for breach of the implied covenant of good faith and fair
dealing as “superfluous,” stating the City alleged the same “acts
and seek[s] the same damages sought in the first cause of action
for breach of contract.” The court also stated that a cause of
action for breach of the implied covenant of good faith and fair
dealing requires an enforceable contract. Because there was no
15
contractual relationship between the City and the defendants,
the court ruled, there could be no breach of the implied covenant.
Finally, the trial court sustained the demurrer to the cause of
action for unjust enrichment, ruling that California does not
recognize such a cause of action and that, even if it did, the City
never “conferred a benefit” on the defendants that the defendants
retained unjustly.
The court entered judgment in favor of the defendants. The
City timely appealed.
DISCUSSION
A. Standard of Review
A demurrer tests the legal sufficiency of the complaint.
(City of Coronado v. San Diego Assn. of Governments (2022)
80 Cal.App.5th 21, 35.) “In an appeal from a judgment following
an order sustaining a demurrer without leave to amend, we first
review de novo ‘whether the complaint states facts sufficient to
constitute a cause of action.’” (Jane Doe No. 1 v. Uber
Technologies, Inc. (2022) 79 Cal.App.5th 410, 419; see Schmier v.
City of Berkeley (2022) 76 Cal.App.5th 549, 553, fn. 4.) “‘“[W]e
accept as true all material facts alleged in the complaint, but not
contentions, deductions or conclusions of fact or law. We also
consider matters that may be judicially noticed.”’” (City of
Coronado, at p. 35; see Schmier, at p. 553, fn. 4.)
If the complaint does not allege facts sufficient to constitute
a cause of action, we determine whether there is a reasonable
possibility the plaintiff can cure the defect by amendment. If so,
the trial court has abused its discretion, and we reverse; if not,
we affirm. (City of Coronado v. San Diego Assn. of Governments,
16
supra, 80 Cal.App.5th at p. 35; All of US or None–Riverside
Chapter v. Hamrick (2021) 64 Cal.App.5th 751, 763.) The
plaintiff has the burden to show a reasonable possibility it can
amend the complaint to state a cause of action. (City of
Coronado, at p. 35; Hamrick, at p. 763.)
B. The City Is Not a Third Party Beneficiary of the
Relocation Policy
Civil Code section 1559 provides “a contract, made
expressly for the benefit of a third person, may be enforced by
him [or her] at any time before the parties thereto rescind it.” In
Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817 (Goonewardene)
the Supreme Court established a three-part test to determine
whether an individual or entity that is not a party to a contract
may bring a breach of contract action against a party to the
contract as a third party beneficiary. (Id. at p. 821.) That test
requires the third party to establish “not only (1) that it is likely
to benefit from the contract, but also (2) that a motivating
purpose of the contracting parties is to provide a benefit to the
third party, and further (3) that permitting the third party to
bring its own breach of contract action against a contracting
party is consistent with the objectives of the contract and the
reasonable expectations of the contracting parties.” (Ibid.; see
Wexler v. California Fair Plan Assn. (2021) 63 Cal.App.5th 55, 65
(Wexler).) “All three elements must be satisfied to permit the
third party action to go forward.” (Goonewardene, at p. 830.)
In applying this test, the court may look to “the express
provisions of the contract at issue, as well as all of the relevant
circumstances under which the contract was agreed to.”
(Goonewardene, supra, 6 Cal.5th at p. 830; see Garcia v. Truck
17
Ins. Exchange (1984) 36 Cal.3d 426, 437 [considering evidence of
the circumstances and negotiations of the parties to a contract to
determine whether the parties intended the plaintiff to benefit
from the contract]; Neverkovec v. Fredericks (1999)
74 Cal.App.4th 337, 349 [same].) In general, courts resolve
doubts against the existence of a third party beneficiary. (Wexler,
supra, 63 Cal.App.5th at p. 66; Shaolian v. Safeco Ins. Co. (1999)
71 Cal.App.4th 268, 275.)
The parties agree the City “is likely to benefit from” the
Relocation Policy and thus meets the first element of the
Goonewardene test. The issues are whether the City has alleged
sufficient facts to meet the second and third elements of that test
and, if not, whether there is a reasonable possibility the City can
cure the defect.
1. The City Sufficiently Alleged the Second
Element of the Goonewardene Test
To qualify as a third party beneficiary of a contract, “the
contracting parties must have a motivating purpose to benefit the
third party, and not simply knowledge that a benefit to the third
party may follow from the contract.” (Goonewardene, supra,
6 Cal.5th at p. 830.) The Supreme Court in Goonewardene
acknowledged that past cases sometimes referred to this element
as a requirement that “the ‘purpose’ of the contract be to benefit
the third party [citation] and sometimes as a requirement that
there be ‘an intent to benefit’ the third party [citations].” (Ibid.)
Finding the term “intent” ambiguous and potentially confusing,
the Supreme Court instead used the term “motivating purpose,”
but made clear its earlier “intent-to-benefit case law” remained
relevant in analyzing the second element of the test for a third
18
party beneficiary. (Ibid.; see Levy v. Only Cremations for Pets,
Inc. (2020) 57 Cal.App.5th 203, 212.)
The City alleged the League Commissioner issued the
Relocation Policy after host cities and members of Congress
criticized the League for “ignoring the interests of fans and Host
Cities in the name of extracting profits.”6 The City also alleged
the League revised the Relocation Policy in light of discussions
with the United States Conference of Mayors to “‘give city
interests a greater measure of recognition and protection.’”
Indeed, in a congressional hearing cited in the complaint,
Commissioner Tagliabue stated the League had “worked for
several years with the U.S. Conference of Mayors and come to an
understanding on issues of franchise movement.” (Hearings
before Sen. Com. on the Judiciary on Sen. No. 952, supra, p. 78.)
That understanding, as reflected in the Joint Statement,
intended to benefit host cities and was a motivating purpose for
the amendments to the Relocation Policy containing the
provisions the City alleges the defendants breached.
The defendants argue the terms of the Relocation Policy
make clear that the purpose of the Relocation Policy “is to protect
and benefit the [League] and [League] clubs” and that its
“overriding motivation” is the League’s business interests. That
may be. But the Supreme Court in Goonewardene did not require
a plaintiff to demonstrate the “overriding motivation” of a
contract was to benefit the plaintiff; instead, the plaintiff need
only show (or here, allege) “a motivating purpose” was to provide
6 The defendants claim the City invented the term “Host
Cities,” which does not appear in the Relocation Policy, to support
the City’s claim the Relocation Policy was intended to benefit
cities in which member clubs play their games.
19
a benefit to the plaintiff. (Goonewardene, supra, 6 Cal.5th at
p. 830.)7 The City cleared that pleading hurdle. In particular,
the League’s adoption of the revised Relocation Policy following
the Joint Statement with the United States Conference of Mayors
shows “a motivating purpose” of the new Policy was to provide a
benefit to cities that host member clubs. There may have been
other motivations for the League to adopt the revised Relocation
Policy, such as avoiding antitrust liability and protecting the
League’s business interests, but those motivations do not exclude
the possibility of additional motivating purposes.
The defendants also argue that the contracting parties’
intent to benefit a third party “‘must appear in the terms of the
agreement’” (Principal Mut. Life Ins. Co. v. Vars, Pave, McCord &
Freedman (1998) 65 Cal.App.4th 1469, 1486; see Allied
Anesthesia Medical Group v. Inland Empire Health Plan (2022)
7 The defendants cite the decision of the United States
District Court for the Northern District of California in City of
Oakland v. Oakland Raiders (N.D.Cal. July 25, 2019, No. 18-cv-
07444-JCS) [2019 WL 3344624], which granted a motion by the
League and its member clubs to dismiss the City’s breach of
contract cause of action in that case because the City was not a
third party beneficiary of the Relocation Policy under California
law. (Id. at p. 16.) In so doing, the court ruled the “overriding
motivation” of the League and its member clubs in adopting the
Relocation Policy was to further the League’s “business
interests.” (Id. at p. 14.) Decisions of a federal court interpreting
California law “are only authoritative to the extent we find them
persuasive.” (LG Chem, Ltd. v. Superior Court (2022)
80 Cal.App.5th 348, 371.) The decision of the district court in
City of Oakland v. Oakland Raiders is not persuasive; it imposed
a higher burden on the plaintiff than the burden imposed by the
California Supreme Court in Goonewardene.
20
80 Cal.App.5th 794, 806) and that the Relocation Policy “says
nothing about furthering the interests of cities in which clubs are
located.” But the cases the defendants cite contradict the
Supreme Court’s decision in Goonewardene, which plainly states
a court, in applying its three-part test, should carefully examine
the terms of the contract “as well as” the circumstances under
which the contract was negotiated. (Goonewardene, supra,
6 Cal.5th at p. 830; see Garcia v. Truck Ins. Exchange, supra,
36 Cal.3d at p. 437 [“In determining the meaning of a written
contract allegedly made, in part, for the benefit of a third party,
evidence of the circumstances and negotiations of the parties in
making the contract is both relevant and admissible.”]; Martinez
v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 401 [a third
party may enforce a contract if such an intention appears from
“the nature of the contract and the circumstances accompanying
its execution”]; Lucas v. Hamm (1961) 56 Cal.2d 583, 590-591
[rejecting any requirement that “there must be ‘an intent clearly
manifested by the promisor’ to secure some benefit to the third
person”]; Schauer v. Mandarin Gems of Cal., Inc. (2005)
125 Cal.App.4th 949, 957-958 [citing Lucas and considering the
circumstances under which the contracting parties negotiated in
determining if the plaintiff was a third party beneficiary of the
contract].)
2. The City Did Not and Cannot Plead Facts To
Satisfy the Third Element of the Goonewardene
Test
The third element of the Goonewardene test “does not focus
upon whether the parties specifically intended third party
enforcement but rather upon whether, taking into account the
21
language of the contract and all of the relevant circumstances
under which the contract was entered into, permitting the third
party to bring the proposed breach of contract action would be
‘consistent with the objectives of the contract and the reasonable
expectations of the contracting parties.’ [Citation.] In other
words, this element calls for a judgment regarding the potential
effect that permitting third party enforcement would have on the
parties’ contracting goals, rather than a determination whether
the parties actually anticipated third party enforcement at the
time the contract was entered into.” (Goonewardene, supra,
6 Cal.5th at pp. 830-831.)
“Furthermore, the requirement in the third element that
third party enforcement be consistent with ‘the objectives of the
contract’ is comparable to the inquiry . . . whether third party
enforcement will effectuate ‘“the contracting parties’ performance
objectives,”’ namely ‘those objectives of the enterprise embodied
in the contract, read in the light of surrounding circumstances.’”
(Goonewardene, supra, 6 Cal.5th at p. 831, italics omitted; see,
e.g., Wexler, supra, 63 Cal.App.5th at p. 66 [insureds’ daughter
was not a third party beneficiary where permitting her to enforce
the insurance contract was not necessary “to effectuate the
insurance contract’s objectives”].) “And the additional
requirement in this element that third party enforcement be
consistent as well with ‘the reasonable expectations of the
contracting parties’ reflects the teaching of prior California
decisions that have denied application of the third party
beneficiary doctrine when permitting the third party to maintain
a breach of contract action would not be consistent with the
reasonable expectations of the contracting parties.”
(Goonewardene, at p. 831.)
22
Even if the Relocation Policy’s benefits to host cities such as
Oakland could only be realized by giving host cities the right to
enforce the Policy, such a result would not be consistent with the
reasonable expectations of the parties under the language of the
Policy and the relevant circumstances surrounding its adoption.
First, the language of the Relocation Policy does not preclude a
member club from relocating under any set of circumstances, nor
does it restrict a member club from exercising its business
judgment in any particular way. Simply put, the defendants did
not agree to constrain their ability to approve a proposed
relocation for any reason. Moreover, the Policy states that, “[i]n
considering a proposed relocation, the Member Clubs are making
a business judgment concerning how best to advance their
collective interests.” Giving a third party the right to enforce
provisions of the Relocation Policy in an attempt to restrict the
defendants’ unfettered discretion under the Policy and prioritize
a third party’s interests over the collective interests of the League
and its member clubs would be contrary to the Policy’s plain
language. (See Martinez v. Socoma Companies, Inc., supra,
11 Cal.3d at p. 402 [giving a third party a right to enforce a
contract contradicted the contract provisions that evidenced the
parties’ intent to maintain control over the determination of
contractual disputes].)
Second, the circumstances surrounding the adoption of the
Relocation Policy and its amendments confirm the defendants did
not reasonably expect host cities like Oakland to be able to
enforce the Policy. As the City alleged, the League first issued
the Relocation Policy on the heels of proposed federal legislation
that would have removed the League’s autonomy in making
relocation decisions. The League made amendments to the
23
Relocation Policy under similar circumstances and after fallout
from several relocations prompted discussions with the United
States Conference of Mayors. While these circumstances indicate
the defendants intended the Relocation Policy to benefit host
cities, it does not follow that the defendants reasonably expected
host cities to be able to enforce the Policy. (See Goonewardene,
supra, 6 Cal.5th at p. 836 [“‘There is an important analytical
distinction between contracting for a benefit to an outsider and
granting a right to sue for breach to that outsider.’”],
parenthetically quoting Geis, Broadcast Contracting (2012)
106 Nw.U.L.Rev. 1153, 1195.) Indeed, the City conceded in the
trial court and in this appeal that “the relevant circumstances
demonstrate that [the defendants] adopted the Relocation [Policy]
to avoid government intervention and retain control over
relocation decisions.” That position is fundamentally inconsistent
with the argument the defendants reasonably expected host cities
to be able to enforce the Relocation Policy. If, as the City and the
defendants appear to agree, the defendants adopted the
Relocation Policy to maintain control over relocation decisions,
the defendants would not reasonably expect a host city to be able
to sue them over those decisions.
Because the City cannot satisfy the third element of the
Goonewardene test, the city is not a third party beneficiary of the
Relocation Policy and cannot maintain a cause of action for
breach of contract. Nor is there a reasonable possibility the City
can amend its complaint to satisfy the Goonewardene test. Both
the plain language of the Relocation Policy and the circumstances
in which the defendants adopted it support only one conclusion:
The defendants did not intend or reasonably expect host cities
like Oakland to enforce the Policy. Therefore, the trial court did
24
not abuse its discretion in sustaining the defendants’ demurrer to
the City’s cause of action for breach of contract without leave to
amend. And because the City is not a third party beneficiary of
the Relocation Policy, it cannot maintain a cause of action for
breach of the implied covenant of good faith and fair dealing.
(See Green Valley Landowners Assn. v. City of Vallejo (2015)
241 Cal.App.4th 425, 433 [“[t]he prerequisite for any action for
breach of the implied covenant of good faith and fair dealing is
the existence of a contractual relationship between the parties,
since the covenant is an implied term in the contract”]; Molecular
Analytical Systems v. Ciphergen Biosystems, Inc. (2010)
186 Cal.App.4th 696, 712 [“The covenant does not exist
independently of the underlying contract.”].)
C. The City Cannot Allege Facts Sufficient To State a
Cause of Action Based on a Theory of Unjust
Enrichment
The City argues the trial court applied the wrong legal
standard in analyzing whether the City stated a cause of action
for unjust enrichment. The City is correct: The trial court did
commit legal error. The error, however, was harmless. The trial
court properly sustained the defendants’ demurrer to this cause
of action, albeit for the wrong reason.
1. Applicable Law
There is no cause of action in California labeled “unjust
enrichment.” (De Havilland v. FX Networks, LLC (2018)
21 Cal.App.5th 845, 870; Bank of New York Mellon v. Citibank,
N.A. (2017) 8 Cal.App.5th 935, 955.) But “[c]ommon law
principles of restitution require a party to return a benefit when
25
the retention of such benefit would unjustly enrich the recipient;
a typical cause of action involving such remedy is ‘quasi-
contract.’” (Munoz v. MacMillan (2011) 195 Cal.App.4th 648,
661; see Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51 [“Under
the law of restitution, an individual may be required to make
restitution if he is unjustly enriched at the expense of another.”];
Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018)
29 Cal.App.5th 230, 238 [“The elements of a cause of action
[based on] unjust enrichment are simply stated as ‘receipt of a
benefit and unjust retention of the benefit at the expense of
another.’”].) “Whether termed unjust enrichment, quasi-contract,
or quantum meruit, the equitable remedy of restitution when
unjust enrichment has occurred ‘is an obligation (not a true
contract [citation]) created by the law without regard to the
intention of the parties . . . .’” (Federal Deposit Ins. Corp. v.
Dintino (2008) 167 Cal.App.4th 333, 346; accord, Unilab Corp. v.
Angeles-IPA (2016) 244 Cal.App.4th 622, 639; see 1 Witkin,
Summary of Cal. Law (11th ed. 2022) Contracts, § 1050 [“Where
a person obtains a benefit that he or she may not justly retain,
the person is unjustly enriched.”].)
The equitable doctrine of unjust enrichment “is based on
the idea that ‘one person should not be permitted unjustly to
enrich himself at the expense of another, but should be required
to make restitution of or for property or benefits received,
retained, or appropriated, where it is just and equitable that such
restitution be made, and where such action involves no violation
or frustration of law or opposition to public policy, either directly
or indirectly.’” (County of San Bernardino v. Walsh (2007)
158 Cal.App.4th 533, 542.) “Typically, the defendant’s benefit
and the plaintiff’s loss are the same, and restitution requires the
26
defendant to restore plaintiff to his or her original position.”
(Ibid.) “To confer a benefit,” however, “it is not essential that
money be paid directly to the recipient by the party seeking
restitution.” (Hirsch v. Bank of America (2003) 107 Cal.App.4th
708, 722; accord, County of Solano v. Vallejo Redevelopment
Agency (1999) 75 Cal.App.4th 1262, 1278; see 1 Witkin, supra,
§ 1055 [“For a benefit to be conferred, it is not essential that
money be paid directly to the recipient by the party seeking
restitution.”].) When a person has received a benefit from
another, he or she is required to make restitution “‘only if the
circumstances of its receipt or retention are such that, as between
the two persons, it is unjust for him [or her] to retain it.’”
(Ghirardo v. Antonioli, supra, 14 Cal.4th at p. 51; see California
Medical Assn., Inc. v. Aetna U.S. Healthcare of California,
Inc. (2001) 94 Cal.App.4th 151, 171, fn. 23.)
The City alleged the defendants were unjustly enriched by
the increased value of the Raiders following the club’s move to
Las Vegas and by the relocation fee, which the Raiders paid to
the League. It is questionable whether this is a valid unjust
enrichment theory where, as here, the plaintiff is asserting a
quasi-contract action to enforce rights created by a contract to
which the plaintiff is not a third party beneficiary. (See Marina
Tenants Assn. v. Deauville Marina Development Co. (1986)
181 Cal.App.3d 122, 134 [rejecting an unjust enrichment theory
of recovery that was “wholly derivative of the third-party
beneficiary claim” because “a court of equity . . . cannot create
new rights under the guise of doing equity”]; see also Feingold v.
John Hancock Life Ins. Co. (USA) (1st Cir. 2014) 753 F.3d 55, 61
[plaintiff could not “circumvent the strong presumption against
27
third-party beneficiaries . . . by recasting an alleged violation of
the [contract] as a common law claim” for unjust enrichment].)
But even if such a theory is valid, it would not apply to the
City’s claim. As the Restatement explains, where someone other
than the plaintiff provided the benefit the defendants allegedly
unjustly retained, as between the plaintiff and the defendant, the
plaintiff is entitled to restitution from the defendant where the
plaintiff “has a better legal or equitable right.” (Rest.3d
Restitution and Unjust Enrichment, § 48.) The Restatement
cautions that the requirement the plaintiff “demonstrate ‘a better
legal or equitable right’ to the benefit in question is actually
highly restrictive.” (Id., com. i, p. 159.) The plaintiff must
“identify a right in the disputed assets that is both recognized,
and accorded priority over the interest of the defendant, under
the law of the jurisdiction. Proof merely that the defendant has
received a windfall, that the [plaintiff] has been ill-treated, and
that the third party’s payment to the defendant (or the
defendant’s retention of payment as against the [plaintiff])
violates rules of good faith, basic fairness, or common decency,
does not suffice to make out a claim in restitution.” (Ibid.; see
Ghirardo v. Antonioli, supra, 14 Cal.4th at p. 51 [relying on the
Restatement of Restitution definition of unjust enrichment];
American Master Lease LLC v. Idanta Partners, Ltd. (2014)
225 Cal.App.4th 1451, 1486, fn. 23 [California courts apply
principles in the Restatement Third of Restitution and Unjust
Enrichment]; see also Canfield v. Security-First Nat. Bank (1939)
13 Cal.2d 1, 30-31 [although the Restatement “does not constitute
a binding authority, considering the circumstances under which
it has been drafted, and its purposes, in the absence of a contrary
statute or decision in this state, it is entitled to great
28
consideration as an argumentative authority”]; Karapetian v.
Carolan (1948) 83 Cal.App.2d 344, 349 [“[t]here can be no doubt
that the rules announced in the Restatement are sound, and
reach the fair and equitable result”].)
2. The City Does Not Have a Better Legal or
Equitable Right in the Increased Value of the
Raiders or the Relocation Fee
In ruling the City could not state a cause of action
supporting restitution because the City did not confer a benefit
on the Raiders or the League, the trial court applied the wrong
standard. As discussed, the plaintiff need not confer a benefit on
the defendant to maintain a cause of action based on unjust
enrichment. The trial court’s error, however, was harmless
because the City cannot show that, as between it and the
defendants, the City has a better legal or equitable right to the
increased value in the Raiders or to the relocation fee. (See
Rest.3d Restitution and Unjust Enrichment, § 48.)
As stated, the City bases its right to the Raiders’ increased
value and to the relocation fee on the defendants’ alleged
breaches of the Relocation Policy, namely, their failure “to work
diligently and in good faith to obtain and to maintain suitable
stadium facilities in their home territories” and to consider the
factors identified in the Relocation Policy. But even if the
defendants failed to comply with these provisions of the
Relocation Policy, member clubs could still approve the Raiders’
move to Las Vegas. As discussed, and contrary to Oakland’s
assertions, the Relocation Policy does not prevent member clubs
from approving a relocation for any reason. While the Relocation
Policy says the League disfavors relocations if a host city has
29
supported the club and the club is financially successful, the
Policy still allows for relocation if warranted by undefined
“compelling League interests.” And while the Relocation Policy
does require clubs to work diligently and in good faith to
maintain suitable stadium facilities in their home territories, the
Policy also allows clubs to “discuss a possible relocation, or to
negotiate a proposed lease or other arrangements, with a
community outside its home territory.” Finally, as the
defendants argue, nothing in the Policy obligates member clubs
to (or says how they should) weigh the relocation factors in
determining how to vote on a proposed relocation. The factors
are merely “useful ways to organize data and to inform” each
club’s judgment about whether a proposed transfer advances the
clubs’ collective interests. Thus, even if the Raiders failed to
work diligently and in good faith to maintain suitable stadium
facilities in Oakland, and even if no club considered a single
relocation factor in voting to approve the Raiders’ move to Las
Vegas (including the degree to which the Raiders engaged in good
faith negotiations concerning terms and conditions under which
the club could remain in Oakland and afforded the community a
reasonable amount of time to address pertinent proposals), the
City would not have a legal claim to the benefits the defendants
received when the Raiders moved to Las Vegas. Because there is
no possibility the City can amend the complaint to allege it has a
better legal or equitable right to the increased value of the
Raiders or to the relocation fee under the Relocation Policy, the
trial court did not abuse its discretion in sustaining the
defendants’ demurrer to the cause of action for unjust enrichment
without leave to amend.
30
DISPOSITION
The judgment is affirmed. The defendants are to recover
their costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
31