Telemasters, Inc v. the Vintage Club Master Association

FILED
NOT FOR PUBLICATION MAR 19 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
TELEMASTERS, INC, a California No. 08-56284
corporation,
D.C. No. 2:05-cv-05139-RGK-
Plaintiff - Appellant, VBK
v.
MEMORANDUM *
THE VINTAGE CLUB MASTER
ASSOCIATION, a California nonprofit
corporation; et al.,
Defendants - Appellees.
TELEMASTERS, INC, a California No. 08-56376
corporation,
D.C. No. 2:05-cv-05139-RGK-
Plaintiff - Appellee, VBK
v.
THE VINTAGE CLUB MASTER
ASSOCIATION, a California nonprofit
corporation; et al.,
Defendants - Appellants.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
TELEMASTERS, INC, a California No. 08-56571
corporation,
D.C. No. 2:05-cv-05139-RGK-
Plaintiff - Appellant, VBK
v.
THE VINTAGE CLUB MASTER
ASSOCIATION, a California nonprofit
corporation; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted March 3, 2010
Pasadena, California
Before: SCHROEDER, RYMER and WARDLAW, Circuit Judges.
Telemasters, Inc. (“Telemasters”), brought this action against The Vintage
Club Master Association and Arthur Allen, Vintage Club’s executive director
(collectively “defendants”), raising claims of copyright infringement, breach of
contract, conversion, breach of the covenant of good faith and fair dealing,
misappropriation of trade secrets, and quantum meruit. The district court granted
summary judgment against Telemasters on two of its claims. The remaining
claims were tried before a jury. At the close of Telemasters’ case, defendants
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moved for judgment as a matter of law under Federal Rule of Civil Procedure
50(a), which the district court granted in part. The jury returned a verdict in favor
of Telemasters in the amount of $698,000 on each of Telemasters’ remaining four
claims. Defendants filed renewed motions for judgment as a matter of law under
Federal Rule of Civil Procedure 50(b), which the district court granted in part,
reducing the damages award to $65,000. The district court also awarded
Telemasters $50,000 in attorneys’ fees, which was significantly less than
Telemasters had requested.
Telemasters appeals and defendants cross-appeal the district court’s
judgment. We have jurisdiction under 28 U.S.C. § 1291 and affirm.
I. Damages
The district court correctly granted in part the Rule 50(b) motion and
reduced the damages award from $698,000 to $65,000 because the evidence
presented at trial did not support the amount of damages awarded by the jury. The
jury’s award of $698,000 in damages for breach of the 1999 Agreement is not
supported by the alleged improper use of intellectual property. The jury was
properly instructed to award the fair market value of the equipment listed in the
1999 Agreement that defendants should have, but did not, return to Telemasters.
The 1999 Agreement did not include intellectual property in this list of equipment.
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Further, although there was evidence that it would cost just over $98,000 to
recreate the cable mapping records, the uncontradicted evidence also demonstrated
that the information was “site specific,” and that the fair market value of that
information was zero.
The jury’s award of damages cannot be based on quantum meruit in relation
to the cable mapping work. The cable mapping work was completed in connection
with the 1993 Agreement, and any breach of contract or losses in connection with
that agreement were not at issue at the trial. Furthermore, the owners of
Telemasters admitted at trial that because they had not performed a thorough
investigation, they had to pay for the cable pair mapping themselves.
The jury’s award of damages cannot be supported under a theory of
conversion on the basis of either the value of Telemasters’ intellectual property that
defendants used or failed to return, or on the basis of the value of the system as a
whole. The district court previously held on summary judgment that any claim for
conversion of intellectual property is preempted, and Telemasters has not
challenged that holding. Additionally, although Paul Philipson, one of the owners
of Telemasters, testified that the value of the whole system was between $500,000
and $600,000, he also testified that Telemasters received part of the system back
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from defendants. The jury was instructed to award the fair market value of only
those specific items that defendants did not return to Telemasters.
As to those items that defendants did not return to Telemasters, there was
evidence at trial that the power transfer panels had a value of between $4,000 and
$5,000, and the amphenol cables had a value of about $20,000. Philipson testified
that the cross-connect cables had a value of $200,000, but the vast majority of that
value was tied to the labor involved in connecting the cables. On this evidence, the
district court appropriately determined that the fair market value of the cross-
connect cables was 20% of the $200,000, or $40,000. Viewed in the light most
favorable to Telemasters, see E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951,
961 (9th Cir. 2009), this evidence supports a damages award of only $65,000.
Further, the district court did not err in submitting the breach of contract claim to
the jury because the district court never precluded recovery for defendants’ failure
to return equipment as required under the 1999 Agreement.
The district court properly granted the Rule 50(a) motion on punitive
damages because the evidence at trial, viewed in the light most favorable to
Telemasters, does not support a finding that defendants’ conduct rose to the level
of “oppression, fraud, or malice” necessary to recover punitive damages. See Cal.
Civ. Code § 3294(a).
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The district court also properly granted the Rule 50(a) motion on
Telemasters’ claims for breach of contract and for quantum meruit in relation to
wireless services. Viewed in the light most favorable to Telemasters, the evidence
does not support a finding that there was mutual assent between defendants and
Telemasters as to the essential terms of an agreement for wireless services, see Div.
of Labor Law Enforcement v. Transpacific Transp. Co., 137 Cal. Rptr. 855, 859
(Ct. App. 1977); that Telemasters researched and developed the wireless internet
system with both parties’ understanding that Telemasters would be compensated
for its services, see Strong v. Beydoun, 83 Cal. Rptr. 3d 632, 635 (Ct. App. 2008);
or that Telemasters’ services benefitted Vintage Club, see Ochs v. PacifiCare of
Cal., 9 Cal. Rptr. 3d 734, 742 (Ct. App. 2004).
The district court properly granted the Rule 50(a) motion as to Telemasters’
contributory copyright infringement claim because the evidence, viewed in the
light most favorable to Telemasters, does not support a finding that defendants
knew or had reason to know that Telemasters had copyrighted the information on
the translation card when Digital Streets used that information in April or May
2004. See Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). Further, the
undisputed evidence at trial showed that it was a Telemasters’ employee, not
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Vintage Club, that provided Digital Streets with the allegedly infringing material.
See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019 (9th Cir. 2001).
Finally, the district court did not abuse its discretion when it precluded
Philipson from testifying regarding defendants’ refusal to pay for DSL line and
caller ID services, and the value of the services that Telemasters withdrew from the
invoice at the request of defendants. Both Telemasters and defendants understood
that the charges for DSL line and caller ID services would not be pursued. In light
of this evidence, the district court did not abuse its discretion in precluding
Philipson from testifying regarding the removed charges.
II. Fees
In awarding attorneys’ fees and costs, the district court was not required to
make a separate determination as to the prevailing party for the copyright claims
and Telemasters’ state law claims, because all of the claims involved a common
core of facts. See Hensley v. Eckerhart, 461 U.S. 424, 435 (1983).
Telemasters’ argument that it is entitled to the full amount of its fees and
costs is based on its contention that the district court erred in reducing the jury’s
award of damages. Because the district court’s reduction of damages was proper,
Telemasters’ request for additional attorneys’ fees and costs fails.
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The district court did not clearly err in finding that Telemasters was the
prevailing party for purposes of an award of attorneys’ fees. See San Francisco
NAACP v. San Francisco Unified Sch. Dist., 284 F.3d 1163, 1166 (9th Cir. 2002).
Further, because the district court found that Telemasters was the prevailing party,
and the 1999 Agreement specifically provides for attorneys’ fees, the court
properly determined that Telemasters was entitled to its reasonable attorneys’ fees
and other costs. See Cal. Civ. Code § 1717(a). Moreover, the amount of attorneys’
fees that it awarded was reasonable.
AFFIRMED.
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