Aspex Eyewear, Inc. v. Vision Service Plan

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUL 26 2010
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
ASPEX EYEWEAR, INC., No. 10-16232
Plaintiff - Appellant, D.C. No. 2:10-cv-00632-JAM-
GGH
v.
VISION SERVICE PLAN, MEMORANDUM*
Defendant - Appellee.
Appeal from the United States District Court
for the Eastern District of California
John A. Mendez, District Judge, Presiding
Argued and Submitted July 16, 2010
San Francisco, California
Before: HUG and M. SMITH, Circuit Judges, and TODD, Senior District Judge.**
Plaintiff-Appellant Aspex Eyewear, Inc. (Aspex) appeals the district court’s
denial of its motion for a preliminary injunction against Defendant-Appellee
Vision Service Plan (VSP). We review the denial of a preliminary injunction for
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable James Dale Todd, Senior United States District Judge
for the Western District of Tennessee, sitting by designation.
abuse of discretion. See Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th
Cir. 2009). We have jurisdiction under 28 U.S.C. § 1292(a)(1). Because the
parties are familiar with the facts and procedural history, we do not restate them
here except as necessary to explain our decision. We affirm.
The district court did not abuse its discretion in denying Aspex’s request for
injunctive relief. “A plaintiff seeking a preliminary injunction must establish that
he is likely to succeed on the merits, that he is likely to suffer irreparable harm in
the absence of preliminary relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest.” Winter v. Natural Res. Def. Council,
Inc., 129 S. Ct. 365, 374 (2008). Aspex has failed to demonstrate a likelihood of
success on the merits of each of its claims.
First, Aspex alleges that it entered into an enforceable implied-in-fact
contract with VSP, which VSP breached when it decided to alter Aspex’s in-
network status. “An implied contract . . . in no less degree than an express
contract, must be founded upon an ascertained agreement of the parties to perform
it.” Zenith Ins. Co. v. Cozen O’Connor, 55 Cal. Rptr. 3d 911, 920 (Ct. App. 2007)
(alteration in original and internal quotation marks omitted). “[T]he very heart of
this kind of agreement is an intent to promise.” Id. (internal quotation marks
omitted). The record in this case does not reveal any intent on the part of VSP to
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promise Aspex that it would not alter their relationship or Aspex’s in-network
status so long as Aspex disclosed and updated its prices. Further, the record
contains no facts demonstrating that VSP committed itself to continue in its
relationship with Aspex for any definite duration. The agreement between Aspex
and VSP appears to be one of indefinite duration, making it terminable at will of
either party. See Zimco Rests., Inc. v. Bartenders and Culinary Workers Union,
Local 340, AFL-CIO, 331 P.2d 789, 793 (Cal. Dist. Ct. App. 1958) (“The rule is
well established in California” that “[a]s to contracts contemplating continuing
performance for an indefinite time, the general rule is that such contracts are
terminable at will by either party.”).
Aspex argues that VSP has violated Aspex’s right to fair procedure. Under
California’s common-law doctrine of fair procedure, “private entities may not
expel or exclude qualified persons without acting in a manner that is substantively
rational and procedurally fair.” Palm Med. Group, Inc. v. State Compensation Ins.
Fund, 74 Cal. Rptr. 3d 266, 274 (Ct. App. 2008). Despite VSP’s obvious business
interest in maintaining Aspex as a partner, the strenuous and litigious relationship
between VSP and Aspex led VSP to decide that it was in its best interests to end its
relationship with Aspex as an in-network vendor. VSP’s conclusion, whether or
not a wise exercise of sound business judgment, was not “arbitrary, capricious,
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discriminatory, irrational or contrary to public policy.” Id. at 280. In this instance,
the right of fair procedure requires no more than “notice and an opportunity to be
heard.” Id. VSP notified Aspex of its intent to remove Aspex as an in-network
provider well in advance of its decision to do so, and gave Aspex multiple
opportunities to respond to and address VSP’s concerns driving its decision.
Aspex also alleges that VSP violated California’s Unfair Competition Law,
Cal. Bus. & Prof. Code § 17200 et seq., by engaging in conduct made unlawful
under the Hobbs Act, 18 U.S.C. § 1951. Aspex contends that VSP’s “threats” that
it would remove Aspex as an in-network vendor if Aspex did not drop its patent
infringements suits constituted extortion under the Hobbs Act. However, Aspex’s
mere fear of economic loss in the face of VSP’s warnings does not give rise to a
claim under the Hobbs Act. “[E]xtortion requires more than fear. . . . [t]he use of
the fear must be ‘wrongful.’” Sosa v. DIRECTV, Inc., 437 F.3d 923, 939 (9th Cir.
2006). The Hobbs Act does not make actionable VSP’s threats of altering Aspex’s
network status, at least to the extent that the basis for those threats “do not rise to
the level of a sham,” id. at 939-40, of which there is no evidence on this record.
Accordingly, VSP was entitled to use some economic pressure falling within the
scope of its legal rights in order to bring Aspex to the negotiating table. See
Rothman v. Vedder Park Management, 912 F.2d 315, 318 (9th Cir. 1990) (holding
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that a landlord’s alleged threats that tenants who did not sign a lease would have to
pay their own utility bills and be subject to future rent increases did not constitute a
“wrongful use of force or fear”).
Aspex also alleges that VSP’s conduct is “unfair” under the UCL because it
threatens an “incipient” antitrust violation and violates the “policy or spirit” of the
antitrust laws. Aspex’s claim fails because it has not offered “proof of some actual
or threatened impact on competition.” Cel-Tech Commuc’ns, Inc. v. L.A. Cellular
Tel. Co., 973 P.2d 527, 544 (Cal. 1999). The record reveals that VSP’s motivation
behind its disputed decision is to end the litigation with Aspex, not to monopolize
the frames market or impede competition. Moreover, there are nearly 450 other
companies who compete with Aspex and VSP’s subsidiaries in the frames market.
VSP’s decision may be bad news for Aspex’s business, but not necessarily for
competition. See id. at 544 (“Injury to a competitor is not equivalent to injury to
competition; only the latter is the proper focus of antitrust laws.”). Even assuming
VSP’s conduct was aimed at pushing Aspex out of the frames market entirely, any
conclusion on this record that this result would diminish competition in the
relevant market would be speculative.
Finally, Aspex alleges that VSP tortiously interefered with a prospective
economic advantage of Aspex. “[A] plaintiff seeking to recover for alleged
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interference with prospective economic relations has the burden of pleading and
proving that the defendant’s interference was wrongful by some measure beyond
the fact of the interference itself.” Della Penna v. Toyota Motor Sales, USA, Inc.,
902 P.2d 740, 751 (Cal. 1995) (internal quotation marks omitted). Because Aspex
has failed to show a likelihood of prevailing on the merits of any of its independent
claims, Aspex necessarily fails to carry its burden on its tortious interference claim.
Having concluded that the district court did not abuse its discretion in
finding that Aspex failed to demonstrate a likelihood of success on the merits of its
claims, we need not address the remaining three factors of the preliminary
injunction inquiry. See Doe v. Reed, 586 F.3d 671, 681 n.14 (9th Cir. 2009).
AFFIRMED.
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