TSI USA LLC v. Uber Technologies Inc

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 TSI USA LLC, Case No. 17-cv-03536-HSG 8 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR 9 v. PARTIAL SUMMARY JUDGMENT 10 UBER TECHNOLOGIES, INC., Re: Dkt. No. 127 11 Defendant. [12] 13 Pending before the Court is Defendant Uber Technologies, Inc.’s motion for partial 14 summary judgment. Dkt. No. 127. The Court held a hearing on the motion on August 27, 2020. 15 Dkt. No. 149. For the reasons detailed below, the Court GRANTS IN PART and DENIES IN 16 PART Defendant’s motion. 17 I. BACKGROUND 18 A. Factual Background1 19 Plaintiff TSI USA LLC and Defendant entered into a Services Agreement and “Statement 20 of Work for Uber Global Travel Management Services” (“SOW”), effective November 24, 2014 21 (collectively, the “Agreements”). See Dkt. No. 89-1, Exs. 1–2. The SOW detailed the scope of 22 the Services that Plaintiff would provide, including global travel management services for Uber 23 employees. See id. The SOW included a checklist that outlined the services that plaintiff offered 24 “within the scope” of the Agreements. See id., Ex. 2 at Ex. B. Such services included providing 25 specific technology and support services for booking and managing travel plans. See id. 26 Defendant could also “issue additional instructions, require additional Services or reduce or waive [27] 1 Services covered by the applicable SOW” at any time, if done in writing and with a mutually 2 agreed upon adjustment in price and time of performance. See id., Ex. 1 at ¶ 2.2. Under the 3 Agreements, Defendant agreed to pay Plaintiff a “flat management fee” based on the monthly 4 volume of airline, rail, hotel and car sales booked through Plaintiff or fulfilled through Plaintiff’s 5 online booking tool on Defendant’s behalf. See id., Ex. 2 at Ex. C (“Payment Terms” and “Flat 6 Management Fee”). If, for example, Defendant booked between $833,333 and $1.25 million in a 7 given month, it would pay Plaintiff a 3% management fee. See id. The “baseline minimum” in 8 combined sales booked through Plaintiff under the Agreements, over the course of the two-year 9 term, was $10 million. See id. (“Contracted Baselines” and “Term”). The Agreements further 10 explained that the “[t]argeted ‘go live’ date” was January 2, 2015. See id., Ex. 1 at ¶ 10.1; id., Ex. 11 2 (“Schedule”). 12 The program did not launch by this “go live” target. See Dkt. No. 129-4, Ex. D (Brady 13 Depo.) at 109:4–112:21. According to Defendant, Plaintiff demonstrated the travel system 14 internally, but it had several problems and Defendant was concerned that it could not adequately 15 test the technology prior to the anticipated launch. See id.; see also id., Ex. 22 at TSI_113007; id., 16 Ex. 23 at TSI_116100. Defendant also stated that Plaintiff was unable to place the software app in 17 Apple’s App Store by January 2, 2015, a prerequisite to launching the program. See id. at 107:5– 18 108:21, 111:22–112:21; see also id., Ex. 23 at TSI_116100. Therefore, Defendant explained, the 19 launch was delayed and instead converted into a small “pilot” launch to test the program for 20 approximately two weeks. See Brady Depo. at 109:4–112:8, 113:17–114:11; id., Ex. 25 at 21 TSI_113980. 22 Plaintiff sent Defendant an invoice dated August 25, 2015, for $200,000, which 23 purportedly covered management fees from January through August 2015. See Dkt. No. 49-2, Ex. 24 J. Defendant states that during this period, Plaintiff made only 129 travel related bookings for 25 Defendant, which totaled $353,534. See Dkt. No. 129-5, Ex. E (Resp. to Rog. No. 13) at 26 TSI_132238; see also Dkt. No. 129-6, Ex. F (Plaintiff’s Initial Discl.). Defendant decided to 27 terminate the Agreements. See Dkt. No. 128 (Jaffe Decl.) at ¶¶ 17–18. By letter dated August 28, 1 notice stated: 2 Enclosed please find a check payable to TSI USA, LLC in the amount of $201,226.30. By executing below, you acknowledge and agree that 3 such payment constitutes full and final payment of all outstanding payment obligations under the Agreement, and that no further 4 amounts are or shall become due. 5 You hereby release and discharge us and our affiliates . . . from all actions, causes of action, claims, damages, suits, and demands of any 6 kind whatsoever, in law or equity . . . relating to or arising out of the Agreement. [7] 8 See Dkt. No. 43, Ex. A; see also Dkt. No. 49-1 (Groenewald Decl.) at ¶ 15. Defendant contends 9 that it did not owe Plaintiff anything for its unsatisfactory services, but the check, which was 10 enclosed with the termination notice, was intended to cover: (1) the $200,000 that Plaintiff 11 requested for its services from January through August 2015; as well as (2) $1,226.30 to reimburse 12 Plaintiff for the cost of an airline ticket that Plaintiff had advanced on Defendant’s behalf in June 13 2015. See Jaffe Decl. at ¶¶ 17–18; see also Groenewald Decl. at ¶ 15; Dkt. No. 89 at ¶ 48(d). 14 Plaintiff cashed the check. See Jaffe Decl. at ¶ 18. It subsequently sent Defendant an 15 additional statement to recover $1.4 million in purported costs incurred and owed by Defendant. 16 See Dkt. No. 129-1, Ex. A (Kumpf Depo.) at Ex. 4-A. The invoiced included: (1) $791,580.25 in 17 “Implementation Costs” from November 2014 through August 2015; (2) $101,450.00 for 18 “Ginseng Project Costs” from April through July 2015; and (3) $739,843.50 in “Monthly Service 19 Costs” from January through November 2015. Id. The invoice also credited the $200,000 from 20 Defendant as a “partial payment.” Id. Defendant contends that these costs are inflated, and in any 21 event, Plaintiff is not entitled to recoup them under the Agreements. See Dkt. No. 127 at 10. 22 As relevant to the instant motion, the Agreements allowed Defendant “at its sole 23 discretion” to “terminate all or any part of this Agreement or SOW hereunder by providing 24 [Plaintiff] 90 days written notice.” See Dkt. No. 89-1, Ex. 1 at ¶ 11.1 (“termination provision”). 25 The termination provision further states that “Uber will provide 90 days written notice and 26 [Plaintiff] shall be entitled to its costs already incurred in the performance of the Services.” Id. 27 The Agreements also contained a limitation of liability clause that states: 9.2 LIMITS OF LIABILITY. . . . IN NO EVENT SHALL 1 UBER’S TOTAL CUMULATIVE LIABILITY OF EACH AND EVERY KIND UNDER THIS AGREEMENT EXCEED THE 2 TOTAL AMOUNT PAID TO [PLAINTIFF] FOR SERVICES PERFORMED IN ACCORDANCE WITH THE APPLICABLE 3 SOW. THE FOREGOING LIMITATION OF LIABILITY AND EXCLUSION OF CERTAIN DAMAGES SHALL APPLY 4 REGARDLESS OF THE SUCCESS OR EFFECTIVENESS OF OTHER REMEDIES. [5] 6 See id., Ex. 1 at ¶ 9.2 (“limitation of liability provision”). The meaning of the termination 7 provision and this limitation of liability underlie the parties’ dispute in this action. 8 B. Procedural History 9 Plaintiff filed its initial complaint on July 27, 2016, and an amended complaint on 10 September 16, 2016, both in the Northern District of Texas. Dkt. Nos. 1, 7. Plaintiff asserted 11 claims for breach of contract, unjust enrichment/quantum meruit, fraud, tortious interference with 12 contract, and defamation/business disparagement. See Dkt. No. 7. It also sought compensatory 13 and punitive damages, as well as attorneys’ fees. Id. The case was subsequently transferred to the 14 Northern District of California on June 19, 2017. See Dkt. No. 31. On August 31, 2017, 15 Defendant filed a motion to dismiss. Dkt. No. 42. The Court granted the motion in part, 16 dismissing Plaintiff’s fraud and tort claims and the prayer for punitive damages and attorneys’ 17 fees. See Dkt. No. 68. 18 Plaintiff filed a Second Amended Complaint (“SAC”) on April 22, 2019. Dkt. No. 89. 19 Defendant again moved to dismiss. See Dkt. No. 90. Plaintiff, however, failed to respond to the 20 motion. The Court thus issued an order to show cause as to why the motion should not be granted. 21 See Dkt. No. 94. Plaintiff responded that it did not oppose the motion and stated that the Court 22 should resolve the motion “as it deems appropriate.” Dkt. No. 95. The Court granted the motion 23 and dismissed the fraud and defamation claims, as well as the prayers for punitive damages and 24 attorneys’ fees, with prejudice. See Dkt. No. 100. Plaintiff’s claims for breach of contract and 25 unjust enrichment/quantum meruit remain. See SAC at ¶¶ 52–60. Defendant answered the 26 remaining portions of the SAC and, inter alia, asserted an affirmative defense of fraud. See Dkt. 27 No. 102 at 12–13. Defendant contends that Plaintiff made false and/or misleading statements 1 id. Defendant urges that it would not have entered into the Agreements had it known the truth 2 about Plaintiff’s size and abilities. Id. Defendant now moves for partial summary judgment. See 3 Dkt. No. 127. 4 II. LEGAL STANDARD 5 Summary judgment is proper when a “movant shows that there is no genuine dispute as to 6 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 7 A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson 8 v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if there is evidence 9 in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. 10 But in deciding if a dispute is genuine, the court must view the inferences reasonably drawn from 11 the materials in the record in the light most favorable to the nonmoving party, Matsushita Elec. 12 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 , 587–88 (1986), and “may not weigh the evidence 13 or make credibility determinations,” Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), 14 overruled on other grounds by Shakur v. Schriro, 514 F.3d 878 , 884–85 (9th Cir. 2008). If a court 15 finds that there is no genuine dispute of material fact as to only a single claim or defense or as to 16 part of a claim or defense, it may enter partial summary judgment. Fed. R. Civ. P. 56(a). 17 III. DISCUSSION 18 Defendant raises three arguments in its motion for partial summary judgment. First, that 19 the limitation of liability caps any damages Defendant may owe to $200,000. See Dkt. No. 127 at 20 13–16. Second, that Plaintiff may not succeed on its unjust enrichment claim because it admitted 21 that all of the costs Plaintiff seeks to recover flow from the Agreements. See id. at 16–19. Lastly, 22 that Plaintiff misrepresented its abilities when negotiating with Defendant, and the Court should 23 grant Defendant’s fraud defense as to Plaintiff’s breach of contract claim. See id. at 19–21. The 24 Court addresses each argument in turn. 25 A. Limitation of Liability 26 Defendant first argues that the plain language of the limitation of liability provision in the 27 Agreements caps its total cumulative liability in this action to the “total amount paid to [Plaintiff] 1 necessary to enforce the cap, Defendant states, is the total amount that Defendant paid Plaintiff for 2 services performed. And here, it is undisputed that Defendant paid Plaintiff a total of $200,000 for 3 services performed. See Dkt. No. 43, Ex. A; Jaffe Decl. at ¶¶ 17–18; Kumpf Depo. at Ex. 4-A. 4 Thus, Defendant urges, under the plain language of the Agreements, “in no event” shall 5 Defendant’s further liability to Plaintiff in this action exceed $200,000. Plaintiff does not contest 6 the amount of money Defendant has paid to date for its services. Instead, Plaintiff argues that the 7 limitation of liability is a boilerplate provision that conflicts with Plaintiff’s right under the 8 termination provision in the Agreements to recover “its costs already incurred in the performance 9 of the Services.” See Dkt. No. 114 at 13–16 (citing Dkt. No. 89-1, Ex. 1 at ¶ 11.1). Plaintiff thus 10 concludes that the Court should disregard the limitation of liability provision entirely. See id. 11 This dispute between the parties therefore concerns a pure question of law: the meaning 12 and enforceability of the limitation of liability provision. See Welles v. Turner Entm’t Co., 503 13 F.3d 728, 735 (9th Cir. 2007) (finding the interpretation of a contract is a question of law for the 14 Court to decide “unless the interpretation depends on the credibility of extrinsic evidence, in 15 which case the interpretation of the contract is the task of the factfinder”). According to the 16 Agreements, they “shall be governed by and construed in accordance with the laws of the State of 17 California.” See Dkt. No. 89-1, Ex. 1 at ¶ 12.1. The Court therefore looks to California law. 18 When interpreting contracts, the overarching goal is to effectuate the parties’ intent. Cal. Civ. 19 Code § 1636 (“A contract must be so interpreted as to give effect to the mutual intention of the 20 parties as it existed at the time of contracting.”). The plain language governs. Cal. Civ. Code 21 § 1638 (“The language of a contract is to govern its interpretation, if the language is clear and 22 explicit.”); see also Cal. Civ. Code § 1639 (“When a contract is reduced to writing, the intention 23 of the parties is to be ascertained from the writing alone, if possible.”). However, “[i]f the 24 terms . . . are in any respect ambiguous or uncertain, it must be interpreted in the sense in which 25 the promisor believed, at the time of making it, that the promisee understood it.” See id. at § 1649. 26 Therefore, when interpreting a contract, the Court must first determine whether its language is 27 ambiguous or reasonably susceptible to more than one interpretation. 1 unambiguous and the termination provision and limitation of liability are not in tension. 2 When read together, the termination provision permits Plaintiff to recover the costs it “incurred in 3 the performance of the Services,” even if Defendant terminates the Agreements. See Dkt. No. 894 1, Ex. 1 at ¶ 11.1. But under the limitation of liability provision, “in no event” shall any such costs 5 exceed the total amount Defendant paid to Plaintiff for services performed under the Agreements. 6 See id., Ex. 1 at ¶ 9.2. This limitation is also consistent with the overall payment structure under 7 the Agreements, in which Plaintiff is paid based on the volume of travel Defendant booked with 8 Plaintiff rather than Plaintiff’s itemized costs. See id., Ex. 2, Ex. C (“Payment Terms” and “Flat 9 Management Fee”). In the event Defendant terminated the Agreements, as occurred here, Plaintiff 10 could thus recover its costs commensurate with the services it had provided. 11 To the extent Plaintiff suggests that there is something inherently problematic with 12 enforcing the limitation of liability provision in this case, the Court is not persuaded. California 13 courts have generally enforced such clauses, noting that they are “intended to protect the 14 wrongdoer defendant from unlimited liability.” See Food Safety Net Servs. v. Eco Safe Sys. USA, 15 Inc., 209 Cal. App. 4th 1118, 1126 (Cal. Ct. App. 2012) (quotation omitted). Parties may limit 16 their liability in this way, and “[w]ith respect to claims for breach of contract, limitation of liability 17 clauses are enforceable unless they are unconscionable, that is, the improper result of unequal 18 bargaining power or contrary to public policy.” Id. Plaintiff makes no effort to explain how the 19 limitation of liability provision in this case is unconscionable or contrary to public policy. Indeed, 20 the Agreements indicate that “both parties . . . had sufficient time to have this Agreement reviewed 21 by counsel and that this Agreement will be deemed to have been jointly prepared by the [p]arties.” 22 See Dkt. No. 89-1, Ex. 1 at ¶ 12.9. 23 That Plaintiff may be unable to recover substantial costs from Defendant does not render 24 the provision unenforceable. Under similar circumstances, the California Court of Appeal 25 enforced a limitation of liability provision which precluded all recovery arising from an alleged 26 breach of contract. See Food Safety, 209 Cal. App. 4th at 1127 . In Food Safety, Eco Safe had 27 asserted claims for breach of contract against Food Safety in connection with a study of Eco Safe’s 1 conducted as specified. See id. at 1124–25. The trial court had granted summary judgment in 2 favor of Food Safety, holding that the parties’ contract limited Eco Safe’s possible recovery. Id. at 3 1126–27. The provision at issue stated: [4] [Food Safety’s] total liability to you in connection with the work 5 herein covered for any and all injuries, losses, expenses, demands, claims or damages whatsoever arising out of or in any way related to 6 the work herein covered, from any cause or causes, shall not exceed an amount equal to the lesser of (a) damages suffered by you as the 7 direct result thereof, or (b) the total amount paid by you to [Food Safety] for the services herein covered. We accept no legal 8 responsibility for the purposes for which you use the test results. [10] Id. at 1126 (emphasis added). The court noted the “broad and unqualified language” in this 11 provision, including that “‘[i]n no event’ is Food Safety liable for damages . . . ‘arising out of or in 12 any way related to the work herein covered, from any cause or causes.” Id. at 1128 (emphasis 13 added). In affirming summary judgment, the California Court of Appeal explained that “[b]ecause 14 it is undisputed that Eco Safe ha[d] paid nothing to Food Safety for the study, the clause thus 15 prohibit[ed] a recovery for breach of contract.” Id. at 1127 . 16 The limitation of liability provision in this case is similarly clear: “in no event shall Uber’s 17 total cumulative liability . . . exceed the total amount paid to [Plaintiff] for services 18 performed . . . .” See Dkt. No. 89-1, Ex. 1 at ¶ 9.2 (emphasis added). Because Defendant only 19 paid $200,000 for Plaintiff’s services under the Agreements, Plaintiff’s recovery is so limited. If 20 Plaintiff incurred costs under the Agreements that it cannot recoup because of the termination, that 21 was Plaintiff’s hazard in entering into the Agreements with this limitation of liability provision. It 22 is not for the Court to rewrite the parties’ contract with the benefit of hindsight. The Court 23 therefore finds that the limitation of liability provision caps Defendant’s contractual damages at 24 $200,000. Nevertheless, the Court agrees with Plaintiff that the limitation of liability provision 25 only applies to Plaintiff’s breach of contract claim. See Dkt. No. 145 at 15–16. To the extent 26 Plaintiff seeks (and is entitled to) damages outside the contract, there simply is no basis for the 27 Court to find that the limitation of liability provision extends to such extracontractual damages. 1 B. Unjust Enrichment 2 Defendant next argues that summary judgment is proper as to Plaintiff’s claim for unjust 3 enrichment/quantum meruit. See Dkt. No. 127 at 16–19. “Under California law, unjust 4 enrichment can be the basis of a right to restitution or quasi-contractual recovery.” Shum v. Intel 5 Corp., No. C-02 -03262-DLJ, 2008 WL 4414722 , at *6 (N.D. Cal. Sept. 26, 2008) (citing 6 California Med. Ass’n, Inc. v. Aetna U.S. Healthcare of California, Inc., 94 Cal. App. 4th 151 , 7 172, 114, n.23 (Cal. Ct. App. 2001)). Similarly, quantum meruit is an “equitable remedy implied 8 by the law under which a plaintiff who has rendered services benefitting the defendant may 9 recover the reasonable value of those services when necessary to prevent unjust enrichment of the 10 defendant.” In re De Laurentiis Entm’t Grp. Inc., 963 F.2d 1269, 1272 (9th Cir. 1992). But such 11 a quasi-contractual claim will not lie where there exists between the parties “a valid express 12 contract governing the same subject matter.” Shvarts v. Budget Grp., Inc., 81 Cal. App. 4th 1153 , 13 1159 (Cal. Ct. App. 2000). The California Court of Appeal has explained that “[t]he reason for 14 the rule is simply that where the parties have freely, fairly and voluntarily bargained for certain 15 benefits in exchange for undertaking certain obligations, it would be inequitable to imply a 16 different liability and to withdraw from one party benefits for which he has bargained and to 17 which he is entitled.” Wal-Noon Corp. v. Hill, 45 Cal. App. 3d 605, 613 (Cal. Ct. App. 1975). 18 Here, Defendant contends that the Agreements cover the full scope of services for which 19 Plaintiff seeks to recover in this action; Plaintiff’s Rule 30(b)(6) witness conceded this; and thus 20 Plaintiff may not seek to recover under any quasi-contractual cause of action. In its initial 21 disclosures, Plaintiff identified five categories of damages: [22] (a) $791,580.25 in implementation costs to achieve the 23 implementation criteria set forth in the Statement of Work; 24 (b) the separate implementation costs of Uber’s specially requested company trip project in the amount of $101,450; [25] (c) the ongoing actual monthly cost of providing travel service to 26 Uber, in the amount of $67,258.50 per month from January 2 through November 26,2015, or $739,843.50; [27] 1 (e) any other out-of-pocket costs of travel advanced for Uber’s benefit by TSI identified during discovery. [2] 3 See Dkt. No. 129-6, Ex. F. Items (a) through (c) track, in both description and dollar value, the 4 costs that Plaintiff invoiced Defendant for following termination. See Kumpf Depo. at Ex. 4-A 5 through 4-G.2 Defendant asked Plaintiff’s Rule 30(b)(6) deponent, Richard Kumpf, about these 6 costs (as detailed in “Exhibit 4”). Although Mr. Kumpf initially identified the costs generically as 7 related to “costs to perform services,” without attribution to a specific SOW or contract, he 8 responded affirmatively when asked whether they were costs under the Agreements: [9] Q. What is this exhibit, exhibits 4-A through 4-G, what is it supposed 10 to represent? 11 A. It is a statement of our costs to perform services. 12 Q. Was it – is it a statement of TSI’s cost to perform services under its contract and Statement of Work with Uber? [13] A. Yes. [14] 15 See Kumpf Depo. at 18:19–19:1 (emphasis added). More granularly, Defendant asked whether the 16 $101,450 for the “specially requested company trip” (“Project Ginseng”) was related to the SOW: [17] Q. Now if we could turn to Exhibit 4-C. This is another invoice with 18 a description of: Ginseng Project Costs per SOW November 24, 2014, April through July 2015, correct? [19] A. Correct [20] Q. So is it correct that the numbers reflected on this invoice, Exhibit 21 4-C, totaling $101,450, are also costs that TSl claims to be due under its contract with Uber because Uber terminated the agreement? [22] A. Yes. [23] 24 See id. at 49:14–24 (emphasis added). Defendant urges that these admissions are binding and not 25 subject to further clarification. See Dkt. No. 127 at 18. Defendant also points out that the 26 Agreements expressly cover travel management services, and that all of Plaintiff’s purported [27] 1 damages relate to travel management services. Id. at 18–19. 2 In response, Plaintiff suggests that through clever questioning, Defendant led Mr. Kumpf 3 to misstate the nature of Plaintiff’s damages. See Dkt. No. 145 at 6–7. Plaintiff urges that it 4 should not be bound by this mistaken concession. By declaration in support of Plaintiff’s 5 opposition to the pending motion, Mr. Kumpf explains that “the underlying premise – that all of 6 the work TSI performed for Uber was within the scope of the SOW – is factually inaccurate.” See 7 Dkt. No. 146 at ¶ 4. Mr. Kumpf additionally states that had he “otherwise understood that 8 [defense counsel] was attempting to have me ‘admit’ that all of the itemized costs on TSI’s invoice 9 to Uber were for tasks within the SOW (which would be contrary to our consistent position from 10 the inception of this litigation), I would have answered by making the distinction between work 11 that was within, as opposed to outside, the scope of the SOW.” See id. at ¶ 7. Plaintiff thus 12 suggests that there is a fact question about the meaning of Mr. Kumpf’s deposition testimony and 13 whether the damages that Plaintiff seek to recover fall outside the scope of the Agreements. 14 “The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an 15 affidavit contradicting his prior deposition testimony.” See Yeager v. Bowlin, 693 F.3d 1076 , 16 1080 (9th Cir. 2012) (quotation omitted). “This sham affidavit rule prevents a party who has been 17 examined at length on deposition from rais[ing] an issue of fact simply by submitting an affidavit 18 contradicting his own prior testimony, which would greatly diminish the utility of summary 19 judgment as a procedure for screening out sham issues of fact.” Id. (quotation omitted) 20 (alterations in original). Nevertheless, “[t]he non-moving party is not precluded from elaborating 21 upon, explaining or clarifying prior testimony elicited by opposing counsel on deposition and 22 minor inconsistencies that result from an honest discrepancy, a mistake, or newly discovered 23 evidence afford no basis for excluding an opposition affidavit.” Id. (quotation omitted). 24 The Court understands Plaintiff to be arguing that Mr. Kumpf simply made a mistake in 25 interpreting defense counsel’s questions. Yet the record does not support such an interpretation. 26 First, the disparity between Mr. Kumpf’s given testimony and subsequent clarification is extreme. 27 During his deposition, Mr. Kumpf admitted that the damages Plaintiff seeks in this litigation are 1 the scope of the Agreements. Were parties free to “correct” testimony in this fashion, depositions 2 would be rendered meaningless and summary judgment easily averted. Second, other than 3 offering Mr. Kumpf’s contradictory declaration, Plaintiff does not proffer any evidence 4 establishing which of Plaintiff’s costs are separate and apart from the Agreements. Plaintiff does 5 not cite any evidence about the nature of its costs at all. In his declaration, Mr. Kumpf merely 6 points to allegations in the SAC. See Dkt. No. 145 at 3–4 (citing SAC at ¶¶ 17–22). Mr. Kumpf 7 does not rely on any independent knowledge about Plaintiff’s work or the costs it incurred. Nor 8 does he parse through Exhibit 4 from his deposition to clarify which costs fall within and which 9 costs fall outside the scope of the Agreements. During the hearing on this motion, when the Court 10 asked Plaintiff about these damages, Plaintiff demurred, stating that Defendant—not Plaintiff— 11 bears the burden of establishing that it is entitled to summary judgment. But a dispute of material 12 fact is only “genuine” if there is evidence in the record sufficient for a reasonable trier of fact to 13 decide in favor of the nonmoving party. Anderson, 477 U.S. at 248 . The “mere existence of a 14 scintilla of evidence in support of the plaintiff’s position [is] insufficient.” Id. at 252 . Thus, 15 Plaintiff may not defeat summary judgment with allegations in the complaint. See Fed. R. Civ. P 16 56(c)(1). Third, the Court finds the timing of Mr. Kumpf’s “correction” suspect. Plaintiff did not 17 clarify the meaning of Mr. Kumpf’s testimony or otherwise correct it during the deposition itself. 18 Nor did Plaintiff correct Mr. Kumpf’s testimony after receiving the deposition transcript. See Fed. 19 R. Civ. P. 30(e). Indeed, Plaintiff did not correct Mr. Kumpf’s deposition testimony at any point 20 in the six months between the deposition and Plaintiff’s opposition to the motion for summary 21 judgment. The Court finds that the sham affidavit rule applies in this context, and the Court 22 therefore strikes Mr. Kumpf’s declaration to the extent he argues that his deposition testimony was 23 mistaken and that Plaintiff seeks to recoup costs outside of the scope of the Agreements. See Dkt. 24 No. 146 at ¶¶ 2–13. 25 Aside from Mr. Kumpf’s declaration, Plaintiff suggests that deposition testimony from 26 Defendant’s CEO, Howard Jaffe, creates a dispute of material fact regarding Plaintiff’s quasi27 contract claim, at least as to costs associated with Project Ginseng. See Dkt. No. 145 at 9–12, 16. 1 Project Ginseng was not mentioned by name in the SOW. See Dkt. No. 147-1, Ex. F at 39:25– 2 43:1, 46:5–51:8, 72:23–73:3; Ex. G. But despite Plaintiff’s suggestion to the contrary, Mr. Jaffe 3 notably did not state that Project Ginseng fell outside the scope of the Agreements, and instead 4 said he believed the Agreements covered “meetings and events” such as Project Ginseng. See id. 5 at 50:23–51:8. Additionally, Plaintiff’s own invoice stated that the “Ginseng Project Costs” were 6 “per” the SOW. See Kumpf Depo. at Ex. 4-A, 4-E. This is consistent with Mr. Kumpf’s 7 deposition testimony in which he conceded that the $101,450 Plaintiff sought for “Ginseng Project 8 Costs” constituted “costs that [Plaintiff] claims to be due under its contract with Uber because 9 Uber terminated the agreement.” See Kumpf Depo. at 49:14–24. 10 Again, the Court understands Plaintiff’s frustration that it may have incurred costs that it 11 cannot recoup under the Agreements. Still, even drawing all reasonable inferences in the light 12 most favorable to Plaintiff, as it must, the Court finds that Plaintiff has not identified a dispute of 13 material fact sufficient to defeat summary judgment on its unjust enrichment/quantum meruit 14 claim. 15 C. Fraud Affirmative Defense 16 Lastly, Defendant contends that there is no dispute of material fact that Plaintiff 17 misrepresented its abilities to Defendant, so the Court should grant summary judgment as to its 18 affirmative defense for fraud to Plaintiff’s breach of contract claim. See Dkt. No. 127 at 19–21. 19 “It is well established that a defrauded defendant may set up the fraud as a defense and, in fact, 20 may even recoup his damages by counterclaim in an action brought by the guilty party to the 21 contract.” Bowmer v. H. C. Louis, Inc., 243 Cal. App. 2d 501, 503 (Cal. Ct. App. 1966). In 22 California, the elements of fraud are: (1) misrepresentation; (2) knowledge of falsity; (3) intent to 23 defraud or to induce reliance (4) justifiable reliance; and (5) resulting damage. See Odorizzi v. 24 Bloomfield Sch. Dist., 246 Cal. App. 2d 123, 129 (Cal. Ct. App. 1966). 25 Here, Defendant argues that Plaintiff made several false or misleading statements in its 26 project proposal to induce Defendant to enter into the Agreements with Plaintiff, including that 27 Plaintiff had over 3,000 employees; operated in over 250 cities; had “wholly owned visa and 1 United States in 2013. See, e.g., Dkt. No. 127 at 6–7 (citing Dkt. No. 128-1, Ex. 1 at 2 UBER0014041, UBER0014058, UBER0014097). In reality, Defendant states, Plaintiff had only 3 approximately 100 employees; had offices in just five U.S. cities; had only one employee who 4 processed passports and visas; and had only earned between $15 and $17 million in revenue. Id. 5 (citing Kumpf Depo. at 12:11–13:4, 16:10–20, 18:1–11, 34:16–35:17). Defendant concludes that 6 had it known the truth, it would not have contracted with Plaintiff. See Dkt. No. 127 at 7, 20–21. 7 Plaintiff, in turn, responds that it did not misrepresent itself and that, in any event, 8 Defendant was aware of Plaintiff’s size and the nature of its global operations. See Dkt. No. 145 9 at 3–6, 16–17. For example, Plaintiff points to a PowerPoint presentation created by Defendant’s 10 in-house travel manager, Margaret Brady, which notes that Plaintiff is “Small in Size” and that 11 Uber would be its “largest client.” See Dkt. No. 147-1, Ex. E at UBER000123. The presentation 12 also noted that Plaintiff is “a global company operating thru [sic] consortia network,” in contrast 13 to Plaintiff’s competitor which had the “largest employee base and broadest footprint covering the 14 most countries.” Id. at UBER000124. During her deposition, Ms. Brady explained that she 15 understood that “operating through consortia network” meant that Plaintiff’s “service 16 configuration globally was more of a profile of a network than wholly-owned offices.” See id., 17 Ex. D. at 19:17–20:14. She clarified that this could mean it operated through “clustered agencies,” 18 but that the agencies may not be wholly owned by Plaintiff. Id. at 20:3–14, 33:1–23. Mr. Kumpf 19 further explained Plaintiff’s representations about its size, global footprint, and revenue referred to 20 both employees and this “consortia” of other agencies. See Dkt. No. 147-1, Ex. A at 29:12–33:25. 21 Mr. Kumpf also explained that he attended a meeting with Ms. Brady and Mr. Jaffe in which 22 Plaintiff explained its relationship with these other affiliated entities. See Dkt. No. 146 at ¶ 20. 23 Defendant suggests that Plaintiff’s testimony does not directly address the specific 24 misstatements that Defendant identified, and instead raises separate, undisputed facts about 25 Plaintiff’s affiliates. See Dkt. No. 148 at 9–10. But Defendant misapprehends Plaintiff’s 26 argument. Plaintiff argues that its statements about the nature and scale of its operations—such as 27 the number of employees, cities of operation, and revenue—included figures from these affiliate 1 statements are still misleading, and disagree as to what Defendant knew about Plaintiff's 2 || operations, but those are issues for the factfinder to determine at trial. The Court finds that 3 || Plaintiff has thus established material disputes of fact as to whether Plaintiff fraudulently 4 || misrepresented its size, revenue, and structure in its pre-contractual communications with 5 Defendant, so as to preclude summary judgment as to Defendant’s affirmative defense. 6 IV. CONCLUSION 7 Accordingly, the Court GRANTS Defendant’s motion for partial summary judgment to 8 the extent Plaintiff seeks to obtain contractual damages that exceed $200,000. The Court further 9 || GRANTS Defendant’s motion for partial summary judgment as to Plaintiffs claim for unjust 10 || enrichment/quantum meruit. The Court otherwise DENIES the motion in its entirety. The Court 11 further SETS a telephonic case management conference for September 22, 2020, at 2:00 p.m. to 12 || discuss how to resolve the remaining breach of contract claim efficiently. All counsel, members 5 13 of the public and press may use the following dial-in information below to access the conference 14 || line: Dial In: 888-808-6929 16 Access Code: 6064255 3 17 The amended scheduling order otherwise remains in effect. See Dkt. No. 123. IT IS SO ORDERED. 19 || Dated: 9/3/2020 20 Abaypwed 5 Sbl □ HAYWOOD S. GILLIAM, JR. United States District Judge