Edifecs, Inc. v. Welltok, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 16, 2021
• Docket: 20-35102
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 16 2021 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

EDIFECS, INC., a Washington No. 20-35102 corporation, D.C. No. 2:18-cv-01086-JLR Plaintiff-Appellant,

v. MEMORANDUM*

WELLTOK, INC., a Delaware corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Western District of Washington James L. Robart, District Judge, Presiding

Submitted March 5, 2021** Seattle, Washington

Before: RAWLINSON and BYBEE, Circuit Judges, and ENGLAND,*** Senior District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Morrison C. England, Jr., Senior United States District Judge for the Eastern District of California, sitting by designation. Edifecs, Inc. (Edifecs) appeals the district court’s grant of summary

judgment in favor of Welltok, Inc., (Welltok) and its sanctions order, in a diversity

action alleging tortious interference with contractual relations. Edifecs alleged that

Welltok wrongfully induced and assisted former Edifecs Senior Vice President

David Profant to recruit five Edifecs sales executives to join Welltok, in violation

of Profant’s contractual obligations. Reviewing de novo, we affirm. See Bravo v.

City of Santa Maria, 665 F.3d 1076, 1083 (9th Cir. 2011).

Under Washington, State law:

To prove tortious interference, the plaintiff must produce evidence sufficient to support all the following findings: (1) the existence of a valid contractual relationship or business expectancy; (2) the defendant's knowledge of and intentional interference with that relationship or expectancy; (3) a breach or termination of that relationship or expectancy induced or caused by the interference; (4) an improper purpose or the use of improper means by the defendant that caused the interference; and (5) resultant damage.

Tamosaitis v. Bechtel Nat’l, Inc., 327 P.3d 1309, 1313 (Wash. Ct. App. 2014)

(citation omitted).

The only issue on appeal involves the damages element. The existence of

pecuniary loss is a “threshold element for recovery under the tort of interference

with a business relationship just as it is for the tort of interference with a contract.”

2 Tamosaitis, 327 P.3d at 1314. And “a party must prove a claim of damages with

reasonable certainty.” Greensun Grp., LLC v. City of Bellevue, 436 P.3d 397, 409

(Wash. Ct. App. 2019) (citation omitted). “Evidence of damage is sufficient if it

affords a reasonable basis for estimating loss and does not subject the trier of fact

to mere speculation or conjecture. . . .” Clayton v. Wilson, 227 P.3d 278, 285

(Wash. 2010) (en banc) (citation omitted).

Edifecs first asserts that it produced evidence of damages based on the

notion that there is pecuniary value in employee relationships. It is true that “[a]

valid business expectancy includes any prospective contractual or business

relationship that would be of pecuniary value.” Newton Ins. Agency & Brokerage,

Inc. v. Caledonian Ins. Grp., Inc., 52 P.3d 30, 33 (Wash. Ct. App. 2002), as

amended (footnote reference omitted). However, Edifecs failed to produce any

evidence that the relationships cultivated by Profant or by the departed employees

were harmed by their departure. Rather, Edifecs contends that the pecuniary value

was in the employees themselves. However, Edifecs cites no case authority to

support this proposition.

Next, Edifecs points to its CEO’s deposition testimony that “once the Dave

Profant crisis happened, we lowered our expectations because we were in a crisis

mode to rebuild everything.” Edifecs contends that this testimony alone is

3 sufficient to create a triable issue on the fact of damages. Not so. “Where

inferences from the facts are remote or unreasonable, as here, factual causation is

not established as a matter of law.” Walters v. Hampton, 543 P.2d 648, 652

(Wash. Ct. App. 1975). Without evidence showing a causal link between the

employees’ departures and lost revenues or profits, Edifecs’ theory of pecuniary

loss amounts to nothing more than speculation and wishful thinking. See Sea-Pac

Co. v. United Food & Com. Workers Loc. Union 44, 699 P.2d 217, 220 (Wash.

1985) (en banc) (“The plaintiff must show that the future opportunities and profits

are a reasonable expectation and not based on merely wishful thinking.”) (citation

omitted).

In sum, Edifecs failed to produce evidence of damages sufficient for a trier

of fact to estimate loss without speculation or conjecture. See Clayton, 227 P.3d at

285. Therefore, Edifecs failed to carry its burden of showing a genuine dispute of

material fact that it suffered pecuniary loss caused by Welltok’s alleged tortious

interference. See Wenzler & Ward Plumbing & Heating Co. v. Sellen, 330 P.2d

1068, 1070 (Wash. 1958) (articulating that uncertainty as to the amount or

4 quantum of damages is not fatal to a plaintiff’s claim, but uncertainty as to the fact

of damage is fatal).1

AFFIRMED.

1 Having determined that Edifecs failed to carry its burden of showing a genuine dispute of material fact that it suffered pecuniary loss caused by Welltok’s alleged tortious interference, we need not address any remaining issues. Smith v. Noonan, 992 F.2d 987, 989 (9th Cir. 1993). 5