Contemporary Services v. Staff Pro



Contemporary Services v








Contemporary Services v. Staff Pro





























Filed 8/5/10 Contemporary Services v. Staff Pro CA2/4

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>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115 >.





THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION FOUR




>






CONTEMPORARY
SERVICES CORPORATION,



Plaintiff and Appellant,



v.



STAFF
PRO, INC. and

CORY
MEREDITH,



Defendants and Respondents.




B198981



(Los Angeles County

Super. Ct. No. BC247681)






APPEAL from a judgment of the Superior Court of Los Angeles
County, Victor H. Person and Michael C. Solner,
Judges. Affirmed.

Simon & Simon, Jeffrey S. Simon
and David A. Simon; Martin & McCormick and Kathy J. McCormick for Plaintiff
and Appellant.

Baer & Troff and Eric L. Troff;
The Gansinger Firm and James M. Gansinger for Defendants and Respondents.





>INTRODUCTION

Both appellant Contemporary Services
Corporation (CSC) and respondent Staff Pro Security, Inc. (Staff Pro) provide
security and event staffing services to arenas, stadiums, and similar venues in
which concerts, athletic events, and trade shows are held. CSC sued Staff Pro and its President and
Chief Executive Officer (CEO) Cory Meredith (collectively Staff Pro).

In its first amended complaint, CSC
alleged that Staff Pro, in violation of California’s Unfair Competition Law (UCL) (Bus.
& Prof. Code, § 17200 et seq.), committed various practices resulting
in injury to CSC. CSC’s first cause of
action alleged that Staff Pro engaged in below-cost pricing in violation of
Business and Professions Code section 17043.
CSC alleged that Staff Pro charged some of its clients rates
substantially below Staff Pro’s actual costs, thereby precluding CSC from
submitting competitive bids. The trial
court granted Staff Pro’s motion to summarily adjudicate this cause of action
in its favor and subsequently denied on the merits CSC’s motion to reconsider
that ruling. CSC’s second cause of
action alleged that Staff Pro engaged in unfair competition in violation of
Business and Professions Code section 17200 by engaging in “ghost
billing.” That is, CSC alleged that
Staff Pro billed clients for services that were never rendered in order to make
up for the financial shortfalls caused by its submission of below-cost
bids. The trial court granted Staff
Pro’s motion to dismiss this cause of action, finding that CSC lacked standing
to pursue this claim because it had not suffered an “injury in fact” as
required by Business and Professions Code section 17204.

In this appeal, CSC primarily contends
that the trial court’s grant of summary adjudication of its first cause of
action and its dismissal of the second cause of action for lack of standing were
erroneous. Secondarily, CSC attacks
three discovery-related rulings made by the trial court. We are not persuaded by any of CSC’s
arguments and therefore affirm the judgment.



I. STAFF PRO’S MOTION FOR SUMMARY ADJUDICATION

ON CSC’S FIRST CAUSE OF ACTION

A. Factual and Procedural Background

1. Staff
Pro’s Summary Adjudication Motion


As stated in our introduction, CSC’s
first cause of action was for below-cost pricing in violation of Business and
Professions Code section 17043. That
statute provides: “It is unlawful for
any person engaged in business within this State to sell any article or product
at less than the cost thereof to such vendor, or to give away any article or
product, for the purpose of injuring
competitors or destroying competition.
[1]
(Italics added.) (Bus. &
Prof. Code, § 17043.)

Staff Pro moved for summary
adjudication of the first cause of action.
Staff Pro offered three declarations to establish that in calculating
and submitting its bids, it did not act with the purpose to injure or destroy
its competitors. One declaration was
from CEO and President, Cory Meredith; the other two were from Staff Pro’s past
and present Chief Financial Officers (CFO).
The declarations explained the methodology Staff Pro used to calculate a
bid.

Meredith’s declaration explained, in
pertinent part:[2]


“3. Staff Pro’s ‘product’ is labor and the
management of labor. Staff Pro’s
business philosophy has always been to never bid for any staffing event below
Staff Pro’s cost. Staff Pro has never bid for any contract with the intent to lose money. Nevertheless, it has happened that after a
contract has been awarded to Staff Pro, over the life of the contract, Staff
Pro may lose money if unforeseen events, such as a raise in the minimum wage,
occur. Furthermore, Staff Pro has never bid a contract with the specific
purpose of injuring CSC or any other competitor in the event staffing, security
and audience management industry
. .
. .



“5. It was never Staff Pro’s intent to bid a
contract merely to get a job, whether or not Staff Pro could make a
profit. Staff Pro never bid a contract with the knowledge that Staff Pro would
not make a profit or that Staff Pro’s bid would be below its cost
. . .
.



“10. The prices at which Staff Pro priced its
services at Irvine Meadows (now Verizon Amphitheatre) and Glen Helen
Blockbuster Pavilion (now Hyundai Pavilion) in 1997, 1998, 1999 and 2000 were
set because I was aware of the price levels at which many of Staff Pro’s
competitors were offering their services in Southern California. Staff Pro’s prices at these venues were
offered at levels that I believed were competitive with the prices being
offered by Staff Pro’s competitors in the Southern California market in each of
these years.



“11. As President of Staff Pro it was important to
me to attempt to maintain and, if possible, to increase Staff Pro’s market
share in the event staffing and security business in Southern California. In order to
maintain, and hopefully increase, Staff Pro’s market share, it was necessary,
in my business judgment, to price Staff Pro’s services at price levels that
were competitive, i.e. that met, the prices offered by Staff Pro’s
competitors.” (Italics added.)





Meredith explained that the
declarations from Staff Pro’s two CFOs accurately set forth Staff Pro’s
procedure for calculating its bids and that he had worked with them to develop
and implement that bidding methodology.
According to Meredith, that “methodology has been, and continues to be,
the basis for how Staff Pro bids for all of its contracts.”

Wayne Neumann had been Staff Pro’s CFO
from 1994 to 1999. He explained:

“5. In order to attempt to assure profitable
contracts, the methodology that [Meredith and I] developed involved first
determining the direct pay rate that we were paying to our employees who would
be providing the services to our customers.
I then calculated the ‘burden’ to add to this direct labor cost. Burden includes employer payroll taxes,
unemployment compensation insurance and workers compensation insurance. The third step was to add a gross profit
component of 25-30% on top of the direct labor cost.



“6. The 25-30% gross profit component was
designed by us to include the cost of all administrative costs such as staff
salaries, rent and other overhead costs, as well as non-operating costs such as
depreciation and amortization. Roughly
speaking, this 25-30% gross profit component included an overhead component of
8-10%, an administrative component of 8-10% and an expected profit component of
8-10%.



“7. It was my opinion that the 25-30% gross
profit figure was adequate to cover all costs and result in a reasonable profit
to the company based upon my many years of experience as a Chief Financial
Officer and by my in depth knowledge of the actual operating and overhead
experiences of Staff Pro. I had
performed a number of cost analyses of a number of Staff Pro’s contracts and
was confident that the bidding methodology that we developed would provide for
profitable operations.”





Edward Masotti served as Staff Pro’s
CFO from 1999 to February 2005.
Masotti’s detailed explanation of Staff Pro’s bidding methodology
paralleled that given by Neumann.
Masotti averred: “I have
performed several cost analyses on a number of Staff Pro’s contracts and I am
confident that the bidding methodology that was developed [by Neumann], >and which I continue to use, provides
for profitable operations.” (Italics
added.) In addition, Masotti’s
declaration included two charts to establish that Staff Pro did not engage in
below-cost bidding. The first chart set
forth Staff Pro’s bids for nine events conducted from 2001 through 2003 and the
bids submitted by two competitors for the same events. The chart indicated that Staff Pro’s bids
were the same as or higher than the competitors’ bids. The second chart, based upon invoices, set
forth Staff Pro’s rate for contract labor at two venues for a five-year period
(1997-2001) as compared to two competitors’ rates for the same time frame. In each instance, Staff Pro’s rate was the
same as or greater than that charged by its competition.



2. CSC’s
Opposition to the Summary Adjudication Motion


CSC’s opposition to the summary adjudication motion offered
deposition testimony and declarations to counter Staff Pro’s evidentiary
showing that Staff Pro did not submit below-cost bids. Although the trial court sustained Staff
Pro’s objections to the bulk of this evidence, CSC’s appeal challenges only one
of those evidentiary rulings: the
striking of three paragraphs from the declaration of CSC’s vice-president James
Granger. We will set forth that specific
evidence later when we address CSC’s claim that the evidentiary ruling was an
abuse of discretion. Other than that, we
will not detail the particulars of CSC’s stricken evidence. “[Because] the trial court sustained
defendants’ evidentiary objections to those items, and [CSC] does not challenge
those evidentiary rulings on appeal[,] [w]e therefore presume that those
evidentiary rulings were correct [citation], and we disregard those excluded
items.” (Stockinger v. Feather River > Community College (2003) 111 Cal.App.4th 1014,
1022.) And to the extent CSC argues a
triable issue of fact was created either by its non-stricken evidence or
evidence proffered by Staff Pro, we will set forth that evidence when we
discuss whether the trial court properly summarily adjudicated the first cause
of action in Staff Pro’s favor.

CSC also filed a 572-page Separate
Statement of Highly Confidential Facts to oppose Staff Pro’s summary
adjudication motion.[3]
The document was filed under seal pursuant to a Protective Order and
Confidentiality Stipulation executed by the parties and signed by the trial
court. CSC urges that information in
this particular document establishes that a triable issue of material fact
exists. We conclude that the argument
has been forfeited by CSC’s deficient presentation first in the trial court and
later in this appeal.



3. The
Trial Court’s Tentative Ruling and the Hearing on the Motion


In its tentative ruling, the trial
court indicated that it would deny Staff Pro’s motion for summary adjudication
based upon Code of Civil Procedure section 437c, subdivision (e) (hereafter
subdivision (e)).[4]
In pertinent part, subdivision (e) provides: “[S]ummary judgment may be denied in the
discretion of the court . . . where a material fact is an individual’s state of
mind, or lack thereof, and that fact is sought to be established solely by the
individual’s affirmation thereof.” The
trial court’s tentative ruling was based upon its mistaken belief that the only
evidence that Staff Pro had offered to establish that it did not act with the
purpose to injure or destroy its competitors was the declaration from Meredith,
its CEO and President.

At the hearing on the motion, Staff
Pro corrected the trial court’s mis-perception.
Staff Pro’s counsel explained that Meredith’s declaration was not the
sole evidentiary basis of its motion because it was also relying upon the
declarations of CFOs Masotti and Neumann.


Since neither party had addressed
subdivision (e)’s potential application, the trial court permitted the parties
to file additional briefing on this question.
In addition, the trial court ruled upon the parties’ evidentiary
objections.



4. The
Trial Court Grants Summary Adjudication to Staff Pro


After the parties submitted additional
briefs, the court granted summary adjudication to Staff Pro. Its minute order explains:

“The
Court has ruled separately on the parties’ evidentiary objections. The
Court did not consider any evidence to which an objection was sustained
.



“Staff Pro . . . contends that CSC cannot establish
that Staff Pro acted with the purpose of injuring competitors or destroying
competition. Even assuming that Staff
Pro sold its services below cost - whether it did so is a question of fact,
[citation] - CSC must prove that it [Staff Pro] did so with the express
purpose of damaging or destroying competition.
[Citation.]



“Cory
Meredith has stated in his declaration that Staff Pro didn’t intend to injure
competition. The company has no policy
of pricing below cost, and does not intend to destroy CSC. Previously, the Court tentatively denied the motion
. . . pursuant to CCP Section 437c(e)[.] . . .
The tentative ruling denying the motion invoked this rule, noting that
the only evidence of Staff Pro’s ‘intent’ in regards to pricing was from Cory
Meredith, CEO of Staff Pro.



“The
parties were permitted to submit further briefing on this issue, and this issue
alone. . . .



“CCP
Section 437c(e) allows the court to deny a motion for summary judgment where
the only proof of a material fact is made by an INDIVIDUAL who was the sole
witness to the fact, or where the fact is an INDIVIDUAL’S state of mind, and
the fact is sought to be established by the INDIVIDUAL’S affirmation
thereof. As Staff Pro convincingly
argues, the issue in the present motion is not an individual’s state of mind,
but rather Staff Pro’s ‘intent’ with regards to any below cost pricing. Thus, while CCP Section 437c(e) would apply
if Cory Meredith’s state of mind or intent were at issue, it does not apply
because no one individual’s intent is at
issue
.



>Furthermore, Staff Pro’s former Chief
Financial Officers (Wayne Neumann and Edward Masotti) have described Staff
Pro’s pricing methodology, which was designed and intended to provide for the
company’s profitable operation. Its bids
have included a 25-30% gross profit figure, which it has found adequate to
cover costs and result in a profit to the company. CSC
has submitted no evidence to the contrary.

Therefore, Staff Pro is entitled to summary adjudication of the first
cause of action on this basis.”[5]
(Capitalization in original, italics and boldface added.)





CSC subsequently filed a motion for
reconsideration which the trial court denied.
We will set forth the specifics of the motion and the trial court’s
ruling later in this opinion when we discuss CSC’s contention that the trial
court erred in denying the reconsideration motion.



>B. The Trial Court Properly
Granted Summary Adjudication to Staff Pro

In this appeal, CSC improperly
conflates procedural, evidentiary and substantive arguments into an overall
attack on the trial court’s decision to grant Staff Pro’s summary adjudication
motion. In addition, CSC improperly
includes facts from its motion for reconsideration to argue that the trial
court erred in granting summary adjudication.
For clarity of analysis, we address separately each of CSC’s
arguments. First, we discuss CSC’s
contentions that the trial court abused its discretion in (1) overruling CSC’s
objections to Staff Pro’s evidence and (2) sustaining Staff Pro’s objections to
CSC’s evidence. Second, we discuss CSC’s
claim that in granting the summary adjudication motion, the trial court
improperly relied upon evidence it had stricken. Third, we discuss whether subdivision (e)
applies to this case. Fourth, we
consider CSC’s procedural argument that the trial court improperly relied upon
evidence not identified in Staff Pro’s Separate Statement of Undisputed Facts
(SSUF) when it granted summary adjudication to Staff Pro. After rejecting all of those claims of error,
we conclude that based upon the evidence presented, the trial court properly
granted summary adjudication.[6]
In a separate portion of this opinion, we address CSC’s motion for
reconsideration.



1. >The Trial Court Did Not Abuse Its Discretion
In Overruling CSC’s Objections

> to Meredith’s Declaration



CSC urges that the trial court abused
its discretion in overruling its objections to paragraph three of Meredith’s
declaration. As set forth earlier, that
paragraph averred:

“3. Staff Pro’s ‘product’ is labor and the
management of labor. Staff Pro’s
business philosophy has always been to never bid for any staffing event below
Staff Pro’s cost. Staff Pro has never bid for any contract with the intent to lose money. Nevertheless, it has happened that after a
contract has been awarded to Staff Pro, over the life of the contract, Staff
Pro may lose money if unforeseen events, such as a raise in the minimum wage,
occur. Furthermore, Staff Pro has never bid a contract with the specific
purpose of injuring CSC or any other competitor in the event staffing, security
and audience management industry
.”
(Italics added.)





CSC objected: “The statement lacks foundation,
mis-characterizes testimony, and is an improper opinion.”

In this appeal, CSC contends that the
italicized statements in paragraph three constitute “impermissible
opinion.” CSC argues that the
declaration shows that Meredith “had no involvement in bidding and had no
knowledge of whether or not the methodology created by Messrs. Neumann and
Masotti was actually used in preparing bids. There was simply no foundation set forth in
Mr. Meredith’s Declaration for the statements made with regard to Staff Pro
never billing below cost and it was an abuse of discretion to permit the
introduction [of] and [to] rely on such objectionable statements.”

CSC’s arguments are not
persuasive. CSC overlooks material
portions of Meredith’s declaration, portions to which CSC posed no
objections. Meredith averred that he had
been Staff Pro’s President and CEO since the company had been founded. Meredith explained that in that capacity, he
had worked with both Neumann and Masotti “in developing and implementing the
bidding methodology described in their Declarations”; that those two
declarations “accurately described” “Staff Pro’s procedure for calculating its
bids”; and that “[t]his methodology has been, and continues to be, the basis
for how Staff Pro bids for all of its contracts.” These averments established Meredith’s
personal knowledge of the methodology of Staff Pro’s bidding process and its
use (past and present). The trial court
therefore did not abuse its discretion in overruling CSC’s objections to
paragraph three of Meredith’s declaration.
(See Tri-Q, Inc. v. Sta-Hi Corp.
(1965) 63 Cal.2d 199, 208 [testimony of both defendant’s president and its
chief executive officer was sufficient to support the finding that the
defendant did not set a low price for its product with the intent to injure or
harm competitors].)



2. The
Trial Court Did Not Abuse Its Discretion In Sustaining Staff Pro’s



Objections to Granger’s Declaration




CSC urges that the trial court abused
its discretion in sustaining Staff Pro’s objections to portions of the
declaration of Granger, CSC’s vice-president.
CSC argues that the ruling constitutes prejudicial error because the
stricken evidence created a triable issue of material fact.[7]
We are not persuaded that the contested ruling was an abuse of
discretion.

By way of background, Granger first
explained: “I was hired to work for
Event Management Services by Defendant Cory Meredith when he started the
company in about 1984. Event Management
Services changed its name to Staff Pro in 1987.
I left employment with Staff Pro sometime in the summer of 1988. I worked under . . . Meredith for almost four
(4) years at Staff Pro and had many discussions and conversations with [him]
about his business ‘philosophies’ and practices.”

The trial court sustained Staff Pro’s
objections to the following three paragraphs of Granger’s declaration in which
he recounted in general terms conversations he allegedly had with Meredith.

“4. I have read the Declaration of Cory Meredith
attached in support of Defendants’ Motion for Summary Adjudication wherein he
states that the business ‘philosophy’ of Staff Pro had ‘always been to never bid
for any staffing event below Staff Pro’s costs.’ Additionally, Cory Meredith states that Staff
Pro ‘has never bid a contract with
the specific purpose of injuring CSC or any other competitor.’ When I was employed with Staff Pro, Cory
Meredith admitted just the exact opposite in conversations which I had with
him. Cory
Meredith admitted to me in conversations that Staff Pro purposefully bid lower
rates, and needed to ‘ghost bill’ to cover the costs associated with the lower
rates. Cory Meredith commented to me
that in order to get jobs Staff Pro would purposefully ‘come in low,’ ‘to give
the customer a reason to use Staff Pro,’ and then over bill or ‘ghost bill’ for
people who did not actually work
.
This was Staff Pro and Cory Meredith’s business ‘philosophy.’ Cory Meredith commented to me that the low
rates resulted in what amounts to an operating loss, but ‘ghost billing’ took
care of it. Cory Meredith stated to me
that Staff Pro essentially did business[ ] this way, bidding well below its
competitors to get the business, and then ‘ghost billing’ the clients to make
up the difference. This was a common
practice, policy and/or procedure for Staff Pro and Cory Meredith.



“5. When I worked at Staff Pro, I was
specifically directed by Cory Meredith, himself, to sign people on time sheets
that did not work at events. >I had conversations with Cory Meredith
wherein he told me that it was common practice at Staff Pro to prepare the
invoices to the clients with the extra people who did not work being billed to
the client – ‘ghost billing.’ Cory
Meredith explained and admitted to me that he knew of and was involved in the
‘ghost billing’ and that the reason for such ‘ghost billing’ was to make up for
Staff Pro’s low rates or the rates that Staff Pro charged its customers. I understood from the directives of Cory
Meredith that he was directing me to keep the client from knowing that Staff
Pro had less people than were supposed to work and then what the client was
charged. One time, I asked Cory Meredith
what was in it for me to do this since the customer trusted me, to which Cory
Meredith responded essentially that my employment depended on it.



“6. In my conversations with Cory Meredith, I
would ask the question, ‘what do you do with the extra money,’ and he told me
it was paying for insurance and other expenses Staff Pro has since it did not
have a good rate from the Universal Amphitheater, and this ‘ghost billing’ made
up for the rate. Essentially, Cory Meredith admitted and told me that since Staff Pro was
charging such low rates, it had to make money by ‘ghost billing.’
This
was Staff Pro’s business model.

(Italics added.)





Staff Pro raised multiple objections
to the preceding three paragraphs. These
included that Granger’s declaration described conversations which had occurred
long before the events giving rise to the lawsuit and that Granger’s averments
failed to identify with particularity what Meredith “specifically said in the
purported conversations, when the conversations took place, where they took
place and who was present during these conversations.” The trial court sustained Staff Pro’s
objections and struck paragraphs 4 through 6 in their entirety.[8]


As CSC concedes, we review a trial
court’s ruling on evidentiary objections in summary adjudication litigation for
an abuse of discretion. ( >Carnes v. Superior Court (2005) 126
Cal.App.4th 688, 694.) Abuse of
discretion means that the ruling “exceeds the bounds of reason, all of the
circumstances before it being considered.”
(Moyal v. Lanphear (1989) 208
Cal.App.3d 491, 498.) Here, we find no abuse of discretion.

In his declaration, Granger averred
that he had worked for Meredith from 1984-1988.
Granger purported to describe conversations he had had with Meredith
about Meredith’s business philosophy and Staff Pro’s practices during that time
period. These conversations, however,
lacked temporal proximity to the events alleged in CSC’s lawsuit. CSC filed its action in 2001; its cause of
action for below-cost pricing has a four-year statute of limitations (Bus.
& Prof. Code, § 17208). Thus,
the lawsuit, at most, put in issue events occurring from 1997 to 2001. But Granger’s declaration referenced, in the
most general manner, conversations that allegedly occurred in 1984-1988, 9-13
years before the events underlying CSC’s lawsuit.

Further, Granger’s conversations with
Meredith occurred long before Meredith, working with Neumann (Staff Pro’s CFO
from 1994 to 1999), developed the methodology Staff Pro uses to formulate its
bids. Masotti, Staff Pro’s CFO from 1999
to 2005, continued to use this methodology.
Staff Pro relied upon the evidence of its creation and use of this
methodology—a methodology designed to yield
profitable contracts—in its summary adjudication motion to establish that it
did not submit below-cost bids.
Granger’s averments did not address the time period raised by the
lawsuit (1997 through 2001) but, instead, addressed a much earlier period
(1984-1988). In light of this
deficiency, the trial court could reasonably conclude that Granger’s
declaration was not relevant evidence about the methodology Staff Pro used to
calculate bids during the period covered by the lawsuit. Because the declaration lacked probative
value on the issues raised by CSC’s lawsuit, the trial court did not abuse its
discretion in sustaining Staff Pro’s objections to paragraphs 4 through 6 of
Granger’s declaration.



3. >The Trial Court Did Not Rely Upon Stricken
Evidence in Granting Summary

> Adjudication to Staff Pro



CSC argues that “it [is] indisputable
that the Trial Court improperly relied on evidence that it found to be
inadmissible in granting the Motion for Summary Adjudication.” That is, CSC claims that although the trial
court sustained CSC’s objections to paragraph seven of Masotti’s declaration
and paragraph eight of Neumann’s declaration, it, nonetheless, relied on those
stricken paragraphs to grant summary adjudication to Staff Pro.[9]

The record directly refutes this
misleading argument. At the hearing on
the summary adjudication motion, the trial court sustained CSC’s objections to
the portions of the declarations CSC now claims the trial court relied
upon. Further, the trial court’s minute
order granting the summary adjudication motion (set forth above) recites: “The Court has ruled separately on the
parties’ evidentiary objections. >The Court did not consider any evidence to
which an objection was sustained.”
(Italics added.) We must presume
that the trial court complied with its own evidentiary rulings. (Evid. Code, § 664 [“It is presumed that
official duty has been regularly performed”]; ABF Capital Corp. v. Grove Properties Co. (2005) 126 Cal.App.4th
204, 213.)

Nonetheless, CSC argues that the
record is susceptible of only one reasonable conclusion: the trial court must have considered
the two stricken paragraphs because this was the only evidence “that addressed
purpose or intent” and therefore supported the grant of summary
adjudication. Not so. As we will explain in great detail below, the
admissible evidence offered by Staff Pro in the declarations of Meredith,
Masotti and Neumann supports the grant of summary of adjudication on the first
cause of action.



4. >Subdivision (e) Does Not Apply to This
Action

To recapitulate, subdivision (e)
provides: “[S]ummary judgment >may be denied in the discretion of the
court . . . where a material fact is an individual’s state of mind, or lack
thereof, and that fact is sought to be established solely by the individual’s
affirmation thereof.” (§ 437c,
subd. (e).) (Italics added.) Although the trial court initially believed
this provision was potentially relevant to Staff Pro’s motion, it ultimately
concluded that it was not. CSC urges
that decision was error, contending that “the Meredith Declaration was the only
Declaration setting forth Staff Pro’s ‘intent’ [so that the case] falls
squarely within Section 437c(e), and the Motion should have been denied.” We disagree for several independent reasons.

First, CSC mischaracterizes the
statute. The statute does >not require denial of the motion if
state of mind is a material issue and only one declaration about state of mind
is tendered to support a motion for summary adjudication or judgment. Instead, the statute gives the trial court the
discretion to deny the motion even though
no evidence is presented to
contradict that one declaration. Thus,
even were we to conclude that the statute applies (a conclusion we do not reach
for the reasons explained below), the real issue would be whether the trial
court abused its discretion in granting Staff Pro’s summary adjudication
motion.[10]

Second, the statutory language limits
its application to a case in which “an individual’s
state of mind, or lack thereof” is a material fact and a party seeks to
establish that fact solely through a declaration from the individual. (§ 437c, subd. (e), italics added.) But this case does not involve the state of
mind of an individual. Instead, it
involves whether a corporation (Staff Pro) acted with the purpose of injuring
or destroying its competitors. While a
corporation is considered a “person” within the meaning of the state and
federal constitutions (9 Witkin, Summary of Cal. Law (10th ed. 2005)
Corporations, § 1, p. 775), it is not an “individual” with a state of
mind. A corporation acts through its
directors, officers and managing agents.
(See Cruz v. HomeBase (2000)
83 Cal.App.4th 160, 167-168.)
Consequently, a corporation’s purpose is established through the
collective state of mind of those individuals because they determine and
implement corporate policy. Thus, while
the existence or non-existence of a corporate purpose can be established
through declarations from those individuals, those declarations do not, within
the meaning of subdivision (e), put the individual
declarant’s
state of mind in issue.
Had the Legislature intended subdivision (e) to apply when the disputed
issue was corporate purpose or state of mind, it could have used the word
“person” instead of “individual” in the statutory language because “the word
‘person’ [in the Code of Civil Procedure] includes a corporation as well as a
natural person.” (§ 17, subd. (a).)

Lastly, the predicate of the
statute—reliance upon one declaration to establish state of mind—is not present
in this case. Staff Pro did not rely
solely upon the Meredith declaration to establish its corporate purpose. It also submitted declarations from Neumann
and Masotti on that specific issue. The
trial court relied upon all three declarations to find that Staff Pro had
discharged its burden to establish that it did not set the price of its
contracts with the purpose of injuring or destroying competitors.

In sum, subdivision (e) does not apply
to this case. CSC therefore cannot rely
upon it to seek reversal.



5. >The Trial Court Did Not Abuse Its Discretion
When It Relied Upon Evidence

> Not Identified in Staff Pro’s Separate
Statement of Undisputed Facts to

> Grant Summary Adjudication



CSC urges that the trial court was
precluded from relying upon the non-stricken
portions of the Masotti and Neumann declarations to grant summary adjudication
because Staff Pro did not identify that specific evidence in its SSUF.

CSC’s claim is based upon the
following. Staff Pro’s summary
adjudication motion included the Masotti and Neumann declarations. Staff Pro’s
Undisputed Facts Nos. 6 through 11 addressed Staff Pro’s contention that
it did not act with the purpose of destroying or injuring competition. To support those undisputed facts, Staff Pro
relied upon Meredith’s declaration (the relevant text of which has been set
forth earlier) and the two paragraphs from the Masotti and Neumann declarations
that the trial court later struck. (See
fn. 9, ante.) The SSUF did not identify the paragraphs of the Masotti and Neumann declarations
describing Staff Pro’s pricing methodology that the trial court later relied
upon in granting summary adjudication.
According to CSC, the omission of those paragraphs from the SSUF
precluded the trial court from relying upon them in rendering its ruling. On the facts of this case, we are not
persuaded.

“Whether to consider evidence not
referenced in the moving party’s separate statement rests with the sound
discretion of the trial court.” ( >San Diego Watercrafts, Inc. v. Wells Fargo
Bank (2002) 102 Cal.App.4th 308, 316.)
In exercising that discretion, the trial court should consider, among
other things, the due process right of the opposing party (here, CSC) to be
adequately informed of the evidence the moving party (here, Staff Pro) intends
to rely upon to secure summary adjudication.
(Ibid.) As we now explain with a detailed chronology
of the summary adjudication litigation, the trial court’s consideration of the
evidence not referenced in Staff Pro’s SSUF did not violate CSC’s due process
rights. We therefore find that the trial court did not abuse its discretion in
considering that evidence.

Staff Pro filed its summary
adjudication motion in February 2005.
Although the SSUF did not refer to all of the paragraphs in the Masotti
and Neumann declarations, the motion did explain, inter alia, that Masotti’s
declaration “demonstrate[s] that the method by which Staff Pro bids on
contracts was always designed to generate a profit, after taking all of the
company’s costs of operating and overhead into account.”

CSC filed its opposition to summary
adjudication in June 2005. CSC set forth
what it believed to be evidence to contradict Staff Pro’s evidentiary showing
(set forth in Facts Nos. 6 through 11 of Staff Pro’s SSUF) that it did not act
with the purpose of injuring or destroying competition.

Before the trial court conducted a
hearing in June 2005 on the summary adjudication motion, it posted its
tentative ruling. As previously
discussed, that ruling indicated that the court believed that the only evidence
offered by Staff Pro about whether it acted with the purpose of injuring or
destroying competition was Meredith’s declaration and, as a result, the court
had the discretion under subdivision (e) to deny the motion and had tentatively
decided to exercise its discretion to deny the motion. At the hearing, Staff Pro’s attorney
responded to the tentative ruling. He
pointed out that Staff Pro had produced other evidence (the Neumann and Masotti
declarations) to establish proper purpose and asked the trial court to consider
that evidence in ruling upon its motion.[11]
CSC’s attorney did not directly respond to that point. In particular, he did not urge that it was improper for Staff Pro to rely upon the
Neumann and Masotti declarations because Staff Pro had not cited them in the
SSUF. Instead, he simply argued that a
triable issue of material fact existed.
After counsel completed argument, the court took the matter under
submission.

Thereafter, Staff Pro requested leave
to file a supplemental brief to
address the applicability of subdivision (e).
The trial court granted the request and allowed CSC to file a reply to
Staff Pro’s supplemental brief.

Staff Pro’s supplemental brief argued,
among other points, that subdivision (e) did not apply because it had offered
declarations from three individuals (Meredith, Neumann, and Masotti) on the
issue of purpose. CSC’s reply brief
never argued that the trial court could not consider the Neumann and Masotti
declarations. Instead, CSC claimed that
the two declarations did “not directly relate to the issue of ‘purpose’ at all,
and, at best, can only be said to inferentially relate to this issue.” On that basis, CSC requested denial of Staff
Pro’s summary adjudication motion.

No further hearing was conducted on
the summary adjudication motion. After
considering the supplemental briefs, the trial court filed a minute order
granting Staff Pro summary adjudication on the first cause of action. The minute order, set forth earlier,
explained that the court was relying upon the three declarations tendered by
Staff Pro.

In light of the above chronology, we
conclude that the trial court did not abuse its discretion in considering the
portions of the Neumann and Masotti declarations not referenced in Staff Pro’s
SSUF. Once the trial court on its own
motion raised subdivision (e) in its tentative ruling, Staff Pro, at the June
2005 hearing, pointed out the significance of the two declarations. CSC did not object on procedural grounds to
Staff Pro’s reliance upon those two declarations. In its supplemental brief filed after the
hearing, Staff Pro again relied upon the two declarations. CSC’s reply did not claim that it was
improper or unfair for Staff Pro to cite those two declarations. Instead, CSC argued on the merits against the
evidentiary significance of the declarations.

Clearly, CSC had both notice that
Staff Pro intended to rely upon the declarations and ample opportunity to argue
that the declarations did not establish what Staff Pro claimed they did. CSC never objected to Staff Pro’s reliance
upon them because they were not cited in the SSUF. This failure to object constitutes a
forfeiture of CSC’s right to raise this claim on appeal.

In any event, “[w]e conclude the trial
court did not abuse its discretion by considering evidence of which [CSC] was
well aware and which [it] had ample opportunity to debunk. This is not a case . . . where the plaintiff
was sabotaged by the sneaky introduction of new evidence for the first time in
the defendant’s reply. [Citation.] Rather, [Staff Pro] submitted declarations by
those who [developed and used Staff Pro’s bidding methodology] as evidence
[that Staff Pro did not act with the purpose of injuring or destroying
competitors in submitting bids for jobs.]
We cannot say the trial court abused its discretion by considering the
evidence material to the single, dispositive issue.” (King
v. United Parcel Service, Inc.
(2007) 152 Cal.App.4th 426, 438.)



6. >The Trial Court Properly Granted Summary
Adjudication to Staff Pro on CSC’s

> First Cause of Action

>

In moving for summary adjudication, a
defendant has “the burden of persuasion that ‘one or more elements of’ the
‘cause of action’ in question ‘cannot be established.’” (Aguilar
v. Atlantic Richfield Co., supra,
25 Cal.4th at p. 850; see also
§ 437c, subd. (o)(1).) Once this burden is met, the burden shifts to
the plaintiff to prove the existence of a triable issue of material fact. If the plaintiff cannot meet its burden, the
defendant is entitled to summary adjudication of the cause of action. (Id.
at pp. 849-850.) We review de novo the
trial court’s grant of summary adjudication.
(Dunn v. >County of >Santa Barbara (2006) 135 Cal.App.4th 1281, 1290.)

CSC’s first cause of action alleged below-cost
bidding on contracts in violation of Business and Professions Code section
17043. “[T]o violate section 17043, a
company must act with the purpose, i.e., the desire, of injuring competitors or
destroying competition.” ( >Cel-Tech Communications, Inc. v. Los Angeles
Cellular Telephone Co. (1999) 20 Cal.4th 163, 174-175; see also CACI No.
3301.)

The crux of Staff Pro’s summary
adjudication motion was that it had established that a critical element of
CSC’s cause of action could not be met:
wrongful purpose. In that regard,
Staff Pro offered evidence that in bidding for contracts, it did not act with
the purpose of injuring or destroying competitors such as CSC. Staff Pro proffered a declaration from
Neumann who, in his capacity as Staff Pro’s first CFO and along with Staff
Pro’s President and CEO Meredith, had developed its bidding methodology. In addition to explaining the details of a
bid computation, Neumann explained that the methodology was designed to ensure
that the contract yielded a reasonable profit for Staff Pro. A declaration from Masotti, Staff Pro’s CFO
at the time of litigation, averred that Staff Pro continued to use the bidding
methodology developed by Neumann.
Masotti also gave specific examples of Staff Pro’s submission of bids
equal to or higher than those submitted by competitors to show that Staff Pro
did not submit below-cost bids. Lastly,
Meredith’s declaration averred that the Neumann and Masotti declarations
accurately set forth Staff Pro’s bidding methodology and that the methodology
had been and still was the process by which Staff Pro computed its bids. Because this evidence demonstrated that Staff
Pro’s bids were based upon a pricing methodology designed to generate a profit,
Staff Pro necessarily established that it was not submitting below-cost
bids. In addition, Meredith explained
that Staff Pro never bid on a contract with the intent to lose money; never bid
on a contract knowing that it would not make a profit; and never bid with the
purpose of injuring any competitor (including CSC). Taken together, this evidence met Staff Pro’s
burden to establish that CSC could not prove an essential element of its cause
of action for below-cost bidding. The burden therefore shifted to CSC to prove
a triable issue of material fact existed.
CSC failed to meet that burden.[12]


CSC’s contrary arguments are not
persuasive.

CSC first urges that Staff Pro did not
establish that it did not bid with the purpose to injure or destroy
competition. CSC argues that the Neumann
and Masotti declarations were insufficient evidence because neither man
indicated “that he had any personal knowledge that the pricing methodology . .
. was actually followed by Staff Pro when actual bids were made.” This argument misses the mark. Meredith explicitly averred that the
methodology described by Neumann and Masotti “has been, and continues to be,
the basis for how Staff Pro bids for all of its contracts.” Meredith was qualified to make this
representation because, as Staff Pro’s President and CEO, he had worked with
Neumann to develop the methodology. In
addition, Masotti averred that he had “performed several cost analyses on a
number of Staff Pro’s contracts and I am confident that the bidding methodology
that was developed, and which I continue
to use,
provides for profitable operations.” (Italics added.) The trial court could reasonably infer from
this representation that the pricing methodology described in Masotti’s declaration
was, in fact, used to calculate bids for submission because profitable
contracts are founded upon successful bids.
We therefore conclude that Staff Pro presented evidence that in
calculating bids it followed the pricing methodology initially developed by
Meredith and Neumann and continued in use by Masotti.

CSC next urges that Staff Pro failed
to meet its burden of persuasion because Staff Pro’s own discovery responses
revealed that Staff Pro “had no clue whether the methodology was always used in
preparing bids.” The only evidence cited
to support this proposition is a fragment of Masotti’s deposition
testimony. CSC takes the testimony out
of context. In the small portion of the
deposition testimony furnished by CSC (only 4 pages), Masotti was questioned
whether Staff Pro submitted a response to every bid request it received and
whether it ever submitted bids without being formally requested to do so. Counsel asked Masotti: “Would the number of bids that Staff Pro
submits be roughly the same as the number of requests for proposal that Staff
Pro receives‌” Masotti replied: “There does not necessarily have to be a
correlation of that, because we could bid a job without getting a request for
proposal because they don’t have requests for proposal, formal requests for
proposal.” The following colloquy then
occurred:

“Q Let me ask it this way. Going back to March 29, 1997, can you estimate the number of bids that Staff Pro
has submitted to various facilities‌



“A I couldn’t estimate that, no.



“Q Say in the past year‌



“A No.



“Q Would it be more than ten‌



“A Again, I would not have any idea because,
necessarily – I don’t necessarily get
involved in them.
” (Italics added.)





CSC argues that Masotti’s italicized
comment establishes, or, at least, suggests, that he (or Staff Pro) did not
know whether the pricing methodology was used to formulate bids. We disagree. Masotti simply indicated that he
did not know how many bids Staff Pro had submitted because he was not
“necessarily” involved in calculating each and every bid. Because Masotti’s declaration did not include
any averment that he was personally involved in formulating >every bid, nothing in his testimony
conflicts with his declaration. Further,
nothing in Masotti’s deposition testimony contradicts Meredith’s unequivocal
assertion that the methodology “has been, and continues to be, the basis for
how Staff Pro bids for all of its contracts.”
CSC’s argument that “the evidence showed that such methodology was not
followed, let alone always followed”
is based upon speculation and conjecture and therefore is insufficient to demonstrate the existence of
a triable issue of material fact. “When
opposition to a motion for summary judgment is based on inferences, those
inferences must be reasonably deducible from the evidence, and not such as are
derived from speculation, conjecture, imagination, or guesswork.” (Joseph
E. Di Loreto, Inc. v. O’Neill
(1991) 1 Cal.App.4th 149, 161.)

CSC next claims that evidence
contained in its Separate Statement of Highly Confidential Facts created a
triable issue of material fact. Because
much of that evidence consisted of Staff Pro documents that CSC obtained during
discovery, CSC claims that “Staff Pro’s own documents [detail] below cost sales
and admissions of intent to sell below cost.”
In addition, CSC argues that the declarations of David Simon (CSC’s
attorney) and Jack Zuckerman (a forensic accountant retained by CSC) offered as
part of its Separate Statement of Highly Confidential Facts contradict the
Meredith, Neumann and Masotti declarations.
CSC’s arguments have been forfeited for two separate reasons.

The first reason is that CSC has
failed to comply with California Rules of Court, rule 8.204(a)(1)(C) which
requires a party to “[s]upport any reference to a matter in the record by a
citation to the volume and page number of the record where the matter
appears.” CSC has merely cited to its
Separate Statement of Highly Confidential Facts but has failed to identify
where in those 572 pages the Simon and Zuckerman declarations and the Staff Pro
documents it claims establish that Staff Pro submitted below-cost bids appear.

“The separate statement is not itself
evidence of anything. It is mere
assertion. The evidence of the asserted
facts appears elsewhere[.] [CSC’s] brief
should have cited to those pages in addition to the separate statement of
disputed facts.” (Stockinger v. Feather River Community College, supra, 111
Cal.App.4th at pp. 1024-1025.) CSC’s
failure to do so constitutes a forfeiture of its claim that the declarations or
the Staff Pro documents created a triable issue of material fact. This is because our obligation to conduct a
“de novo review [of the trial court’s grant of summary adjudication] does not
obligate us to cull the record for the benefit of the appellant [here, CSC] in
order to attempt to uncover requisite triable issues. . . . [R]eview is limited to issues which have been
adequately raised and briefed.” ( >Lewis v. >County of >Sacramento (2001) 93 Cal.App.4th 107, 116.)

In any event, we believe we have
located the two declarations referred to by CSC. Simon’s declaration simply purports to
authenticate more than 30 documents attached to CSC’s motion. Zuckerman’s declaration primarily averred
that, in his opinion, Staff Pro engaged in ghost billing. In that context, Zuckerman also opined that
“Staff Pro engages in sales of its event staffing services at rates below its
costs.” However, Zuckerman’s opinion on
that issue was based largely upon stricken evidence and therefore does not
establish a triable issue of material fact.[13]


The second reason that the argument is
forfeited is that to the extent CSC relies upon the Zuckerman declaration,
CSC’s Separate Statement of Undisputed Facts (SSUF) never directed the trial
court to that particular declaration notwithstanding CSC’s specific citation to
other evidence found in its Separate Statement of Highly Confidential
Facts. “In opposing a defendant’s motion
for summary judgment, the plaintiff must submit a separate statement setting
forth the specific facts showing that a triable issue of material fact
exists. [Citations.] Without a separate statement of undisputed
facts with references to supporting evidence in the form of affidavits or
declarations, it is impossible for the plaintiff to demonstrate the existence
of disputed facts. [Citation.] When a
fact upon which plaintiff relies is not mentioned in the separate statement, it
is irrelevant that such fact might be buried in the mound of paperwork filed
with the trial court; the court does not have the burden to conduct a search
for facts that counsel failed to bring out
.
[Citation.]” ( >Lewis v. County of Sacramento, supra, 93
Cal.App.4th at p. 116, italics added.)
The fact that CSC’s memorandum opposing Staff Pro’s motion referenced
Zuckerman’s declaration does not change this conclusion. As we explained in Blackman v. Burrows (1987)
193 Cal.App.3d 889, “[i]t is no answer to say that the facts in [the
plaintiff’s] memorandum of points and authorities filed in opposition to the
motion constituted compliance with the separate statement requirement. Such an argument does not aid the trial court
at all since it then has to cull through often discursive argument to determine
what is admitted, what is contested, and where the evidence on each side of the
issue is located.” (Id. at p. 894; see also Cal. Rules of Court, rule 3.1350(h)
[setting forth precise format for an opposing separate statement].) Because CSC’s SSUF did not direct the trial
court’s attention to Zuckerman’s declaration, CSC cannot rely upon that
declaration to argue that the trial court erred in concluding that CSC had
failed to meet its burden to establish the existence of a triable issue of
fact.[14]
(North Coast Business Park v.
Nielsen Construction Co.
(1993) 17 Cal.App.4th 22, 30-31.)



C. The Trial Court Properly Denied CSC’s Motion
for Reconsideration of Its Grant of Staff Pro’s Motion for Summary Adjudication


1. CSC’s
Motion for Reconsideration


CSC filed a timely motion for
reconsideration of the grant of summary adjudication in favor of Staff
Pro

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