Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. Ct. No. BC353644.Ruth Ann Kwan, Judge.
Saied Kashani for Plaintiffs and Appellants.
Leonard, Dicker & Schreiber, Richard C. Leonard and Brad Parr, for Defendants and Respondents.
ASHMANN-GERST, J.
Ultimax Cement Manufacturing Corporation and Hassan Kunbargi sued CTS Cement Manufacturing Corporation and Edward K. Rice for statutory unfair competition. The trial court found in favor of CTS and entered judgment accordingly. Ultimax appeals and argues that the judgment is not supported by substantial evidence. We find no error and affirm.
When adverting to Hassan Kunbargi individually, we refer to him as Kunbargi. For ease of reference, we collectively refer to Ultimax Cement Manufacturing Corporation and Kunbargi as Ultimax.
Throughout this opinion, Edward K. Rice is called Rice as a reference to him as an individual. CTS Cement Manufacturing Corporation and Rice are referred to collectively as CTS.
FACTS
Calcium alumino sulphate (CAS) cement falls into two categories. The first category is Type K, which is called shrinkage-compensating. The second category is called rapid-hardening. Ultimax and CTS both sell rapid-hardening CAS cement. A problem facing any seller of rapid-hardening CAS cement is that it sets (starts to stiffen) in 10 to 15 minutes and purchasers of the cement usually do not have enough time to work with it.
Pursuant to Business and Professions Code section 17200, Ultimax sued CTS on a common law misappropriation theory. As alleged, Ultimax discovered that adding citric acid and lithium carbonate as a retarder to rapid-hardening CAS cement increases the work time (by retarding or delaying the set time) without slowing down strength gain. Ultimax invested substantial time and money to develop this formula. Sometime in 1999 or 2000, CTS appropriated the formula at little or no cost. In 2002, Ultimax sued CTS in federal court for infringing on certain patents. During that case, Ultimax discovered CTS’s theft of the formula.
All further statutory references are to the Business and Professions Code unless otherwise indicated.
The case proceeded to trial before Honorable Jon M. Mayeda (Ret.) pursuant to a reference under article VI, section 21 of the California Constitution. The evidence showed the following:
Citric acid has been used in the cement industry to retard the set time of CAS cement for decades. In the late 1980’s, CTS combined citric acid as a retarder with lithium carbonate as an accelerator in CAS cement. Patents issued in the late 1980’s and early 1990’s for CAS cements were based in part on using citric acid and lithium carbonate as additives. In the early 1990’s, Blue Circle Company had two CAS cement lines, Rockfast and Calcrete, and its brochures advised that a mixture of citric acid and lithium carbonate could be used to control set time. Rice knew about the patents as well as Rockfast and Calcrete.
John Collins (Collins) worked for CTS. Harry Moss (Moss) owned a company called SRS that operated as an independent representative which sold CTS’s rapid-hardening CAS cement. SRS was paid through commissions. In 1998, Collins went to work for Ultimax. At about the same time, Moss considered going to work for Ultimax because CTS was experiencing a cement shortage. When CTS was unable to provide strong enough cement for the Tappan Zee Bridge project in New York, Moss called Collins and suggested that Ultimax should put in a bid. In August 1998, SRS officially severed its ties with CTS. Moss began selling Ultimax cement to some of his customers. He signed an agreement in which he promised not to disclose Ultimax’s secrets.
Moss maintained a relationship with Rice. They spoke to each other on occasion and met at conventions. They shared ideas from time to time. At a project shared by CTS and Ultimax, for example, Moss asked Rice for advice because Ultimax’s cement was cracking a day after it was poured.
To satisfy new government specifications for rapid-hardening CAS cement used in connection with highway projects, Kunbargi conducted a series of experiments. He looked for a way to increase the work time of Ultimax’s rapid-hardening CAS cement without losing strength gain. He combined citric acid and lithium carbonate as additives and had limited success.
One of Moss’s customers, Seville Central Mix (Seville), called Moss and told him it needed cement for a project at JFK Airport (JFK Project). As recommended by Moss, Seville purchased Ultimax cement. Collins provided a mix design for the proportions of cement, sand, stone, water and admixture. Moss met with Steve Bentz (Bentz), Seville’s quality control manager, to run tests to make sure the cement met specifications for set time and strength. Collins called and suggested that Moss and Bentz use a one-to-one ratio of citric acid to lithium carbonate. They did, but the cement set up too fast in their mobile mixer. Collins then suggested a two-to-one ratio. Once again, Moss and Bentz followed instructions. And once again, the cement set up too fast. Collins told them to keep diluting the lithium carbonate until they found the right combination. They tried a four-to-one ratio, which finally worked. Seville commenced work on the JFK Project in November 1998.
At the end of 1998, Moss told Rice that Ultimax was using four-to-one citric acid to lithium carbonate as a retarder. Rice did nothing with the information. Moss repeated the information about a year later in a subsequent conversation. At that point, Rice sent a memo to CTS personnel and asked them to run experiments on the formula. CTS concluded that the formula did not operate as a retarder in its cement.
In 2001 and 2002, CTS used lithium carbonate as an accelerator in its rapid hardening CAS cement for about 12 to 14 months. At no time did CTS use lithium carbonate as a retarder. Nor did CTS add citric acid and lithium carbonate to its cement in a ratio of four-to-one.
Judge Mayeda issued a statement of decision and concluded: (1) Ultimax did not meet its burden of proving that CTS misappropriated any secret formulas; (2) the use of lithium carbonate and the combination of lithium carbonate and citric acid were both well known to Rice and the cement industry generally before Kunbargi’s alleged inventions; (3) Ultimax did not maintain in confidence information about the use of lithium carbonate or the combination of lithium carbonate and citric acid; (4) Rice did not know or have reason to suspect that the information about lithium carbonate told to him by Moss was confidential information; (5) any complaint about CTS’s use of lithium carbonate should have been dealt with in Ultimax’s patent infringement action filed in federal court; and (6) Ultimax failed to present any evidence that would support disgorgement of CTS’s profits.
The trial court entered judgment for CTS.
This timely appeal followed.
STANDARD OF REVIEW
When applying the substantial evidence rule, a reviewing court is obligated to resolve all conflicts in the evidence in favor of the prevailing parties, and draw all reasonable inferences in a manner that upholds the judgment. (Holmes v. Lerner (1999) 74 Cal.App.4th 442, 445.)
DISCUSSION
I. The appellate record is inadequate for review.
The statement of decision indicates that there were 16 live witnesses and the depositions of 10 witnesses were read into the record. Instead of providing trial transcripts of the depositions being read into the record—and any related evidentiary rulings—Ultimax opted instead to simply provide the depositions. This decision was fatal to Ultimax’s appeal. The depositions are not records of the evidence presented to Judge Mayeda, and we are left unable to assess the entirety of the trial. In the absence of an adequate record, “a reviewing court will presume the evidence supports the judgment. [Citation.]” (In re Angel L. (2008) 159 Cal.App.4th 1127, 1136–1137; Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.)
In the reply brief, Ultimax states: “On July 5, 2008, at the conclusion of the trial, Ultimax filed a list of deposition excerpts which were read into the record. This list is reproduced at the end of Part C of [the appellants’ appendix]. CTS raised no objection to the list or its completeness at the time, or since. These same excerpts are filed as part of the record on appeal (in fact [Ultimax] lodged the entirety of the depositions).” This statement does not save the day. There was no stipulation by the parties or ruling from Judge Mayeda regarding the list. And even if the list is correct, the record on appeal is still inadequate because the list is not a substitute for a record of what actually transpired at trial.
A compounding problem is that Ultimax did not include a record of opening or closing statements (if there were any), and the appellants’ appendix does not contain any trial briefs from Ultimax. As a result, we cannot identify Ultimax’s theory of the case at trial, and we therefore cannot determine whether Ultimax has changed its theory of the case on appeal. Nor can we determine whether any of Ultimax’s arguments were waived for failure to raise them below.
In its pleading, Ultimax cited the elements of common law misappropriation and then alleged supporting facts. Judge Mayeda’s statement of decision, however, does not track these elements. For example, Judge Mayeda made no express findings as to whether Ultimax invested substantial time, skill or money in developing its formula. The reason for this disconnect is unclear. We note that in its appellate briefs and at oral argument, Ultimax has repeatedly conflated trade secret law with common law misappropriation. Also, it has focused on irrelevant issues such Judge Mayeda’s off-track statement of decision and the confidentiality agreements that Collins and Moss signed with Ultimax. Perhaps a similar lack of legal focus by Ultimax caused confusion in the proceedings below.
Our analysis could end here.
To be complete, we proceed further.
II. Unfair competition law.
Section 17203 permits a court to enjoin unfair competition and order restitution to a party wrongfully deprived of money. (Sevidal v. Target Corp. (2010) 189 Cal.App.4th 905, 923.) The umbrella of unfair competition includes common law misappropriation. It is a theory used “to protect something of value not otherwise covered by patent or copyright law, trade secret law, breach of confidential relationship, or some other form of unfair competition. [Citations.]” (United States Golf Assn. v. Arroyo Software Corp. (1999) 69 Cal.App.4th 607, 618 (Golf).) The elements are: “(a) the plaintiff invested substantial time, skill or money in developing its property; (b) the defendant appropriated and used the plaintiff’s property at little or no cost to the defendant; (c) the defendant’s appropriation and use of the plaintiff’s property was without the authorization or consent of the plaintiff; and (d) the plaintiff can establish that it has been injured by the defendant’s conduct.” (Ibid.)
III. The first Golf element.
We presume that Judge Mayeda made an implied finding that Ultimax did not invest substantial time, skill or money in developing its formula. Indeed, a “‘judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.’ [Citations.]” (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
Ultimax’s task is to explain why the evidence is insufficient to support the judgment. We note that even though Ultimax cited Golf and the applicable elements in the analysis section of its opening brief, it failed to offer any discussion of the first element in that analysis. In fact, the analysis does not contain a heading directed to the issue. This is a violation of California Rules of Court, rule 8.204(a)(1)(B) providing that appellate briefs must “[s]tate each point under a separate heading or subheading summarizing the point, and support each point by argument and, if possible, by citation of authority.” As a consequence, we deem Ultimax’s argument waived. (Heavenly Valley v. El Dorado County Bd. of Equalization (2000) 84 Cal.App.4th 1323, 1345, fn. 17 [“Amicus curiae California Assessors’ Association argues the two-year period is a statute of limitations subject to equitable tolling. This argument appears under the heading that Heavenly Valley is equitably estopped from invoking [a statute] because it could have sought an immediate writ instead of waiting out the two-year period. Each point in an appellate brief should appear under a separate heading, and we need not address contentions not properly briefed”].)
In its statement of facts, Ultimax combined facts and arguments under the heading “CTS’s Contentions re Development of the Formulas” and attacks the testimony of Moss and Collins regarding the creation of the formula of four parts to one part citric acid to lithium carbonate. Reading Ultimax’s opening brief is akin to looking at a cubist painting by Picasso; we see an ear where we expect to see an eye. Suffice it to say, setting forth argument in this fashion is improper because it violates the rule obligating all appellants to set forth points in headings, and it misleads the court as well as respondents as to the nature of the contentions on appeal. In any event, these attacks do not develop the relevant issue.
Ultimax alleged that CTS misappropriated multiple formulas. In Ultimax’s appellate briefs, its position vacillates. Sometimes it suggests that multiple formulas were misappropriated. Other times, it suggests that only one formula—four parts citric acid to one part lithium carbonate—is at issue. At oral argument, Ultimax represented that the pertinent formula is the use of four parts citric acid to one part lithium carbonate as a retarder in rapid hardening CAS cement.
Only in the reply does Ultimax specifically argue the first element of common law misappropriation. “‘A point not presented in a party’s opening brief is deemed to have been abandoned or waived. [Citations.]’ [Citation.]” (Wurzl v. Holloway (1996) 46 Cal.App.4th 1740, 1754, fn. 1.) This rule is backed by sound policy. When a party fails to develop proper arguments in the opening brief, it is equivalent to knocking a train off its tracks. The whole appeal is thrown off course because the issues are not properly framed. Moreover, when the respondent tries to address the arguments raised in the opening brief, it can be misled. It is simply unfair to place the train back on the tracks once it has passed respondent’s station.
IV. The fourth Golf element.
To demonstrate that it is entitled to restitution, Ultimax refers us to the testimony of its expert, Bjorn Malmlund (Malmlund).
Malmlund testified that CTS’s profits increased tenfold from 2000 to 2001 after it began using lithium carbonate. He then offered an opinion as to the profits that should be disgorged. The flaw is plain. This appeal is not based on CTS’s use of lithium carbonate. Even if it was, Ultimax failed to raise and discuss Judge Mayeda’s conclusion that a claim based on misappropriation of a lithium carbonate formula had to be raised in the patent infringement action. Arguments not made are deemed waived or abandoned. (Tan v. California Fed. Sav. & Loan Assn. (1983) 140 Cal.App.3d 800, 811.) Because this appeal is based on a formula for combining citric acid and lithium carbonate, and because Malmlund’s opinion regarding damages did not pertain to that combination, it is impossible to conclude that Judge Mayeda erred in making his findings as to restitution.
Ultimax contends that even if we accept all of the findings in Judge Mayeda’s statement of decision, Ultimax is entitled to a judgment against CTS. Untrue. As we previously indicated, Judge Mayeda’s statement of decision did not track the elements of common law misappropriation. He did not expressly find that Ultimax invested substantial time or money in developing the formula, or that CTS used Ultimax’s formula at little or no expense.
DISPOSITION
The judgment is affirmed. CTS shall recover its costs on appeal.
We concur: BOREN, P. J, DOI TODD, J.