Opinion
Case No. 17-cv-03536-HSG
09-03-2020
TSI USA LLC, Plaintiff, v. UBER TECHNOLOGIES, INC., Defendant.
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR PARTIAL SUMMARY JUDGMENT
Re: Dkt. No. 127
Pending before the Court is Defendant Uber Technologies, Inc.'s motion for partial summary judgment. Dkt. No. 127. The Court held a hearing on the motion on August 27, 2020. Dkt. No. 149. For the reasons detailed below, the Court GRANTS IN PART and DENIES IN PART Defendant's motion.
I. BACKGROUND
Except where noted otherwise, relevant facts are undisputed.
Plaintiff TSI USA LLC and Defendant entered into a Services Agreement and "Statement of Work for Uber Global Travel Management Services" ("SOW"), effective November 24, 2014 (collectively, the "Agreements"). See Dkt. No. 89-1, Exs. 1-2. The SOW detailed the scope of the Services that Plaintiff would provide, including global travel management services for Uber employees. See id. The SOW included a checklist that outlined the services that plaintiff offered "within the scope" of the Agreements. See id., Ex. 2 at Ex. B. Such services included providing specific technology and support services for booking and managing travel plans. See id. Defendant could also "issue additional instructions, require additional Services or reduce or waive Services covered by the applicable SOW" at any time, if done in writing and with a mutually agreed upon adjustment in price and time of performance. See id., Ex. 1 at ¶ 2.2. Under the Agreements, Defendant agreed to pay Plaintiff a "flat management fee" based on the monthly volume of airline, rail, hotel and car sales booked through Plaintiff or fulfilled through Plaintiff's online booking tool on Defendant's behalf. See id., Ex. 2 at Ex. C ("Payment Terms" and "Flat Management Fee"). If, for example, Defendant booked between $833,333 and $1.25 million in a given month, it would pay Plaintiff a 3% management fee. See id. The "baseline minimum" in combined sales booked through Plaintiff under the Agreements, over the course of the two-year term, was $10 million. See id. ("Contracted Baselines" and "Term"). The Agreements further explained that the "[t]argeted 'go live' date" was January 2, 2015. See id., Ex. 1 at ¶ 10.1; id., Ex. 2 ("Schedule").
The program did not launch by this "go live" target. See Dkt. No. 129-4, Ex. D (Brady Depo.) at 109:4-112:21. According to Defendant, Plaintiff demonstrated the travel system internally, but it had several problems and Defendant was concerned that it could not adequately test the technology prior to the anticipated launch. See id.; see also id., Ex. 22 at TSI_113007; id., Ex. 23 at TSI_116100. Defendant also stated that Plaintiff was unable to place the software app in Apple's App Store by January 2, 2015, a prerequisite to launching the program. See id. at 107:5-108:21, 111:22-112:21; see also id., Ex. 23 at TSI_116100. Therefore, Defendant explained, the launch was delayed and instead converted into a small "pilot" launch to test the program for approximately two weeks. See Brady Depo. at 109:4-112:8, 113:17-114:11; id., Ex. 25 at TSI_113980.
Plaintiff sent Defendant an invoice dated August 25, 2015, for $200,000, which purportedly covered management fees from January through August 2015. See Dkt. No. 49-2, Ex. J. Defendant states that during this period, Plaintiff made only 129 travel related bookings for Defendant, which totaled $353,534. See Dkt. No. 129-5, Ex. E (Resp. to Rog. No. 13) at TSI_132238; see also Dkt. No. 129-6, Ex. F (Plaintiff's Initial Discl.). Defendant decided to terminate the Agreements. See Dkt. No. 128 (Jaffe Decl.) at ¶¶ 17-18. By letter dated August 28, 2015, Defendant provided Plaintiff with notice of termination. See id. at ¶ 18. The termination notice stated:
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 such payment constitutes full and final payment of all outstanding payment obligations under the Agreement, and that no further amounts are or shall become due.See Dkt. No. 43, Ex. A; see also Dkt. No. 49-1 (Groenewald Decl.) at ¶ 15. Defendant contends that it did not owe Plaintiff anything for its unsatisfactory services, but the check, which was enclosed with the termination notice, was intended to cover: (1) the $200,000 that Plaintiff requested for its services from January through August 2015; as well as (2) $1,226.30 to reimburse Plaintiff for the cost of an airline ticket that Plaintiff had advanced on Defendant's behalf in June 2015. See Jaffe Decl. at ¶¶ 17-18; see also Groenewald Decl. at ¶ 15; Dkt. No. 89 at ¶ 48(d).
You hereby release and discharge us and our affiliates . . . from all actions, causes of action, claims, damages, suits, and demands of any kind whatsoever, in law or equity . . . relating to or arising out of the Agreement.
Plaintiff cashed the check. See Jaffe Decl. at ¶ 18. It subsequently sent Defendant an additional statement to recover $1.4 million in purported costs incurred and owed by Defendant. See Dkt. No. 129-1, Ex. A (Kumpf Depo.) at Ex. 4-A. The invoiced included: (1) $791,580.25 in "Implementation Costs" from November 2014 through August 2015; (2) $101,450.00 for "Ginseng Project Costs" from April through July 2015; and (3) $739,843.50 in "Monthly Service Costs" from January through November 2015. Id. The invoice also credited the $200,000 from Defendant as a "partial payment." Id. Defendant contends that these costs are inflated, and in any event, Plaintiff is not entitled to recoup them under the Agreements. See Dkt. No. 127 at 10.
As relevant to the instant motion, the Agreements allowed Defendant "at its sole discretion" to "terminate all or any part of this Agreement or SOW hereunder by providing [Plaintiff] 90 days written notice." See Dkt. No. 89-1, Ex. 1 at ¶ 11.1 ("termination provision"). The termination provision further states that "Uber will provide 90 days written notice and [Plaintiff] shall be entitled to its costs already incurred in the performance of the Services." Id. The Agreements also contained a limitation of liability clause that states:
9.2 LIMITS OF LIABILITY. . . . IN NO EVENT SHALL UBER'S TOTAL CUMULATIVE LIABILITY OF EACH AND EVERY KIND UNDER THIS AGREEMENT EXCEED THE TOTAL AMOUNT PAID TO [PLAINTIFF] FOR SERVICES PERFORMED IN ACCORDANCE WITH THE APPLICABLE SOW. THE FOREGOING LIMITATION OF LIABILITY AND EXCLUSION OF CERTAIN DAMAGES SHALL APPLY REGARDLESS OF THE SUCCESS OR EFFECTIVENESS OF OTHER REMEDIES.See id., Ex. 1 at ¶ 9.2 ("limitation of liability provision"). The meaning of the termination provision and this limitation of liability underlie the parties' dispute in this action.
B. Procedural History
Plaintiff filed its initial complaint on July 27, 2016, and an amended complaint on September 16, 2016, both in the Northern District of Texas. Dkt. Nos. 1, 7. Plaintiff asserted claims for breach of contract, unjust enrichment/quantum meruit, fraud, tortious interference with contract, and defamation/business disparagement. See Dkt. No. 7. It also sought compensatory and punitive damages, as well as attorneys' fees. Id. The case was subsequently transferred to the Northern District of California on June 19, 2017. See Dkt. No. 31. On August 31, 2017, Defendant filed a motion to dismiss. Dkt. No. 42. The Court granted the motion in part, dismissing Plaintiff's fraud and tort claims and the prayer for punitive damages and attorneys' fees. See Dkt. No. 68.
Plaintiff filed a Second Amended Complaint ("SAC") on April 22, 2019. Dkt. No. 89. Defendant again moved to dismiss. See Dkt. No. 90. Plaintiff, however, failed to respond to the motion. The Court thus issued an order to show cause as to why the motion should not be granted. See Dkt. No. 94. Plaintiff responded that it did not oppose the motion and stated that the Court should resolve the motion "as it deems appropriate." Dkt. No. 95. The Court granted the motion and dismissed the fraud and defamation claims, as well as the prayers for punitive damages and attorneys' fees, with prejudice. See Dkt. No. 100. Plaintiff's claims for breach of contract and unjust enrichment/quantum meruit remain. See SAC at ¶¶ 52-60. Defendant answered the remaining portions of the SAC and, inter alia, asserted an affirmative defense of fraud. See Dkt. No. 102 at 12-13. Defendant contends that Plaintiff made false and/or misleading statements about its size and the scale of its travel services to induce Defendant to contract with Plaintiff. See id. Defendant urges that it would not have entered into the Agreements had it known the truth about Plaintiff's size and abilities. Id. Defendant now moves for partial summary judgment. See Dkt. No. 127.
II. LEGAL STANDARD
Summary judgment is proper when a "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is "genuine" if there is evidence in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. But in deciding if a dispute is genuine, the court must view the inferences reasonably drawn from the materials in the record in the light most favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986), and "may not weigh the evidence or make credibility determinations," Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v. Schriro, 514 F.3d 878, 884-85 (9th Cir. 2008). If a court finds that there is no genuine dispute of material fact as to only a single claim or defense or as to part of a claim or defense, it may enter partial summary judgment. Fed. R. Civ. P. 56(a).
III. DISCUSSION
Defendant raises three arguments in its motion for partial summary judgment. First, that the limitation of liability caps any damages Defendant may owe to $200,000. See Dkt. No. 127 at 13-16. Second, that Plaintiff may not succeed on its unjust enrichment claim because it admitted that all of the costs Plaintiff seeks to recover flow from the Agreements. See id. at 16-19. Lastly, that Plaintiff misrepresented its abilities when negotiating with Defendant, and the Court should grant Defendant's fraud defense as to Plaintiff's breach of contract claim. See id. at 19-21. The Court addresses each argument in turn.
A. Limitation of Liability
Defendant first argues that the plain language of the limitation of liability provision in the Agreements caps its total cumulative liability in this action to the "total amount paid to [Plaintiff] for services performed under [the Agreements]." See Dkt. No. 89-1, Ex. 1 at ¶ 9.2. The only fact necessary to enforce the cap, Defendant states, is the total amount that Defendant paid Plaintiff for services performed. And here, it is undisputed that Defendant paid Plaintiff a total of $200,000 for services performed. See Dkt. No. 43, Ex. A; Jaffe Decl. at ¶¶ 17-18; Kumpf Depo. at Ex. 4-A. Thus, Defendant urges, under the plain language of the Agreements, "in no event" shall Defendant's further liability to Plaintiff in this action exceed $200,000. Plaintiff does not contest the amount of money Defendant has paid to date for its services. Instead, Plaintiff argues that the limitation of liability is a boilerplate provision that conflicts with Plaintiff's right under the termination provision in the Agreements to recover "its costs already incurred in the performance of the Services." See Dkt. No. 114 at 13-16 (citing Dkt. No. 89-1, Ex. 1 at ¶ 11.1). Plaintiff thus concludes that the Court should disregard the limitation of liability provision entirely. See id.
This dispute between the parties therefore concerns a pure question of law: the meaning and enforceability of the limitation of liability provision. See Welles v. Turner Entm't Co., 503 F.3d 728, 735 (9th Cir. 2007) (finding the interpretation of a contract is a question of law for the Court to decide "unless the interpretation depends on the credibility of extrinsic evidence, in which case the interpretation of the contract is the task of the factfinder"). According to the Agreements, they "shall be governed by and construed in accordance with the laws of the State of California." See Dkt. No. 89-1, Ex. 1 at ¶ 12.1. The Court therefore looks to California law. When interpreting contracts, the overarching goal is to effectuate the parties' intent. Cal. Civ. Code § 1636 ("A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting."). The plain language governs. Cal. Civ. Code § 1638 ("The language of a contract is to govern its interpretation, if the language is clear and explicit."); see also Cal. Civ. Code § 1639 ("When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible."). However, "[i]f the terms . . . are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it." See id. at § 1649. Therefore, when interpreting a contract, the Court must first determine whether its language is ambiguous or reasonably susceptible to more than one interpretation.
Here, the Court finds that when read in its entirety, the language of the Agreements is unambiguous and the termination provision and limitation of liability are not in tension. When read together, the termination provision permits Plaintiff to recover the costs it "incurred in the performance of the Services," even if Defendant terminates the Agreements. See Dkt. No. 89-1, Ex. 1 at ¶ 11.1. But under the limitation of liability provision, "in no event" shall any such costs exceed the total amount Defendant paid to Plaintiff for services performed under the Agreements. See id., Ex. 1 at ¶ 9.2. This limitation is also consistent with the overall payment structure under the Agreements, in which Plaintiff is paid based on the volume of travel Defendant booked with Plaintiff rather than Plaintiff's itemized costs. See id., Ex. 2, Ex. C ("Payment Terms" and "Flat Management Fee"). In the event Defendant terminated the Agreements, as occurred here, Plaintiff could thus recover its costs commensurate with the services it had provided.
To the extent Plaintiff suggests that there is something inherently problematic with enforcing the limitation of liability provision in this case, the Court is not persuaded. California courts have generally enforced such clauses, noting that they are "intended to protect the wrongdoer defendant from unlimited liability." See Food Safety Net Servs. v. Eco Safe Sys. USA, Inc., 209 Cal. App. 4th 1118, 1126 (Cal. Ct. App. 2012) (quotation omitted). Parties may limit their liability in this way, and "[w]ith respect to claims for breach of contract, limitation of liability clauses are enforceable unless they are unconscionable, that is, the improper result of unequal bargaining power or contrary to public policy." Id. Plaintiff makes no effort to explain how the limitation of liability provision in this case is unconscionable or contrary to public policy. Indeed, the Agreements indicate that "both parties . . . had sufficient time to have this Agreement reviewed by counsel and that this Agreement will be deemed to have been jointly prepared by the [p]arties." See Dkt. No. 89-1, Ex. 1 at ¶ 12.9.
That Plaintiff may be unable to recover substantial costs from Defendant does not render the provision unenforceable. Under similar circumstances, the California Court of Appeal enforced a limitation of liability provision which precluded all recovery arising from an alleged breach of contract. See Food Safety, 209 Cal. App. 4th at 1127. In Food Safety, Eco Safe had asserted claims for breach of contract against Food Safety in connection with a study of Eco Safe's food disinfection equipment. Id. at 1122-23. Eco Safe alleged that the study had not been conducted as specified. See id. at 1124-25. The trial court had granted summary judgment in favor of Food Safety, holding that the parties' contract limited Eco Safe's possible recovery. Id. at 1126-27. The provision at issue stated:
[Food Safety's] total liability to you in connection with the work herein covered for any and all injuries, losses, expenses, demands, claims or damages whatsoever arising out of or in any way related to 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 direct result thereof, or (b) the total amount paid by you to [Food Safety] for the services herein covered. We accept no legal responsibility for the purposes for which you use the test results.Id. at 1126 (emphasis added). The court noted the "broad and unqualified language" in this provision, including that "'[i]n no event' is Food Safety liable for damages . . . 'arising out of or in any way related to the work herein covered, from any cause or causes." Id. at 1128 (emphasis added). In affirming summary judgment, the California Court of Appeal explained that "[b]ecause it is undisputed that Eco Safe ha[d] paid nothing to Food Safety for the study, the clause thus prohibit[ed] a recovery for breach of contract." Id. at 1127.
The limitation of liability provision in this case is similarly clear: "in no event shall Uber's total cumulative liability . . . exceed the total amount paid to [Plaintiff] for services performed . . . ." See Dkt. No. 89-1, Ex. 1 at ¶ 9.2 (emphasis added). Because Defendant only paid $200,000 for Plaintiff's services under the Agreements, Plaintiff's recovery is so limited. If Plaintiff incurred costs under the Agreements that it cannot recoup because of the termination, that was Plaintiff's hazard in entering into the Agreements with this limitation of liability provision. It is not for the Court to rewrite the parties' contract with the benefit of hindsight. The Court therefore finds that the limitation of liability provision caps Defendant's contractual damages at $200,000. Nevertheless, the Court agrees with Plaintiff that the limitation of liability provision only applies to Plaintiff's breach of contract claim. See Dkt. No. 145 at 15-16. To the extent Plaintiff seeks (and is entitled to) damages outside the contract, there simply is no basis for the Court to find that the limitation of liability provision extends to such extracontractual damages. //
B. Unjust Enrichment
Defendant next argues that summary judgment is proper as to Plaintiff's claim for unjust enrichment/quantum meruit. See Dkt. No. 127 at 16-19. "Under California law, unjust enrichment can be the basis of a right to restitution or quasi-contractual recovery." Shum v. Intel Corp., No. C-02 -03262-DLJ, 2008 WL 4414722, at *6 (N.D. Cal. Sept. 26, 2008) (citing California Med. Ass'n, Inc. v. Aetna U.S. Healthcare of California, Inc., 94 Cal. App. 4th 151, 172, 114, n.23 (Cal. Ct. App. 2001)). Similarly, quantum meruit is an "equitable remedy implied by the law under which a plaintiff who has rendered services benefitting the defendant may recover the reasonable value of those services when necessary to prevent unjust enrichment of the defendant." In re De Laurentiis Entm't Grp. Inc., 963 F.2d 1269, 1272 (9th Cir. 1992). But such a quasi-contractual claim will not lie where there exists between the parties "a valid express contract governing the same subject matter." Shvarts v. Budget Grp., Inc., 81 Cal. App. 4th 1153, 1159 (Cal. Ct. App. 2000). The California Court of Appeal has explained that "[t]he reason for the rule is simply that where the parties have freely, fairly and voluntarily bargained for certain benefits in exchange for undertaking certain obligations, it would be inequitable to imply a different liability and to withdraw from one party benefits for which he has bargained and to which he is entitled." Wal-Noon Corp. v. Hill, 45 Cal. App. 3d 605, 613 (Cal. Ct. App. 1975).
Here, Defendant contends that the Agreements cover the full scope of services for which Plaintiff seeks to recover in this action; Plaintiff's Rule 30(b)(6) witness conceded this; and thus Plaintiff may not seek to recover under any quasi-contractual cause of action. In its initial disclosures, Plaintiff identified five categories of damages:
(a) $791,580.25 in implementation costs to achieve the implementation criteria set forth in the Statement of Work;
(b) the separate implementation costs of Uber's specially requested company trip project in the amount of $101,450;
(c) the ongoing actual monthly cost of providing travel service to Uber, in the amount of $67,258.50 per month from January 2 through November 26,2015, or $739,843.50;
(d) the cost of the airline ticket purchased for Mr. Krometis in the amount of $1,226.30; [and]
(e) any other out-of-pocket costs of travel advanced for Uber's benefit by TSI identified during discovery.See Dkt. No. 129-6, Ex. F. Items (a) through (c) track, in both description and dollar value, the costs that Plaintiff invoiced Defendant for following termination. See Kumpf Depo. at Ex. 4-A through 4-G. Defendant asked Plaintiff's Rule 30(b)(6) deponent, Richard Kumpf, about these costs (as detailed in "Exhibit 4"). Although Mr. Kumpf initially identified the costs generically as related to "costs to perform services," without attribution to a specific SOW or contract, he responded affirmatively when asked whether they were costs under the Agreements:
Q. What is this exhibit, exhibits 4-A through 4-G, what is it supposed to represent?See Kumpf Depo. at 18:19-19:1 (emphasis added). More granularly, Defendant asked whether the $101,450 for the "specially requested company trip" ("Project Ginseng") was related to the SOW:
A. It is a statement of our costs to perform services.
Q. Was it - is it a statement of TSI's cost to perform services under its contract and Statement of Work with Uber?
A. Yes.
Q. Now if we could turn to Exhibit 4-C. This is another invoice with a description of: Ginseng Project Costs per SOW November 24, 2014, April through July 2015, correct?See id. at 49:14-24 (emphasis added). Defendant urges that these admissions are binding and not subject to further clarification. See Dkt. No. 127 at 18. Defendant also points out that the Agreements expressly cover travel management services, and that all of Plaintiff's purported damages relate to travel management services. Id. at 18-19.
A. Correct
Q. So is it correct that the numbers reflected on this invoice, Exhibit 4-C, totaling $101,450, are also costs that TSl claims to be due under its contract with Uber because Uber terminated the agreement?
A. Yes.
The Court understands that Plaintiff subsequently adjusted its calculations, reducing its claimed costs. See Dkt. No. 129-1, Ex. 28.
In response, Plaintiff suggests that through clever questioning, Defendant led Mr. Kumpf to misstate the nature of Plaintiff's damages. See Dkt. No. 145 at 6-7. Plaintiff urges that it should not be bound by this mistaken concession. By declaration in support of Plaintiff's opposition to the pending motion, Mr. Kumpf explains that "the underlying premise - that all of the work TSI performed for Uber was within the scope of the SOW - is factually inaccurate." See Dkt. No. 146 at ¶ 4. Mr. Kumpf additionally states that had he "otherwise understood that [defense counsel] was attempting to have me 'admit' that all of the itemized costs on TSI's invoice to Uber were for tasks within the SOW (which would be contrary to our consistent position from the inception of this litigation), I would have answered by making the distinction between work that was within, as opposed to outside, the scope of the SOW." See id. at ¶ 7. Plaintiff thus suggests that there is a fact question about the meaning of Mr. Kumpf's deposition testimony and whether the damages that Plaintiff seek to recover fall outside the scope of the Agreements.
"The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony." See Yeager v. Bowlin, 693 F.3d 1076, 1080 (9th Cir. 2012) (quotation omitted). "This sham affidavit rule prevents a party who has been examined at length on deposition from rais[ing] an issue of fact simply by submitting an affidavit contradicting his own prior testimony, which would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact." Id. (quotation omitted) (alterations in original). Nevertheless, "[t]he non-moving party is not precluded from elaborating upon, explaining or clarifying prior testimony elicited by opposing counsel on deposition and minor inconsistencies that result from an honest discrepancy, a mistake, or newly discovered evidence afford no basis for excluding an opposition affidavit." Id. (quotation omitted).
The Court understands Plaintiff to be arguing that Mr. Kumpf simply made a mistake in interpreting defense counsel's questions. Yet the record does not support such an interpretation. First, the disparity between Mr. Kumpf's given testimony and subsequent clarification is extreme. During his deposition, Mr. Kumpf admitted that the damages Plaintiff seeks in this litigation are all related to the Agreements. Yet now Mr. Kumpf states that some of Plaintiff's costs fall outside the scope of the Agreements. Were parties free to "correct" testimony in this fashion, depositions would be rendered meaningless and summary judgment easily averted. Second, other than offering Mr. Kumpf's contradictory declaration, Plaintiff does not proffer any evidence establishing which of Plaintiff's costs are separate and apart from the Agreements. Plaintiff does not cite any evidence about the nature of its costs at all. In his declaration, Mr. Kumpf merely points to allegations in the SAC. See Dkt. No. 145 at 3-4 (citing SAC at ¶¶ 17-22). Mr. Kumpf does not rely on any independent knowledge about Plaintiff's work or the costs it incurred. Nor does he parse through Exhibit 4 from his deposition to clarify which costs fall within and which costs fall outside the scope of the Agreements. During the hearing on this motion, when the Court asked Plaintiff about these damages, Plaintiff demurred, stating that Defendant—not Plaintiff—bears the burden of establishing that it is entitled to summary judgment. But a dispute of material fact is only "genuine" if there is evidence in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Anderson, 477 U.S. at 248. The "mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient." Id. at 252. Thus, Plaintiff may not defeat summary judgment with allegations in the complaint. See Fed. R. Civ. P 56(c)(1). Third, the Court finds the timing of Mr. Kumpf's "correction" suspect. Plaintiff did not clarify the meaning of Mr. Kumpf's testimony or otherwise correct it during the deposition itself. Nor did Plaintiff correct Mr. Kumpf's testimony after receiving the deposition transcript. See Fed. R. Civ. P. 30(e). Indeed, Plaintiff did not correct Mr. Kumpf's deposition testimony at any point in the six months between the deposition and Plaintiff's opposition to the motion for summary judgment. The Court finds that the sham affidavit rule applies in this context, and the Court therefore strikes Mr. Kumpf's declaration to the extent he argues that his deposition testimony was mistaken and that Plaintiff seeks to recoup costs outside of the scope of the Agreements. See Dkt. No. 146 at ¶¶ 2-13.
Aside from Mr. Kumpf's declaration, Plaintiff suggests that deposition testimony from Defendant's CEO, Howard Jaffe, creates a dispute of material fact regarding Plaintiff's quasi-contract claim, at least as to costs associated with Project Ginseng. See Dkt. No. 145 at 9-12, 16. Mr. Jaffe acknowledged that Plaintiff was putting together a proposal for Project Ginseng and that Project Ginseng was not mentioned by name in the SOW. See Dkt. No. 147-1, Ex. F at 39:25-43:1, 46:5-51:8, 72:23-73:3; Ex. G. But despite Plaintiff's suggestion to the contrary, Mr. Jaffe notably did not state that Project Ginseng fell outside the scope of the Agreements, and instead said he believed the Agreements covered "meetings and events" such as Project Ginseng. See id. at 50:23-51:8. Additionally, Plaintiff's own invoice stated that the "Ginseng Project Costs" were "per" the SOW. See Kumpf Depo. at Ex. 4-A, 4-E. This is consistent with Mr. Kumpf's deposition testimony in which he conceded that the $101,450 Plaintiff sought for "Ginseng Project Costs" constituted "costs that [Plaintiff] claims to be due under its contract with Uber because Uber terminated the agreement." See Kumpf Depo. at 49:14-24.
Again, the Court understands Plaintiff's frustration that it may have incurred costs that it cannot recoup under the Agreements. Still, even drawing all reasonable inferences in the light most favorable to Plaintiff, as it must, the Court finds that Plaintiff has not identified a dispute of material fact sufficient to defeat summary judgment on its unjust enrichment/quantum meruit claim.
C. Fraud Affirmative Defense
Lastly, Defendant contends that there is no dispute of material fact that Plaintiff misrepresented its abilities to Defendant, so the Court should grant summary judgment as to its affirmative defense for fraud to Plaintiff's breach of contract claim. See Dkt. No. 127 at 19-21. "It is well established that a defrauded defendant may set up the fraud as a defense and, in fact, may even recoup his damages by counterclaim in an action brought by the guilty party to the contract." Bowmer v. H. C. Louis, Inc., 243 Cal. App. 2d 501, 503 (Cal. Ct. App. 1966). In California, the elements of fraud are: (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud or to induce reliance (4) justifiable reliance; and (5) resulting damage. See Odorizzi v. Bloomfield Sch. Dist., 246 Cal. App. 2d 123, 129 (Cal. Ct. App. 1966).
Here, Defendant argues that Plaintiff made several false or misleading statements in its project proposal to induce Defendant to enter into the Agreements with Plaintiff, including that Plaintiff had over 3,000 employees; operated in over 250 cities; had "wholly owned visa and passport offices" in various regional offices; and had earned over $200 million in revenue in the United States in 2013. See, e.g., Dkt. No. 127 at 6-7 (citing Dkt. No. 128-1, Ex. 1 at UBER0014041, UBER0014058, UBER0014097). In reality, Defendant states, Plaintiff had only approximately 100 employees; had offices in just five U.S. cities; had only one employee who processed passports and visas; and had only earned between $15 and $17 million in revenue. Id. (citing Kumpf Depo. at 12:11-13:4, 16:10-20, 18:1-11, 34:16-35:17). Defendant concludes that had it known the truth, it would not have contracted with Plaintiff. See Dkt. No. 127 at 7, 20-21.
Plaintiff, in turn, responds that it did not misrepresent itself and that, in any event, Defendant was aware of Plaintiff's size and the nature of its global operations. See Dkt. No. 145 at 3-6, 16-17. For example, Plaintiff points to a PowerPoint presentation created by Defendant's in-house travel manager, Margaret Brady, which notes that Plaintiff is "Small in Size" and that Uber would be its "largest client." See Dkt. No. 147-1, Ex. E at UBER000123. The presentation also noted that Plaintiff is "a global company operating thru [sic] consortia network," in contrast to Plaintiff's competitor which had the "largest employee base and broadest footprint covering the most countries." Id. at UBER000124. During her deposition, Ms. Brady explained that she understood that "operating through consortia network" meant that Plaintiff's "service configuration globally was more of a profile of a network than wholly-owned offices." See id., Ex. D. at 19:17-20:14. She clarified that this could mean it operated through "clustered agencies," but that the agencies may not be wholly owned by Plaintiff. Id. at 20:3-14, 33:1-23. Mr. Kumpf further explained Plaintiff's representations about its size, global footprint, and revenue referred to both employees and this "consortia" of other agencies. See Dkt. No. 147-1, Ex. A at 29:12-33:25. Mr. Kumpf also explained that he attended a meeting with Ms. Brady and Mr. Jaffe in which Plaintiff explained its relationship with these other affiliated entities. See Dkt. No. 146 at ¶ 20.
Defendant suggests that Plaintiff's testimony does not directly address the specific misstatements that Defendant identified, and instead raises separate, undisputed facts about Plaintiff's affiliates. See Dkt. No. 148 at 9-10. But Defendant misapprehends Plaintiff's argument. Plaintiff argues that its statements about the nature and scale of its operations—such as the number of employees, cities of operation, and revenue—included figures from these affiliate entities, and that Defendant knew this. Of course, Defendant may nevertheless argue that these statements are still misleading, and disagree as to what Defendant knew about Plaintiff's operations, but those are issues for the factfinder to determine at trial. The Court finds that Plaintiff has thus established material disputes of fact as to whether Plaintiff fraudulently misrepresented its size, revenue, and structure in its pre-contractual communications with Defendant, so as to preclude summary judgment as to Defendant's affirmative defense.
IV. CONCLUSION
Accordingly, the Court GRANTS Defendant's motion for partial summary judgment to the extent Plaintiff seeks to obtain contractual damages that exceed $200,000. The Court further GRANTS Defendant's motion for partial summary judgment as to Plaintiff's claim for unjust enrichment/quantum meruit. The Court otherwise DENIES the motion in its entirety. The Court further SETS a telephonic case management conference for September 22, 2020, at 2:00 p.m. to discuss how to resolve the remaining breach of contract claim efficiently. All counsel, members of the public and press may use the following dial-in information below to access the conference line:
Dial In: 888-808-6929
Access Code: 6064255 The amended scheduling order otherwise remains in effect. See Dkt. No. 123.
IT IS SO ORDERED. Dated: 9/3/2020
/s/_________
HAYWOOD S. GILLIAM, JR.
United States District Judge