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San Diego Convention Center wins court battle against cleaning contractor

United District Court Judge Anthony J. Battaglia issued an order Aug. 20 granting summary judgment in favor of San Diego Convention Center Corporation (SDCCC) on an interference with contract claim brought by United National Maintenance (UNM).

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The claim was the last remaining unresolved issue following an earlier victory for SDCCC when the U.S. Supreme Court on Jan. 12 denied the petition submitted by UNM seeking further review of the Aug.15, 2014 ruling by the Ninth Circuit Court of Appeal in favor of the SDCCC. The denial meant that UNM’s antitrust claims were settled, and the only remaining action to resolve was UNM’s claim of interference with contract. Unless UNM appeals the ruling to the Ninth Circuit Court of Appeals, the legal proceedings are complete.

“We are jubilant with this victory,” said Carol Wallace, president & CEO, San Diego Convention Center Corporation. “As I have said before, this is a positive outcome for the facility management industry allowing venues to retain control over their buildings operations,” she said.

Case History:

UNM, a vendor of tradeshow cleaning services, initially sued SDCCC in November 2007 on claims for intentionally interfering with contractual relationships, antitrust violations and interference with prospective economic advantage. This lawsuit was filed after SDCCC adopted a policy in July of 2007 mandating that they would be the exclusive provider of cleaning services staffing within their facility.

In the lower court on May 4, 2011, the jury returned a unanimous verdict on UNM’s intentional interference with contractual relations claim. The jury awarded UNM damages of $668,905. The jury did not reach a verdict on UNM’s remaining claims. SDCCC filed a motion for new trial on UNM’s intentional interference with contractual relations claim and a renewed motion for judgment as a matter of law on UNM’s other claims. The district court held that SDCCC was entitled to a new trial as the district court had previously erred in not giving a legal interpretation of UNM’s contracts. The district court held that UNM had failed to present sufficient evidence on the specific elements of its antitrust claims and finally they dismissed UNM’s claims for interference with prospective economic advantage and punitive damages as well as UNM’s motion for injunctive relief. After which UNM appealed, bringing the matter to the Ninth Circuit Court.

In the Aug. 15, 2014 ruling, the Ninth Circuit Court of Appeals amended its opinion to state that SDCCC is a public entity and denied UNM’s petition for rehearing. The Ninth Circuit cited that SDCCC operates as an “instrument” of San Diego based on the facts that SDCCC’s board members are appointed by the City of San Diego, SDCCC’s assets revert to San Diego and the fact that “SDCCC must publicly account for its operations.” SDCCC “is an extension of the municipality of San Diego and thus does not require active supervision by the state in order to retain its immunity from antitrust liability.”

Judge Andrew D. Hurwitz concurred, stating that in addition to state action immunity, SDCCC would win anyway on the antitrust claims because “no jury could reasonably find that SDCCC engaged either in monopolization or an attempt to monopolize by mandating that its own employees clean its building.”

The San Diego Convention Center Corporation is a public benefit corporation created by The City of San Diego to exclusively manage, market and operate the 2.6 million square-foot waterfront facility.

Posted in Southwest News, World
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