United National Maintenance (UNM) brought a lawsuit against San Diego Convention Center Corp. (SDCCC), is a public benefit corporation created by the City of San Diego to exclusively manage and operate the 2.6 million square-foot waterfront facility. UNM, a vendor of tradeshow cleaning services, initially sued SDCCC in November 2007.
On Aug. 15, the Ninth Circuit Court of Appeals issued its ruling on United National Maintenance v. San Diego Convention Center Corporation in favor of SDCCC.
“This is a win for San Diego, but more importantly a landmark win for the facility management industry as it will allow venues to operate and manage their buildings as they see fit,” said Carol Wallace, president and CEO, SDCCC.
UNM brought suit against SDCCC after the facility manager adopted a policy in July 2007 mandating that it would be the exclusive provider of cleaning services staffing within its facility. Claims against SDCCC included intentionally interfering with contractual relationships, antitrust violations and interference with prospective economic advantage.
On May 4, 2011, the jury in the lower court returned a unanimous verdict on UNM’s claim of intentional interference with contractual relations, awarding $668,905 in damages to the cleaning services vendor.
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. Stating that it had previously erred in not giving a legal interpretation of UNM’s contracts, the Southern District Court of California held that SDCCC was entitled to a new trial.
In a new trial, the District Court held that UNM had failed to present sufficient evidence on the specific elements of its antitrust claims, thereby dismissing UNM’s claims for interference with prospective economic advantage and punitive damages as well as its motion for injunctive relief. As a result, UNM appealed and brought the matter to the Ninth Circuit Court.
In its 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. The decision was based on several facts, including that SDCCC’s board members are appointed by the City of San Diego, SDCCC’s assets revert to San Diego and that “SDCCC must publicly account for its operations” as it “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.”
Going forward, UNM may either file a petition with the U.S. Supreme Court requesting a review of the Ninth Circuit decision; put on a new trial in the District Court that would be limited to the issue of interference with contract; or dismiss the case.
The San Diego Convention Center Corp. is celebrating nearly 25 years with the San Diego Convention Center having generated $22.9 billion in regional economic impact, $430.3 million in tax revenues and supports 12,500 jobs countywide.
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