NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS DEC 23 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

PACIFIC SURF DESIGNS, INC., a No. 23-2609 Delaware corporation, D.C. No. 3:20-cv-01464-BEN-DDL Plaintiff - Appellant,

v. MEMORANDUM*

WHITEWATER WEST INDUSTRIES,

LTD.; GEOFFREY CHUTTER, an individual; FLOWRIDER, INC., a California corporation; MARSHALL MYRMAN, an individual; AQUATIC DEVELOPMENT GROUP, INC., a New York corporation; DAVID KEIM, an individual; THOMAS LOCHTEFELD, an individual,

Defendants - Appellees.

Appeal from the United States District Court for the Southern District of California Roger T. Benitez, District Judge, Presiding

Argued and Submitted December 5, 2024 Pasadena, California

Before: BYBEE, IKUTA, and BADE, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Plaintiff-Appellant Pacific Surf Designs, Inc. (“PSD”) appeals the district

court’s entry of judgment following a jury verdict that Defendant-Appellee

WhiteWater West Industries, Ltd. did not violate § 2 of the Sherman Act by

monopolizing the market for sheet-wave machines. It challenges the district

court’s verdict form, jury instructions, and exclusion of evidence pursuant to

Federal Rule of Evidence 408. We have jurisdiction pursuant to 28 U.S.C. § 1291,

and we affirm.

1. PSD argues that the district court erred by designing a sequential

verdict form that required the jury to cease deliberations if it concluded that PSD

had not proven sham litigation. PSD did not object to the design of the verdict

form,1 and we therefore review for plain error. Chess v. Dovey, 790 F.3d 961, 970

(9th Cir. 2015) (citing C.B. v. City of Sonora, 769 F.3d 1005, 1016 (9th Cir. 2014)

(en banc)) (explaining that unpreserved challenges to jury instructions are

reviewed for plain error); United States v. Stinson, 647 F.3d 1196, 1218 (9th Cir.

2011) (stating that we “treat verdict forms like jury instructions”).

In antitrust cases, “plaintiffs should be given the full benefit of their proof

without tightly compartmentalizing the various factual components and wiping the

1 The parties dispute whether PSD preserved its various objections. Our review indicates that PSD preserved some objections, but not all. For those issues on which PSD did not preserve its objections, our conclusions would not change under de novo review.

2 23-2609 slate clean after scrutiny of each.” Cont’l Ore Co. v. Union Carbide & Carbon

Corp., 370 U.S. 690, 699 (1962). With that said, “if all we are shown is a number

of perfectly legal acts, it becomes much more difficult to find overall wrongdoing.”

City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1376 (9th Cir. 1992); accord

Dreamstime.com, LLC v. Google LLC, 54 F.4th 1130, 1142 (9th Cir. 2022).

These principles are applicable here. PSD argues that the verdict form’s

sequential design failed to account for its “monopoly broth” theory by preventing

the jury from considering “the anticompetitive conduct alleged in the aggregate.”

PSD’s monopoly broth theory alleged that WhiteWater engaged in an

anticompetitive scheme consisting of (1) sham litigation and (2) informing PSD’s

potential customers about that litigation to harm PSD’s business. The district court

correctly observed that PSD’s “allegations of disparagement would likely fail in

isolation.” Once the jury found that WhiteWater did not engage in sham litigation,

there were no illegal acts left in the broth. Therefore, the district court did not

plainly err by providing a verdict form that required the jury to make sequential

findings and cease deliberation after it determined there was no sham litigation.

2. PSD also argues that the district court erred by failing to instruct the

jury to consider the evidence as a whole. PSD did not preserve this objection. We

therefore review for plain error, Chess, 790 F.3d at 970, and we detect none

because the district court instructed the jury to “base [its] decision on all of the

3 23-2609 evidence, regardless of which party presented it.”2

3. PSD argues that the district court erred by instructing the jury that, to

prove sham litigation, PSD must “prove by clear and convincing evidence” that

WhiteWater’s “lawsuits were objectively baseless as a whole.” It challenges this

instruction as it pertains to both the clear and convincing standard and the objective

baselessness standard. PSD preserved these objections, and we therefore review de

novo. Chess, 790 F.3d at 970.

We have “established a clear and convincing standard for section 2 antitrust

liability resulting from the prosecution of a patent suit in bad faith.” Handgards,

Inc. v. Ethicon, Inc. (“Handgards II”), 743 F.2d 1282, 1284 (9th Cir. 1984) (citing

Handgards, Inc. v. Ethicon, Inc. (“Handgards I”), 601 F.2d 986 (9th Cir. 1979)).

PSD tries to circumvent this standard by arguing that (1) WhiteWater’s scheme

included disparagement in addition to sham litigation, and (2) the underlying

litigation involved more than just patent claims. These arguments are

unpersuasive. A company “generat[ing] adverse publicity” in addition to filing

infringement actions does not change the nature of the conduct, Handgards I, 601

F.2d at 991, and the conduct is therefore still subject to the clear and convincing

standard. PSD’s attempt to relabel sham patent litigation as monopoly broth does

2 The transcripts are in all capital letters. We have altered quotations from the transcripts to use capital and lower-case letters.

4 23-2609 not transform it: “It is the same old wine when put in a new bottle . . . .” Id. at 994.

Next, PSD argues that it did not need to show that WhiteWater’s lawsuits

were objectively baseless. Objective baselessness is the first part of the two-part

sham litigation inquiry. Pro. Real Est. Invs., Inc. v. Columbia Pictures Indus., Inc.,

508 U.S. 49, 60–61 (1993). This circuit has recognized that a variation of that test

may apply “[w]hen dealing with a series of lawsuits.” USS-POSCO Indus. v.

Contra Costa Cnty. Bldg. & Constr. Trades Council, AFL-CIO, 31 F.3d 800, 811

(9th Cir. 1994). PSD argues that the district court erred by not conforming its

instructions to POSCO, but our recent decision in Relevant Group, LLC v.

Nourmand precludes applying POSCO here. 116 F.4th 917, 931 (9th Cir. 2024).

At most, PSD alleged that WhiteWater pursued five sham lawsuits and, per

Relevant Group, that number is insufficient for POSCO to apply.3 Id. Because

POSCO does not apply, the district court did not err.

4. Lastly, PSD argues that the district court abused its discretion by

excluding evidence of a conversation between Richard Alleshouse, the founder of

PSD, and Marshall Myrman, the COO of Flowrider Surf (a WhiteWater

subsidiary). The district court concluded that evidence of this conversation

constituted evidence of settlement negotiations and excluded it under Federal Rule

3 Although five separate lawsuits were filed, they consisted of the same two disputes brought in various permutations: “a patent case and a contract case.”

5 23-2609 of Evidence 408.

This court reviews the district court’s evidentiary rulings for abuse of

discretion. Spencer v. Peters, 857 F.3d 789, 798 (9th Cir. 2017) (citing McEuin v.

Crown Equip. Corp., 328 F.3d 1028, 1032 (9th Cir. 2003)). PSD cited cases that

support the conclusion that the district court could have admitted evidence

pertaining to the Alleshouse/Myrman conversation if it determined that the

conversation was not a settlement discussion. But the district court’s finding that

the Alleshouse/Myrman conversation was a settlement discussion was not

unreasonable. The district court did not abuse its discretion by excluding this

evidence.

AFFIRMED.

6 23-2609