UNITED STATES COURT OF APPEALS FILED

FOR THE NINTH CIRCUIT JUL 10 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

VIACOM INTERNATIONAL, INC., a No. 16-56475 Delaware corporation, D.C. No. 2:15-cv-09621-R-E Plaintiff-counter- Central District of California, defendant-Appellee, Los Angeles

v. ORDER

MGA ENTERTAINMENT, INC.,

Defendant-counter-claimant- Appellant,

and

DOES, 1-10, inclusive,

Counter-defendant.

Before: TALLMAN and NGUYEN, Circuit Judges, and BENNETT,* District Judge.

The memorandum disposition filed on June 21, 2018, is replaced with the

concurrently filed amended memorandum disposition.

The petition for rehearing is DENIED. No future petitions shall be

entertained.

IT IS SO ORDERED.

* The Honorable Mark W. Bennett, United States District Judge for the Northern District of Iowa, sitting by designation.

NOT FOR PUBLICATION

FILED

UNITED STATES COURT OF APPEALS

JUL 10 2018

FOR THE NINTH CIRCUIT MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

VIACOM INTERNATIONAL, INC., a No. 16-56475 Delaware corporation, D.C. No. 2:15-cv-09621-R-E Plaintiff-counter- defendant-Appellee,

AMENDED MEMORANDUM*

v.

MGA ENTERTAINMENT, INC.,

Defendant-counter-claimant- Appellant,

and

DOES, 1-10, inclusive,

Counter-defendants.

Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding

Argued and Submitted June 7, 2018 Pasadena, California

Before: TALLMAN and NGUYEN, Circuit Judges, and BENNETT,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Mark W. Bennett, United States District Judge for the Northern District of Iowa, sitting by designation. Appellant MGA Entertainment, Inc., a toy manufacturer, and Appellee

Viacom International, Inc., the owner of cable television channels, entered into

agreements to develop and air a television show, Lalaloopsy, both domestically

and internationally, based on MGA’s Lalaloopsy fashion doll. The parties also had

a contract for MGA’s advertising on Viacom media. After MGA failed to make

contractually obligated payments, Viacom sued MGA for breach of the

agreements, and MGA asserted counterclaims and various defenses. The district

court granted summary judgment in favor of Viacom, and MGA appeals.

We have jurisdiction under 28 U.S.C. § 1291, and we review de novo a

district court’s grant of summary judgment. Sierra Med. Servs. All. v. Kent, 883

F.3d 1216, 1222 (9th Cir. 2018). The parties agree that their claims are governed

by California law.

1. As to the Co-Finance Agreement (CFA) concerning development,

financing, and domestic airing of Lalaloopsy, the district court correctly concluded

that to prove either a breach of contract or a viable excuse for non-performance,

MGA must show that Viacom materially breached the contract, Brown v. Grimes,

120 Cal. Rptr. 3d 893, 903 (Ct. App. 2011), and that the breach caused MGA’s

resulting damages, Troyk v. Farmers Grp., Inc., 90 Cal. Rptr. 3d 589, 628–29 (Ct.

App. 2009). The district court correctly concluded that MGA did not establish a

genuine issue of material fact that any breach by Viacom was material, or

otherwise stated, that Viacom failed to “regularly” air Lalaloopsy. MGA’s

2 16-56475 argument involving an implied covenant of good faith and fair dealing also fails

because an “implied covenant does not trump an agreement’s express language,”

Steiner v. Thexton, 226 P.3d 359, 365 (Cal. 2010), and the implied covenant cannot

impose substantive terms and conditions beyond those to which the contracting

parties actually agreed, see Guz v. Bechtel Nat’l, Inc., 8 P.3d 1089, 1110 (Cal.

2000). Furthermore, nothing but speculation connects Viacom’s alleged breaches

of the CFA to any loss of sales of Lalaloopsy dolls.

2. As for the International Advertising Agreement (IAA), there is no

dispute that MGA did not fulfill its required $5 million “spend” on international

advertising within the time specified. On MGA’s “excuse” defense, no reasonable

jury could find that (1) the alleged unhappiness of MGA’s international

distributors, prevented or delayed MGA’s fulfillment of its commitment;

(2) Viacom materially breached its airing obligations under the companion

International Licensing Agreement (ILA) when it substantially performed; or

(3) Viacom had no excess international advertising inventory during the relevant

period, so that Viacom had no damages. Standard Iron Works v. Globe Jewelry &

Loan, Inc., 330 P.2d 271, 278 (Ct. App. 1958) (“Mere difficulty or unusual or

unexpected expense will not excuse a party for failing to comply with the terms of

his contract.”). Therefore, we affirm summary judgment in favor of Viacom on the

IAA claim.

3 16-56475 3. MGA does not dispute on appeal that it breached the so-called Beacon

Agreement, relating to MGA’s advertising on Viacom media. We need not

address the district court’s conclusion that “failure to mitigate” was inapplicable

where MGA’s advertising commitment was “non-cancellable,” because we “may

affirm [summary judgment] on any ground supported by the record.” Perez v. City

of Roseville, 882 F.3d 843, 850 (9th Cir. 2018). Evidence that networks may have

been short of advertising inventory at the time of MGA’s breach, would allow

jurors to speculate that Viacom could have taken further steps to mitigate its

damages. That evidence would not, however, be enough for a reasonable jury to

conclude that when a suitable offer was made to purchase MGA’s “cancelled”

advertising inventory, Viacom unreasonably rejected that offer. Green v. Smith, 67

Cal. Rptr. 796, 800 (Ct. App. 1968).

Costs are awarded to Plaintiff-Appellee Viacom.

AFFIRMED.

4 16-56475