Appling

Opinion by Judge TROTT; Dissent by Judge BETTY B. FLETCHER

OPINION

Plaintiffs-Appellants (“Agents”) are independent-contractor insurance agents who sold insurance products for the State Farm group of insurance companies (“State Farm”). 1 Each Agent has or had an independent-contractor agreement with State Farm (“contract”).

This consolidated appeal arises from an action the Agents brought in district court alleging that State Farm breached the contract (“breach of contract action”). The district court granted summary judgment in favor of State Farm on July 3, 2000. The Agents appeal this decision in Case No. 00-16521, arguing that the district court abused its discretion by not applying collateral estoppel against State Farm based on our unpublished decision in Sandberg v. State Farm Mut. Auto. Ins. Co., 182 F.3d 927 (9th Cir.1999) (mem. disposition), cert. denied, 528 U.S. 1118 , 120 S.Ct. 938 , 145 L.Ed.2d 816 (2000). The Agents also argue that a genuine issue of material fact exists as to: (1) whether the contract’s termination provision required good cause before State Farm could terminate its agents; (2) whether State Farm breached the implied covenant of good faith and…

dissenting.

In the principal suit, I respectfully dissent. I would hold that the district court erred (1) in not applying collateral estoppel against State Farm and (2) in granting summary judgment in favor of State Farm. In the independent action, I would reinstate the action because the majority construes the circumstances in which a party commits fraud on the court too narrowly. If proved, the agents’ allegations against Orrick and State Farm amount to fraud on the court sufficient to support an independent action.

I. Breach of Contract Action

A. Collateral Estoppel

The majority holds that collateral estop-pel does not bar relitigation in this case of the identical issue that was decided in Sandberg v. State Farm Mut. Auto. Ins. Co., 182 F.3d 927 (9th Cir.1999) (table) (memorandum disposition). Sandberg held that, under California law, the contract provisions that are at issue here permit termination only for good cause. The majority concedes that the district court erred in holding that the preconditions for estoppel were not met in this case, see majority opinion, supra, but the majority nonetheless defers to the district court’s ultimate decision not to estop State Farm…