Seth Wallack v. IDEXX LABORATORIES, INC. and IDEXX REFERENCE LABORATORIES, INC.

1
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SETH WALLACK,
Plaintiff-Appellant,
and
SAN DIEGO VETERINARY IMAGING,
INC.,
Plaintiff,
v.
IDEXX LABORATORIES, INC. and
IDEXX REFERENCE LABORATORIES,
INC.,
Defendants,
and
MATTHEW WRIGHT and STEPHEN
WALTERS,
Defendants-Appellees.
No. 16-55648
D.C. No. 3:11-cv-02996-GPC-
KSC
MEMORANDUM*
Appeal from the United States District Court
for the Southern District of California
Gonzalo P. Curiel, District Judge, Presiding
* This disposition is not appropriate for publication and is not precedent except
as provided by Ninth Circuit Rule 36-3.
FILED
MAR 6 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

-- 1 of 8 --

2
Argued and Submitted December 6, 2017
Pasadena, California
Before: KELLY,** CALLAHAN, and BEA, Circuit Judges.
Plaintiff-Appellant Seth Wallack appeals the district court’s grant of summary
judgment in favor of Defendants-Appellees Matthew Wright and Stephen Walters,
arguing that the district court erred when it held that the record does not establish a
genuine dispute as to any fact material to Wallack’s claim for breach of fiduciary
duty. Because we agree with the district court’s analysis, we affirm.
We review the grant of summary judgment de novo, “applying the same
standard of review as the district court under Federal Rule of Civil Procedure 56.”
Flores v. City of San Gabriel, 824 F.3d 890, 897 (9th Cir. 2016). Under Rule 56,
“[t]he court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” A fact is material if it could affect the outcome of the case. Miller v.
Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Wallack’s only claim on appeal—breach of fiduciary duty—arises from
allegations that Wright and Walters withheld from Wallack their plans to sell the
company the three owned together (DVMInsight) in an effort first to buy Wallack’s
** The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.

-- 2 of 8 --

3
share of the company at a discount, and then turn a profit on a later sale. Wright and
Walters did eventually purchase Wallack’s share of DVMInsight via their Stock
Repurchase Agreement (SRA). Later, they profited considerably from selling the
company to Idexx. But the SRA contained a mutual release which waived Wallack’s
right to sue Wright and Walters for any claim arising prior to the release’s execution.
Thus, in order for Wallack’s breach of fiduciary duty claim to succeed, Wallack must
show that either: (1) the mutual release is inapplicable to his claim for breach of
fiduciary duty, or (2) his agreement to the SRA (and, by extension, to the mutual
release it contains) was induced by the fraud of Wright and Walters or some other
improper means, and is therefore voidable. Wallack makes both arguments, but
neither is convincing.
1. First, Wallack attempts to show that the mutual release does not apply to
his claims of fraud by Wright and Walters. He urges us to reverse on the ground
that the district court skipped over his argument that Appellees “breached” the SRA
itself. Because the language of the mutual release of the SRA explicitly allows
claims “for breach[es] of this agreement,” Wallack argues that the mutual release is
inapplicable. But Wallack’s claim is not for breach of the SRA contract, or of any
contract, but for breach of fiduciary duty. The SRA clearly carves out an exception
for the breach of contract claim, but not the breach of fiduciary duty claim: “The
only possible claim between the two sides that can survive this release will be one

-- 3 of 8 --

4
for breach of this agreement, and any such claim is specifically preserved from this
release.” Wallack pleaded, and the district court granted summary judgment against,
a claim for breach of fiduciary duty. Neither Wallack’s brief before this court nor
his summary judgment briefing below explains why the court should expand the
exception made in the mutual release of the SRA for a breach of contract claim to
include the claim of an earlier breach of fiduciary duty. We therefore decline to do
so and hold that the mutual release is applicable to Wallack’s claim for breach of
fiduciary duty.
2. Because the mutual release applies to Wallack’s claim for breach of
fiduciary duty, Wallack’s remaining chance of success is to show that the mutual
release is voidable. His second argument therefore focuses on the claim that the
mutual release was induced by a fraud committed by Appellees, Wright and Walters.
Before addressing Wallack’s specific arguments, which take aim at the
particular ways in which the district court reached its conclusions, it is helpful to
explain Wallack’s basic theory of the case. Wallack claims that Appellees
negotiated with Idexx, and arranged for the sale of DVMInsight prior to the SRA,
but withheld their plans from him to obtain Wallack’s share at a discount. If this
were true, then Appellees breached their fiduciary duties to Wallack, a fellow
shareholder, by withholding from him information pertinent to the sale of his shares.

-- 4 of 8 --

5
As part of this overall theory, Wallack also accuses Appellees of planning to “steal”
the DVMInsight trademark and sell it to Idexx at the later transaction.
In reaching its conclusion that the record contained no genuine dispute as to
any fact material to Wallack’s breach of fiduciary duty claim, the district court
specifically discussed the lack of evidence in the record to suggest that Appellees
ever planned to “steal” the DVMInsight trademark.1 Wallack makes this discussion
a centerpiece of his briefing before this court. Specifically, he argues that the district
court erred by focusing on whether Appellees intended to sell the DVMInsight
trademark to Idexx, when it should have focused on (1) “whether there was a genuine
dispute of material fact as to whether [Appellees] committed fraud in the inducement
and/or concealment of material facts in obtaining the mutual release,” and (2)
“whether there was a genuine issue of material fact as to whether [Appellees]
committed a breach of fiduciary [duty] that was actionable by Wallack.” Wallack
submits that he established a genuine dispute as to facts (1) and (2), and that his
“inability to prove (and almost impossibility to prove) that . . . [Appellees] intended
to sell the trademark to Idexx” should not have decided the case. Wallack’s
argument misses the mark for at least two reasons.
1 Wallack moves this court to take judicial notice of several documents related to
his claim about the DVMInsight trademark. The documents contain matter
irrelevant to the issues of this case. Notice of them would not change the outcome
of this case. Therefore, his motion for judicial notice is denied.

-- 5 of 8 --

6
First, the district court focused on whether Appellees were planning the sale
of DVMInsight to Idexx at the time of the SRA because it determined, quite
reasonably, that Wallack’s case depended on that premise for its success. After all,
it is Wallack’s contention that Appellees induced the SRA and breached their
fiduciary duties by concealing information from him that was pertinent to his
decision to sell his shares—namely, information about another, eventual deal
between DVMI and Idexx once Wallack was out of the way. Wallack theorizes that
Appellees were in secret contact with Idexx, and that Appellees pushed Wallack to
sell his shares at a discount so they could turn around and sell the company to Idexx
for a profit. The district court correctly observed that if Appellees were not planning
the sale at the time of the SRA, then Wallack’s theory falls apart. And, in finding
that Wallack had failed to produce evidence tending to show that Appellees at the
time of the SRA planned to “steal” the DVMInsight trademark and sell it to Idexx,
the district court reached one of the core issues in this case. Thus, it was not error
for the district court to grant summary judgment in part because Wallack failed to
establish a genuine dispute of fact as to whether Appellees intended to “steal” the
DVMInsight trademark at the time of the SRA’s execution.
Second, although the district court discussed the trademark issue, it was by no
means the only (or even the primary) issue on which the court based its decision.
The district court granted summary judgment in favor of Appellees only after

-- 6 of 8 --

7
methodically analyzing each of Wallack’s factual claims to determine whether
Wallack had established a genuine dispute as to any fact material to his claim for
breach of fiduciary duty. We agree with the district court that there is no evidence
in the record to support the claim that Appellees were planning the later sale to Idexx
before they bought Wallack’s shares, and thus there is no genuine dispute as to any
fact material to Wallack’s claim. See Fed. R. Civ. P. 56; see also Friedman v. Live
Nation Merchandise, Inc., 833 F.3d 1180, 1188 (9th Cir. 2016) (“Where a moving
party carries its burden of production, the nonmoving party must produce evidence
to support its claim or defense.”) (citations and internal quotation marks omitted).
Thus, Wallack’s second argument fails.
3. Finally, Wallack finds fault with the district court’s order for granting
summary judgment in partial reliance on Wallack’s awareness, prior to the SRA,
of several of Appellees’ alleged breaches of fiduciary duty. Wallack argues that
his awareness should not matter because Appellees committed breaches of their
fiduciary duties and induced the SRA by fraud.
Even if Wallack could establish that Appellees committed breaches of
fiduciary duty, which he cannot, whether he knew about the alleged breaches before
signing the SRA does matter—it bears directly on the question whether the mutual
release was induced by fraud or concealment. If Wallack knew about Appellees’
conduct, then the SRA was not induced by Appellees’ concealment of that conduct.

-- 7 of 8 --

8
Nevertheless, in the end, even if Wallack were right that his awareness is irrelevant,
he still could not overcome our affirmance of the district court’s determination that
he failed to establish a genuine dispute as to any of the facts material to the success
of his case. Relying on his awareness of Appellees’ breaches to validate the mutual
release presumes that breaches occurred—a factual claim which Wallack has failed
to support with evidence and about which he has thus failed to establish a genuine
dispute. His final argument therefore is unavailing.
AFFIRMED.

-- 8 of 8 --