MALEM MEDICAL, LTD., and ENURESIS ASSOCIATES, LLC v. THEOS MEDICAL SYSTEMS, INC., and SAKET BHATIA

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MALEM MEDICAL, LTD., and
ENURESIS ASSOCIATES, LLC,,
Plaintiffs-Appellees,
v.
THEOS MEDICAL SYSTEMS, INC., and
SAKET BHATIA,
Defendants-Appellants.
No. 17-17289
D.C. No. 3:13-cv-05236 EMC
MEMORANDUM*
Appeal from the United States District Court
for the Northern District of California
Edward Chen, District Judge, Presiding
Submitted February 11, 2019
San Francisco, California
Before: SCHROEDER and RAWLINSON, Circuit Judges, and LASNIK,**
District Judge.
Theos Medical Systems, Inc., and Saket Bhatia (hereinafter, “Theos”) appeal
the district court’s orders holding them in contempt of court for violating a consent
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable Robert S. Lasnik, United States District Judge for the
Western District of Washington, sitting by designation.
FILED
FEB 19 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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decree and awarding attorney’s fees to Malem Medical, Ltd., and Enureses
Associates, LLC (hereinafter, “Malem”). We have jurisdiction pursuant to 28
U.S.C. § 1291 because the district court’s post-judgment contempt order is a final
order of the district court. Davies v. Grossmont Union High Sch. Dist., 930 F.2d
1390, 1393-94 (9th Cir. 1991). We affirm.
Malem and Theos are competitors in the market for enuresis (i.e., bed-
wetting) products. Malem sued Theos, alleging that Theos improperly used
Malem’s marks and made false accusations that Malem’s products were dangerous.
The parties negotiated a settlement in March 2015, and the district court entered a
consent decree in July 2015 requiring that:
9. [THEOS] will not disparage [MALEM] or any of their
products, services, officers, directors, or employees. For
purposes of this agreement, disparage means to take any action
which could reasonably be expected to adversely affect the
reputation of [MALEM] or any of their products, services,
officers, directors, or employees. This paragraph does not apply
to legitimate business concerns raised by [THEOS] or to
allegations that [MALEM] have violated this Agreement or
Consent Decree.
The month after the consent decree was entered Theos began submitting reports to
various domestic and foreign regulatory agencies regarding Malem’s products,
opining that the products expose children to significant safety hazards (including
toxic chemicals and small parts that posed a risk of choking) and requesting that
the products be recalled from the market. Malem filed a motion to hold Theos in

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contempt. Following a one-day trial, the district court found that Theos violated the
non-disparagement provision of the consent decree. The court subsequently
awarded Malem its reasonable fees and costs as authorized by the settlement
agreement.
Theos challenges the enforceability of the non-disparagement provision to
the extent it restricts its right to petition regulatory authorities for the removal of
dangerous products from the market. The right to petition the government,
including administrative agencies, is one of the freedoms protected by the United
States Constitution. Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508,
510 (1972). A person may waive his or her constitutional rights, however, as long
as there is clear and convincing evidence that the waiver was voluntary, knowing,
and intelligent. D.H. Overmyer Co., Inc. v. Frick Co., 405 U.S. 174, 187 (1972);
Davies, 930 F.2d at 1394-95. Courts will enforce a waiver of a constitutional right
unless “the interest in its enforcement is outweighed in the circumstances by a
public policy harmed by enforcement of the agreement.” Leonard v. Clark, 12 F.3d
885, 889-90 (9th Cir. 1993).
In an oral ruling before trial, the district court found that Theos knowingly
and intelligently waived its right to make the type of reports at issue here.1 Given
1 Pursuant to Federal Rule of Evidence 201, we may take judicial notice of the
portions of the district court transcript relevant to the First Amendment issues
despite the fact that the parties designated only a single page of the discussion as

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the context in which the non-disparagement provision was negotiated, including
Theos falsely claiming Malem’s products were dangerous, Theos clearly
“voluntarily and knowingly” waived its First Amendment rights. There is no error
in the district court’s finding of waiver, regardless of whether the determination is
reviewed under an abuse of discretion or de novo standard.2
The district court also correctly analyzed and resolved Theos’ argument that,
even if it knowingly gave up the right to file adverse reports with regulatory
agencies, the interest in enforcing the waiver is outweighed by a public policy in
favor of reporting safety hazards. The balance of policy interests depended in large
part on the facts proven at trial regarding the purpose of the complaints. In light of
the district court’s factual findings regarding intent and falsity, discussed below,
the interest in enforcing Theos’ promise not to disparage Malem (and the waiver of
a constitutional right contained therein) is not “outweighed in the circumstances by
a public policy harmed by enforcement of the agreement.” Leonard, 12 F.3d at
889-90.
part of the record on appeal. See Harris v. Cty. of Orange, 682 F.3d 1126, 1131–32
(9th Cir. 2012).
2 In Bose Corp. v. Consumer’s Union, 466 U.S. 485, 509-10 (1984), the Supreme
Court held that the deference to trial court fact findings required by Rule 52(a)
gives way when appellants are claiming interference with First Amendment rights.

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Theos argues that there was insufficient evidence in the record to support the
district court’s findings regarding the falsity of the reports it submitted, its intent in
making the reports, disparagement, and contempt. A district court’s civil contempt
order is reviewed for abuse of discretion. Sec. Exch. Comm’n v. Hickey, 322 F.3d
1123, 1128 (9th Cir.), amended by 335 F.3d 834 (9th Cir. 2003). Its credibility
findings are entitled to even greater deference. Anderson v. City of Bessemer City,
N.C., 470 U.S. 564, 575 (1985). The district court’s conclusions that Mr. Bhatia
was not credible and that Theos submitted false reports to regulatory agencies in
order to mislead the agencies and hurt Malem’s business (not in an attempt to
safeguard public safety) are amply supported by the record. There is no clear error
of judgment on the district court’s part regarding its factual findings, the contempt
determination, or the award of attorney’s fees.
AFFIRMED.

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