Monday, August 3, 2026
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Ninth Circuit:
‘Selfishness,’ Without More, Does Not Gut Agent Immunity
Opinion Says District Court Judge Erred in Finding CEO Liable for Tortious Interference With Contract Based on Business Choices, Wrongly Ordered Salary Disgorgement Under Section Allowing Recovery of ‘Profits’
By a MetNews Staff Writer
U.S. District Court Judge Otis D. Wright II of the Central District of California erred in ruling that immunity protections that apply in California to shield a corporate officer from liability for tortious interference of contract based on business-related decisions do not apply if those choices benefit the defendant personally, the Ninth U.S. Circuit Court of Appeals has held.
Highlighting that liability protections are only lost if the officer acts to the detriment of the company or otherwise steps outside the scope of his agency, Circuit Judge Eric C. Tung, writing for the court, remarked in Thursday’s opinion:
“Agency status is not defeated simply because an employee advances his own interests while also seeking to advance the company’s interests….Nothing in the law of agency demands something so unrealistic as requiring an agent to harbor purely selfless motives; our corporate law does not reflect a puritanical creed that seeks to extirpate self-interest. The wrong is not that an agent may act to benefit himself—after all, who doesn’t, to some degree, act with such a motive? It is only when an agent acts outside the scope of his agency, such as by acting for his own benefit at the expense of his principal, that the law steps in to deny immunity.”
Disgorgement of Salary
The opinion, joined in by Circuit Judges Consuelo M. Callahan and Patrick J. Bumatay, also declares that Wright wrongly ordered the disgorgement of the corporate officer’s salary after a jury found him responsible for a false advertisement claim brought under the Lanham Act, which permits the recovery of “profits” as a form of equitable relief. Tung cited 15 U.S.C. §1117(a) and said:
“[The CEO’s] salary is not his profits. Under the statute, to assess ‘profits,’ the plaintiff ‘shall be required to prove defendant’s sales only’ and the ‘defendant must prove all elements of cost or deduction claimed.’…But [the plaintiff] failed to show that [the defendant] had any sales. To be sure, [the company he worked for] made sales. But the ‘defendant’ here is not [the company].”
However, the court upheld a nearly $600,000 attorney-fee award based on the Lanham Act violation, saying the statute allows such a recovery if the judge finds a case to be “exceptional.” Because the jury found that the defendant had made representations about the company that were “deliberately or intentionally false,” Tung reasoned that Wright “did not abuse [his] discretion.”
Litigation Between Competitors
The dispute erupted after litigation between two activewear competitors, the Pacific Palisades company Hologenix LLC and the Pennsylvania-based Multiple Energy Technologies (“MET”). Both businesses promote the use of a “bioceramic” material in their products that they claim reflects heat back into the body in the form of infrared energy for the purported purpose of enhancing the wearer’s circulation and muscle recovery.
In 2019, MET sued Hologenix claiming that the defendant falsely advertised its technology, known as Celliant, as having been approved by the Food and Drug Administration. Hologenix allegedly agreed in March 2020 to settle the case for $2.5 million, to be paid in installments, and to refrain from representing that its products had approvals from the federal government.
After Hologeniz filed for Chapter 11 bankruptcy protections approximately one month later, MET filed a complaint against Hologenix’s CEO Seth Casden in February 2021, asserting violations of the Lanham Act as well as tortious interference with contractual relations under California law based on allegations that the defendant interfered with the settlement agreement by voting to put Hologenix into bankruptcy.
Judgment for Plaintiff
MET moved for judgment as a matter of law on the tortious interference claim after the case went to trial in 2023. Wright granted the request, saying that Casden was foreclosed from asserting immunity because he “acted for his individual advantage” where he “was eligible for a bonus of up to fifty percent of his base salary…based on Hologenix’s business performance” and “by falsely promoting Celliant, Casden positioned himself to gain personally.”
A verdict in favor of MET on the false-advertising claims was reached and the panel awarded nominal damages. On the plaintiff’s motion, Wright ordered the disgorgement of Casden’s salary earnings from 2020-23, an aggregate totaling $983,171, and trebled the amount under the statute.
On the interference cause of action, he awarded MET $2.5 million in damages. All told, the defendant was ordered to pay more than $6 million.
California Law
Noting that California law governs whether an agent is entitled to immunity for a tortious interference claim, Tung pointed out:
“[U]nder that law, ‘ordinarily corporate agents and employees acting for and on behalf of the corporation cannot be held liable for inducing a breach of the corporation’s contract since being in a confidential relationship to the corporation their action in this respect is privileged.’ ”
He acknowledged that “an agent’s immunity vanishes if he does not act for and on behalf of his principal when inducing the breach” but opined:
“An agent’s immunity should not be denied merely because the agent acts to benefit himself (while also seeking to advance the principal’s interest)….Otherwise, agents who act in their self-interest—to get a raise, to make more money, to sustain a family—would lose immunity even though their actions would generally also advance their employer’s interests. Nothing in California law (or common sense) requires that outcome.”
The jurist continued:
“Yet that is what the district court concluded…. The district court cited certain facts…to support its conclusion that Casden ‘acted to advance his own personal interests’ when he induced the breach….But all those actions appear compatible with Hologenix’s interests. At least there has been no finding that Casden acted against those interests.”
Purportedly Selfish Motives
Tung said that Wright appeared to “hinge…denial of immunity on Casden’s purportedly selfish motives” and rejected that approach, saying:
“It is…the act (not the motive) that counts. To determine whether agency immunity attaches, we apply an objective test: is the agent acting for and on behalf of the company, or outside the scope of his agency such as by acting for himself at the expense of the company? The district court failed to apply the proper test here.”
Saying that “[t]he pitfalls of a test that turns only on subjective motives are apparent,” he reasoned that “it would be odd if an otherwise permissible act…becomes impermissible merely because the agent had a motive to benefit himself” and that “[m]otives are notoriously difficult to discern.”
He added:
“To be sure, some language in our caselaw and in intermediate state authorities….suggests that a court should look to motive in assessing whether agency immunity attaches. But again, even if one could surmount the problems of administrability that a motives-only test would produce, such a test in this context misconceives the objective nature of the inquiry and is contrary…California Supreme Court precedent directing us to examine the act rather than the motive.”
The case is Multiple Energy Technologies LLC v. Casden, 24-4691.
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