Multiple Energy Technologies, LLC v. Casden, 2026 WL 2196259,
No. 24-4691, — F.4th —- (9th Cir. Jul. 30, 2026)

The parties compete in the market for “bioceramic” athletic
wear components that are supposed to enhance the wearer’s circulation, support
muscle recovery, and provide other health benefits. This case “asks whether an
officer of a corporation can be sued for tortious interference of contract when
he is found to have induced the corporation to breach a contract.” Normally, an
agent acting on behalf of a principal is immune from that kind of to avoid
double recovery from the principal (for the breach) and the agent (for
interference). There’s an exception when “the supposed agent acts not for and
on behalf of his principal, but … to benefit himself at the expense of his
principal.” The court applied those principles: it was not enough to avoid immunity
that the agent benefited by inducing a breach (e.g., he got a bonus for sales
goals) as long as he was also seeking to advance the company’s interests.

The district court also awarded disgorgement and attorney’s
fees for a separate claim brought by the plaintiff under the Lanham Act; the
disgorgement was also reversed.

In 2019, MET sued Hologenix for falsely advertising its
product, Celliant, as being FDA-approved. The parties settled with Hologenix
agreeing to pay $2.5 million (in installments) and to refrain from representing
that its product was FDA-approved or that the FDA determined that it has health
benefits. Before Hologenix made all its payments, though, it filed for
bankruptcy.

MET then sued Hologenix’s CEO, Casden. Hologenix allegedly continued
to represent that the FDA determined that Celliant has health
benefits—representations that Casden approved or made himself—in violation of
the settlement agreement. MET alleged tortious interference with Hologenix’s
performance of the settlement agreement (including by voting to file for
bankruptcy) and violation of the Lanham Act.

The district court found no immunity for Casden, stating
that he “was eligible for a bonus of up to fifty percent of his base salary per
year based on Hologenix’s business performance” and “[t]hus, by falsely
promoting Celliant, Casden positioned himself to gain personally.” A jury’s
“advisory finding” was that “Casden acted to advance his own personal interests
at the time he interfered with the Settlement Agreement,” although the jury
also found that he was “acting in his official capacity on behalf of
Hologenix.” It awarded MET $2.5 million in damages for the
tortious-interference claim.

The jury also returned a verdict in MET’s favor on its
false-advertising claim under the Lanham Act and awarded nominal damages of one
dollar. The district court then awarded MET disgorgement of Casden’s salary
earned from 2020 through 2023, trebled that amount, and also awarded attorney’s
fees of nearly $600,000 under the Act. The total came to over $6 million.

I won’t say much about the rather straightforward agency law
issue with tortious interference. “Where an employee acts within the scope of
his employment, it does not matter whether his conduct in inducing the breach
of contract was motivated by ‘ill-will or malice on his part.’ ”

Lanham Act: The disgorgement ruling was erroneous. “Casden’s
salary is not his profits.” The statute says that, 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
MET failed to show that Casden had any sales.” Hologenix made sales, but it wasn’t
the defendant (citing Dewberry Group, Inc. v. Dewberry Engineers, Inc., 604
U.S. 321 (2025)). Without sales, no profits.

But the fee award survived. The jury found that Casden’s
representations concerning Celliant were “deliberately or intentionally false”
in violation of the Lanham Act, so there was no abuse of discretion.

from Blogger https://tushnet.blogspot.com/2026/08/executive-liable-for-false-advertising.html