                                                                           FILED
                           NOT FOR PUBLICATION
                                                                            JUN 19 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS


                           FOR THE NINTH CIRCUIT

DIRECTV, a Delaware corporation,                 No. 16-55313

              Plaintiff-Appellant,               D.C. No.
                                                 2:14-cv-08673-DDP-MAN
 v.

FACTORY MUTUAL INSURANCE                         MEMORANDUM*
COMPANY, a Rhode Island corporation,

              Defendant-Appellee.


                    Appeal from the United States District Court
                       for the Central District of California
                    Dean D. Pregerson, District Judge, Presiding

                        Argued and Submitted June 8, 2017
                              Pasadena, California

Before: GRABER and MURGUIA, Circuit Judges, and BOLTON,** District
Judge.

      Defendant Factory Mutual Insurance Company promised to insure Plaintiff

DIRECTV against business interruptions stemming from certain events at

"contingent time element locations." The insurance policy’s definition of such

      *
        This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
         The Honorable Susan R. Bolton, United States District Judge for the
District of Arizona, sitting by designation.
locations included any location "of a direct supplier, contract manufacturer or

contract service provider to [DIRECTV]." The question in this case is whether

Western Digital, which manufactures hard drives that are used in DIRECTV’s set-

top boxes—but which does not have a contractual relationship with DIRECTV and

does not send its hard drives directly to DIRECTV to be integrated into the set-top

boxes—fits within the policy’s definition of a "direct supplier, contract

manufacturer or contract service provider to [DIRECTV]." If so, then the policy

might cover Plaintiff’s losses caused by monsoonal flooding in northern Thailand

that damaged two of Western Digital’s hard drive manufacturing facilities in 2011.

      The district court granted summary judgment to Defendant; Plaintiff timely

appeals. Reviewing de novo, Orr v. Bank of Am., NT & SA, 285 F.3d 764, 772

(9th Cir. 2002), we reverse the district court’s judgment and remand for further

proceedings.

      1. The plain and ordinary meaning of the phrase "direct supplier" does not

include Western Digital. The "meaning a layperson would ordinarily attach" to the

phrase "direct supplier," Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 627 (Cal.

1995), is a supplier that sends its goods or materials straight to the insured without

intervening processing. Because Western Digital’s hard drives are sent to third-

party set-top box manufacturers, which then assemble the set-top boxes and send


                                           2
them on to Plaintiff, Western Digital is not Plaintiff’s "direct supplier" under the

plain and ordinary meaning of that phrase.

      2. Western Digital is not Plaintiff’s "contract manufacturer" or "contract

service provider" because it does not have a contract with Plaintiff.

      3. In light of the extrinsic evidence of trade usage introduced by Plaintiff,

the phrase "direct supplier" is "reasonably susceptible" to the meaning urged by

Plaintiff. Wolf v. Superior Court, 8 Cal. Rptr. 3d 649, 655 (Ct. App. 2004). In

reaching that conclusion, we rely on a prediction that the Supreme Court of

California would hold that "[t]he law charges insurance companies with the duty of

informing themselves as to the usages of the particular business insured, and a

knowledge of such usage on the part of such company will be presumed." Globe

& Rutgers Fire Ins. Co. v. Ind. Reduction Co., 113 N.E. 425, 429 (Ind. App. 1916).

We base that prediction on the law of other jurisdictions, a leading insurance law

treatise, see 2 Couch on Insurance § 22:52 (3d ed. 2015), and the California Court

of Appeal’s decision in Geddes v. Tri-State Insurance Co., 70 Cal. Rptr. 183 (Ct.

App. 1968). See Astaire v. Best Film & Video Corp., 116 F.3d 1297, 1300 (9th

Cir. 1997) ("In the absence of a California Supreme Court decision, we must

predict how the California Supreme Court would decide [an] issue using

intermediate appellate court decisions, decisions from other jurisdictions, statutes,


                                           3
treatises and restatements as guidance."). Whether the phrase "direct supplier" was

intended in a trade usage sense and, if so, whether Western Digital falls within the

trade usage definition are questions of fact to be resolved by a jury. City of Hope

Nat’l Med. Ctr. v. Genentech, Inc., 181 P.3d 142, 156–57 (Cal. 2008).

      4. We do not reach Plaintiff’s argument concerning the ambiguity of the

phrase "direct supplier." "A rule for construing contracts against the author is not

an alternative to construing the contract as the parties intended. It is to be applied

after the court has inquired into the intent of the parties, and then only if its

meaning remains uncertain." Bd. of Trade of S.F. v. Swiss Credit Bank, 597 F.2d

146, 149 (9th Cir. 1979) (emphasis added).

      REVERSED and REMANDED.




                                            4
