                                                                            FILED
                           NOT FOR PUBLICATION                              DEC 10 2015

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


ST. PAUL MERCURY INSURANCE                       No. 13-17189
COMPANY, a Minnesota corporation,
                                                 D.C. No. 5:12-cv-01827-RMW
              Plaintiff - Appellee,

 v.                                              MEMORANDUM*

TESSERA, INC., a Delaware corporation,

              Defendant - Appellant.


                  Appeal from the United States District Court
                     for the Northern District of California
                Ronald M. Whyte, Senior District Judge, Presiding

                          Submitted December 7, 2015**
                            San Francisco, California

Before: O’SCANNLAIN, SILVERMAN, and BEA, Circuit Judges.

      Tessera, Inc. appeals the district court’s grant of summary judgment to St.

Paul Mercury Insurance Company on the issue of St. Paul’s duty to defend Tessera

in a third party action brought by Powertech Technology, Inc., also known as PTI.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
We review the district court’s ruling on cross-motions for summary judgment de

novo. Guatay Christian Fellowship v. Cnty. of San Diego, 670 F.3d 957, 970 (9th

Cir. 2011). We reverse and remand.

      The district court erred when it held PTI’s allegations against Tessera did

not allege a potential disparagement claim. The facts alleged in PTI’s complaint

that Tessera made untrue accusations to PTI’s customers that PTI’s products

infringed Tessera’s patents could potentially allege a claim for disparagement. See

Atl. Mut. Ins. Co. v. J. Lamb, Inc., 123 Cal. Rptr. 2d 256, 269-71 (Ct. App. 2002).

To the extent that the district court found that the facts did not support a

disparagement claim as a matter of law, because Tessera enjoyed a privilege that

barred liability, the district court applied the wrong legal standard and

impermissibly considered the merits of the claim. See Montrose Chem. Corp. of

Cal. v. Superior Court, 861 P.2d 1153, 1159 (Cal. 1993) (holding that an insurer

“may terminate its defense obligation by proving that the underlying claim falls

outside the scope of policy coverage, but not by demonstrating that the claim lacks

merit”). The existence of a slam-dunk defense, immunity, or privilege with respect

to the underlying claim against the insured does not affect an insurance company’s

duty to defend. See CNA Cas. of Cal. v. Seaboard Sur. Co., 222 Cal. Rptr. 276,

281 n.4 (Ct. App. 1986) (“[W]hen presented with a tender of a defense, it is not the


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insurer’s place to analyze and evaluate the underlying claim of liability in order to

reject the defense of any claim that is not meritorious. . . .[T]he fact that [the

insurer] may have known of a good defense, even an ironclad one, to the [potential

tort] claim did not relieve it of its obligation to defend its insured.”). Therefore,

the district court erred when it relieved St. Paul of its duty to defend based on the

merits of the underlying potential disparagement claim.

      We remand for the district court to consider in the first instance whether the

intellectual property exclusion applies.

      St. Paul’s motion to take judicial notice is granted.

      REVERSED and REMANDED.




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