Chinese Yellow Pages v. Chinese Overseas Mktg. Service Corp.

Full title: CHINESE YELLOW PAGES et al., Plaintiffs and Respondents, v. CHINESE…

Court: California Court of Appeals, Second District, Fifth Division

Date published: Aug 21, 2007

No. B190315 (Cal. Ct. App. Aug. 21, 2007)

Opinion

CHINESE YELLOW PAGES et al., Plaintiffs and Respondents, v. CHINESE OVERSEAS MARKETING SERVICE CORPORATION et al., Defendants and Appellants. B190315 California Court of Appeal, Second District, Fifth Division August 21, 2007

NOT DESIGNATED FOR PUBLICATION

APPEAL from an order of the Superior Court of Los Angeles County Ct. No. BC270115, Elizabeth A. Grimes, Judge. Affirmed in part; reversed in part.

Sedgwick, Detert, Moran & Arnold, Hall R. Marston, Douglas J. Collodel, and Michele L. Flowers for Defendant and Appellant Chinese Overseas Marketing Service Corporation.

Law Offices of J. Jay Chang, and Jye Chang for Defendant and Appellant Alan Kao.

Law Offices of James T. Grant and James T. Grant; Murtagh & Associates and Paul G. Murtagh for Plaintiffs and Respondents Chinese Yellow Pages, Inc., and Chinese Yellow Pages, L.P.

OPINION

TURNER, P. J.

I. INTRODUCTION

Defendants, Chinese Overseas Marketing Service Corporation (Overseas Marketing), and Alan Kao, appeal from a judgment in favor of plaintiffs, Chinese Yellow Pages, Inc. and Chinese Yellow Pages, LP, doing business as Chinese Yellow Pages, following a jury trial. We reverse the judgment insofar as it finds defendants committed a contract breach. But we affirm the judgment in all other respects.

II. BACKGROUND

A. The Underlying Lawsuit

Chinese Yellow Pages, Inc. is a California corporation. Chinese Yellow Pages, LP, is a California limited liability partnership. The two companies, which were joined by a 2001 merger, do business under the fictitious business name of Chinese Yellow Pages. When it is clear which of the two entities was in existence when events occurred, it will be referred to by its specific name. For example prior to the 2001 merger, we will refer to Chinese Yellow Pages, Inc. When it is unclear which of the two entities was the subject of testimony, they will be referred to collectively as plaintiffs. Most of the pre-2002 events involve Chinese Yellow Pages, Inc. Defendant, Overseas Marketing, is a California corporation which does business under the fictitious name of Chinese Consumer Yellow Pages. Mr. Kao owns and operates Overseas Marketing. Both plaintiffs and Overseas Marketing publish Chinese language yellow pages directories within the Chinese community in Southern California. The publications are financed by fees paid by advertisers who purchase space in the competing directories. The companies compete for the same advertising customers.

On November 23, 1999, Overseas Marketing filed a lawsuit which alleged Chinese Yellow Pages, Inc. engaged in misleading advertising and unfair competition. On October 27, 2000, the parties entered into a settlement and release agreement resolving the lawsuit in its entirety. Chinese Yellow Pages, Inc. agreed to: pay $3,750 to Overseas Marketing; refrain “from engaging in making, disseminating, or causing to be made or disseminated before the public, in any newspaper, other publication, or advertising device, by public outcry or proclamation, or in any manner whatever, any statement that is untrue or misleading, and that is known, or by the exercise of reasonable care should be known, to be untrue and misleading[]”; and execute a stipulation for entry of judgment which included a permanent injunction. The parties agreed to release each other from any claims they had amongst themselves and the settlement agreement was not an admission of any liability. A confidentiality provision was specifically deleted. Thereafter, Judge Andrea K. Richey entered judgment on the stipulation as well as a related permanent injunction. A joint press release acknowledged that the parties had entered into a confidential settlement which resolved the case in its entirety.

B. The Third Amended Complaint In This Case

In their third amended complaint, plaintiffs alleged claims for: contract breach; intentional contractual relations interference; intentional prospective economic advantage interference; unfair competition; libel; and slander. Plaintiffs alleged that between March 2001 and May 2005 defendants intentionally misrepresented: the outcome of the initial lawsuit; the nature and scope of the stipulated injunction; and the circumstances surrounding the printing of plaintiffs’ 1999 directory. Plaintiffs further alleged that Overseas Marketing, Mr. Kao, and their counsel, Peter Hwu, distributed a ‘“Permanent Injunction Packet.”’ The packet was distributed to advertisers in plaintiffs’ directories. The packet allegedly misrepresented that plaintiffs defrauded their advertisers by printing only 80,000 copies of its 1999 directory rather than the advertised 100,000 copies. Further, plaintiffs alleged misrepresentations were made concerning their directory circulation. According to the third amended complaint, Overseas Marketing sales staff falsely stated plaintiffs had not printed the number of directories promised to their customers. All of this allegedly was done with Mr. Kao’s knowledge and consent. The Overseas Marketing sales representatives also provided “the packet” to plaintiffs’ customers.

Plaintiffs further alleged Overseas Marketing distributed a notice to plaintiffs’ advertisers, which was prepared by Mr. Kao in Chinese. The notice set forth the allegations from the initial lawsuit without reference to either the settlement agreement as a whole or reference to the provision that the resolution of the litigation was not an admission of liability by any party. The notice set forth documents produced during the previous lawsuit and those sections of the Business and Professions Code that forbid false advertising or unfair competition.

The third amended complaint further alleged, “Defendants have engaged . . . in an ongoing attempt to severely damage [plaintiffs’] business reputation and goodwill and to subvert [plaintiffs’] relationships with its existing and potential advertisers.” In addition, it was alleged defendants sought to harm plaintiffs financially. This was done in an effort to reduce plaintiffs’ ability to compete in the Southern California market. Plaintiffs sought: compensatory damages in excess of $1 million as to the first, second, third, fifth, and sixth causes of action; punitive damages as to the second, third, fifth, and sixth causes of action; injunctive relief as to the second through sixth causes of action; attorneys fees as to first cause of action; costs of suit; and further relief as deemed proper.

C. Trial Testimony

Scarlett Yen was the marketing director at Chinese Yellow Pages, Inc. between 1996 and 2000. In that capacity, she reviewed the company’s revenue generated by advertisements. There was competition amongst sales personnel who sold advertisements. Ms. Yen dealt with all department managers. Ms. Yen coordinated the sales, production, and administration departments of Chinese Yellow Pages, Inc. In 1996, the gross revenue for the annual directories was approximately $2 million. It increased thereafter on an average of five to six percent annually. Ms. Yen returned to work for plaintiffs as the business development director between 2001 and 2003. The renewal rate for plaintiffs’ advertising customers was 87 to 92 percent during her employment. Ms. Yen also dealt with GTE, the printer of their directories. Between 1996 and 2000 Chinese Yellow Pages, Inc. was the market leader. It was the first publisher to join the Yellow Pages Publisher Association and won several awards for marketing strategy. Its major competitor was the Chinese Consumer Yellow Pages, printed by Overseas Marketing. Overseas Marketing had approximately 50 to 60 percent of the same advertisers as Chinese Yellow Pages, Inc. The directory prepared by Chinese Yellow Pages, Inc. included information for new immigrants on such topics as: medical resources; motor vehicle testing; long distance calling; and emergency services. In 1999, Chinese Yellow Pages, Inc. won an award for developing the China Expo in Los Angeles, which provided a different medium for their advertisers to promote their products or services.

The directories were distributed to local businesses such as supermarkets, restaurants, banks, and book stores where consumers could easily pick up a copy. It was important to circulate the directories in late October or early November for the following year. Plaintiffs’ directory printing and distribution was audited and certified by a private company.

In April 1997, Ms. Yen signed a contract on behalf of Chinese Yellow Pages, Inc. with Ledner Cunningham, a sales representative for GTE in Dallas. The contract provided for the printing of 100,000 copies of the 1998 directory. Delays in printing the 1998 edition resulted in additional expenses for Chinese Yellow Pages, Inc. in the form of repeat advertisements on the local radio station and in the local newspaper. GTE was also printing the Overseas Marketing directory during that period. GTE employees mistakenly sent Chinese Yellow Pages, Inc. proofs to Overseas Marketing. Following negotiations, GTE credited Chinese Yellow Pages, Inc. for some of the delay-related expenses.

In September 1998, Chinese Yellow Pages, Inc. again contracted through Mr. Cunningham with GTE to print 100,000 copies of the 1999 directory. Because of normal overruns, Chinese Yellow Pages, Inc. guaranteed that 100,800 copies of the directory would be printed. On December 30, 1998, a few days prior to the anticipated delivery of the 1999 directory, Ms. Yen learned that GTE was printing only 80,000 copies of the directory rather than the contracted for 100,000 directories. Initially, Mr. Cunningham stated that only 80,000 copies were ordered. However, after reviewing copies of the contracts and checks paid by Chinese Yellow Pages, Inc., Mr. Cunningham acknowledged that 100,000 copies had been ordered. GTE was unable to print the remaining copies immediately because of other orders that were utilizing its printing press. In addition, Mr. Cunningham admitted to Ms. Yen that he had not ordered enough of the special yellow paper from a paper mill to print the contracted for 100,000 copies. Mr. Cunningham estimated that the earliest GTE could print 20,000 additional copies would be the end of February 1999. Ultimately, John Wu, the former chief executive officer of Chinese Yellow Pages, Inc., decided not to print additional directories because they could not be distributed until March 1999, when, like a calendar, they would no longer be desirable to the public. This was also well into the time negotiations would be underway for the 2000 directory.

Ms. Yen went on maternity leave in early January 1999. When she returned in September 2001, she learned from the sales personnel that customers who routinely renewed their advertisements were complaining. Ms. Yen had daily conversations with customers to assure them that plaintiffs were not closing, nor going bankrupt, and would continue to print directories. Ms. Yen noted a decline in sales numbers beginning in 2001 and for the next few years.

In September 2001, Ms. Yen was shown a document entitled “Permanent Injunction Packet” by Joseph Browning. Mr. Browning became president of Chinese Yellow Pages, Inc. following the 2001 merger. The permanent injunction packet included an unsigned print order for 80,000 directories from GTE. The order did not include a quotation. (In fact, the actual contract entered into by Chinese Yellow Pages, Inc. for the 1999 directories with GTE was for 100,000 copies to be printed.) The distribution of the unsigned order for only 80,000 directories suggested to advertisers that plaintiffs were “cheating.”

Ms. Yen described a telephone conversation with Corina Wu, a distributor for and advertiser in plaintiffs’ directories. During the course of that conversation, Ms. Wu received a telephone call on another phone from Chris Sun, a salesperson for Overseas Marketing. Ms. Wu placed the call from Mr. Sun on a speaker phone. Ms. Yen could hear the conversation between Mr. Sun and Ms. Wu. Mr. Sun asked Ms. Wu, “‘So are you going to advertise with us?’” Ms. Wu responded, “‘No, I am not planning to.’” Mr. Wu said: “Well, why do you want to advertise with Chinese Yellow Pages? They’re not a good company. They’re dishonest and they financially have problems. They’ll go bankrupt. So why do you want to advertise with them?’”

Mr. Kao was the owner and operator of Overseas Marketing. Plaintiffs had been his major competitor since the early 1980’s. In 1999, Overseas Marketing sued Chinese Yellow Pages, Inc. Overseas Marketing alleged the circulation “stamp” on the 2000 directories was false. Also, Overseas Marketing contended that the claim of Chinese Yellow Pages, Inc. that over 400,000 directories were distributed nationwide was false. Overseas Marketing sought to enjoin Chinese Yellow Pages, Inc. from engaging in misleading advertising. Mr. Kao testified a settlement was reached between the respective attorneys for the two companies. Mr. Kao understood the confidentiality provision of the settlement agreement was deleted. As a result, Overseas Marketing employees could talk about the settlement when clients inquired. Mr. Kao acknowledged that two days prior to the settlement, on October 25 and 26, 2000, two articles were published in the Chinese Daily News regarding the settlement. One of the articles spoke of a “source from Chinese Consumer Yellow Pages” which Mr. Kao believed was Mr. Wu. Mr. Kao denied speaking to the newspaper. Mr. Kao believed the settlement resolved all of the disputes with Chinese Yellow Pages prior to that date.

After the settlement agreement was signed, Mr. Kao’s attorney prepared a document in English. Mr. Kao translated the document into Chinese. The document was given to those advertisers who inquired about the initial lawsuit. The document explained that a reduced number of directories had been printed by Chinese Yellow Pages, Inc. in 1999 and described the subsequently filed Overseas Marketing false advertising suit. Mr. Kao acknowledged that the document did not explain the settlement agreement. Rather, it stated, “‘Accordingly, on January 26, 2001, Judge Andria K. Richey of Los Angeles Superior Court, for Case No. KC032014, ordered Chinese Yellow Pages to cease and desist from making any untruthful promulgation.’” At trial, Mr. Kao acknowledged that Judge Richey did not find that Overseas Marketing had proven its false advertising claim.

Mr. Kao also created approximately 100 copies of a packet entitled “Permanent Injunction” to summarize the results of the lawsuit. Thereafter, at a weekly sales meeting, Mr. Kao informed his sales representatives they could provide that information to advertisers if they inquired about the lawsuit. Mr. Kao did not include the settlement agreement in the Permanent Injunction packet because he thought it involved personal information between the litigants. The document included a quotation from GTE to Chinese Yellow Pages, Inc. for an order of 79,718 directories. Mr. Kao acknowledged that no Chinese Yellow Pages, Inc. employee signed the quotation and there was no price quoted. The GTE document had been located by Mr. Kao’s attorney, Mr. Hwu. The packet also included a claim form to be used by advertisers to request a refund from Chinese Yellow Pages, Inc. Mr. Kao also authorized Mr. Hwu to place an article in the Chinese Daily News on October 25, 2000, which discussed the Overseas Marketing lawsuit against Chinese Yellow Pages, Inc. The article stated: “‘[Mr.] Kao indicated that Chinese Yellow Pages falsely stated on the cover of [its] year 2000 phone books. That the publication exceeded 100,000 copies. Mr. Kao knows the numbers are false because, “We used the same printing company.”’” An article in the October 26, 2000 edition of the Chinese Daily News stated: “‘According to sources close to Chinese [Consumer] Yellow Pages, it contacted Chinese Yellow Pages on the 25th with a merger proposal which was rejected. The response from T.C. Wu of Chinese Yellow Pages said there was never such a proposal. Who cares to sell to him[?]’”

In addition, Overseas Marketing utilized radio advertisements on KAZN AM 1300, which was the largest radio station in the local Chinese community. The advertisements were aired during commuter drive time. The advertisements included: “‘To avoid being cheated, when you take out an ad in a telephone directory, you have to check the circulation first. Chinese Consumer Yellow Pages is on the same page with you.’” The term “cheated” means being lied to in the Chinese community. Another radio advertisement read: “‘Employee: Boss, if you want to take out an ad, why don’t you pick the one that’s cheaper? [¶] Boss: That is why I’m the boss and you are the employee. If you take out an ad and there is not sufficient circulation, there is no guarantee. Even if it’s cheaper, it’s still a waste of money. [¶] Employee: If you take out an ad in Chinese Consumer Yellow Pages, is there a guarantee of their circulation? [¶] Boss: Of course. They’re the only one who guarantees 100,000 copies with contract. No other contract dares to say so. [¶] . . . Narrator . . . : All smart bosses will choose Chinese Consumer Yellow Pages . . . .’”

Mr. Kao acknowledged that the number of advertisers Overseas Marketing serves had steadily risen between 2001 and 2005. Overseas Marketing’s revenue had increased as well during that period. At the time of trial, Overseas Marketing’s gross revenue for the 2006 directory was approximately $3.5 to $4 million. Overseas Marketing experienced an average revenue growth of five percent each year since 2000. When Mr. Kao was served with the complaint in this lawsuit, he lied about his true identity. Mr. Kao testified: “I told him I was Alan Kao’s either older brother or younger brother. I don’t remember which.” On June 14, 2005, Mr. Kao signed a declaration under penalty of perjury in which he stated, “‘This summary was also mailed to certain Overseas customers.’” Mr. Kao’s declaration also indicated, “‘Overseas prepared an 11-page information packet that was mailed to some of its customers.’” Mr. Kao testified the packet of information was “handed out” to customers.

Todd Van was the office manager for the law offices of Dale C. Frailey. In that capacity, Mr. Van purchased advertising in both the Chinese Yellow Pages and the Chinese Consumer Yellow Pages directories in 2001. On July 18, 2001, Mr. Van received a facsimile transmission from Mary Wang, an Overseas Marketing employee. The facsimile transmission consisted of a 12-page document entitled “Permanent Injunction” including a notation, “‘Dear Todd, if you did the edition of the 1999 Chinese Yellow Pages, . . . you may ask them to refund you the advertising fee according to the permanent injunction[.]’” Ms. Wang also telephoned Mr. Van and inquired whether he knew about the lawsuit. Ms. Wang told Mr. Van, “‘It’s possible to have a refund back because they have shorted you in their printing.’” Prior to that time, Mr. Van was unaware of the untitled lawsuit filed by Overseas Marketing.

Chao Yang Li worked at a company known as Bank Card Services. In the past, Bank Card Services purchased advertisements in the Chinese Yellow Pages, plaintiffs’ directory. In 2005, Bank Card Services purchased advertisements in both the Chinese Yellow Pages and the Chinese Consumer Yellow Pages. The advertisement in the Chinese Consumer Yellow Pages was the same size and color as the one in the Chinese Yellow Pages. The advertisement in the directory printed by Overseas Marketing was more expensive that the one produced by Chinese Yellow Pages. In July 2005, Mr. Li spoke with Angel Chi, an employee of plaintiffs, regarding renewal of the advertisement. Mr. Li questioned Ms. Chi about the number of directories in circulation. Mr. Li testified he decided not to purchase an advertisement from plaintiffs until the following year.

A portion of Ms. Chi’s deposition testimony was read to the jury. Ms. Chi testified that she telephoned Mr. Li about a renewal on July 22, 2005. Mr. Li told her that he did not want to renew because he had heard that plaintiffs did not print the advertised number of copies of its annual directory. Mr. Li also said: plaintiffs print less and come out later than Chinese Consumer Yellow Pages; plaintiffs do not distribute their annual directories to the areas where most Chinese consumers are located; and plaintiffs are not as effective as the one published by Overseas Marketing. According to Mr. Li, Chinese Yellow Pages, plaintiffs’ directory, is not chosen by consumers because they only want one telephone book in their homes. Mr. Li said his primary concern was that he did not think that plaintiffs were printing enough directories. Ms. Chi advised Mr. Li that plaintiffs were printing over 100,000 directories annually and forwarded, via facsimile transmission, a copy of an audit report showing the exact circulation. However, Mr. Li refused to renew his ad in plaintiffs’ 2006 directory.

When Mr. Browning acquired Chinese Yellow Pages, Inc. in May 2001, it had a revenue growth of approximately five percent per year. Mr. Browning and his brother and sister invested approximately $3.5 million in Chinese Yellow Pages, Inc., which amounted to approximately eight times the company’s presumed $600,000 pretax annual profit. Mr. Browning discovered the 1999 shortfall approximately one week after the merger closed. This occurred when Mr. Browning was contacted by a journalist. She asked Mr. Browning for his reaction to the permanent injunction. Confused by the inquiry, Mr. Browning described what occurred then: “I said, ‘What do you mean, permanent injunction?”’ [¶] She said, ‘Well the permanent injunction the advertisers are seeing.”’

Mr. Browning spoke with the previous owner, Mr. Wu, and decided to begin refunding money to advertisers. By September 1, 2001, after securing legal assistance and developing a release form, plaintiffs began making refunds to 1999 advertisers. Approximately 70 percent of the advertisers who could be located received refunds. Some of the advertisers were no longer in business. A subsequent class action was filed August 20, 2001, which resulted in a court order to discontinue contact with advertisers and settlement negotiations. Under the terms of the settlement, Mr. Wu paid approximately $400,000. Mr. Browning paid approximately $1 million. The 1999 advertisers were paid approximately 70 to 80 percent of their billings as refunds. In addition, the 1999 advertisers received credits toward their future advertisements in directories for four years. However, the newspaper advertisements and, in Mr. Browning’s words, the “smear campaign” initiated by defendants in June and July 2001, caused sales to begin to drop prior to the filing of the class action by approximately $375,000. In addition, because of the negative information disseminated by defendants, plaintiffs were forced to extend its sales campaign to recoup losses. By extending the sales campaign, the directory was issued late and plaintiffs lost an additional $70,000 in revenue over the prior year.

On December 27, 2001, the Su and Li law firm, located in the building next to plaintiffs’ offices, gave a sales representative a request for refund form. In fact, the Su and Li firm had already received a 20 percent refund in October 2001. When Mr. Browning looked at the document, he recognized that the form had been sent via facsimile transmission to the law firm on Christmas Eve when plaintiffs’ office was closed. Moreover, the phone number on the facsimile transmission itself was different than plaintiffs’ fax number. Additional refund forms were received within the following month that were not generated by plaintiffs’ office. Mr. Browning was suing defendants to: recover lost revenue; restore customer confidence; repair damage to plaintiffs’ reputation; and improve employee morale. Sales representatives were often confronted by advertisers with such claims as, “‘You are a dishonest company.’” During the four-year period between the initial distribution of the information packets and trial, Mr. Browning was forced to place company growth plans on hold. The value of plaintiffs’ business enterprise had been devalued according to Mr. Browning. Mr. Browning believed he could not sell the enterprise for “top dollar.”

Lloyd James was the general manager of the GTE printing facility from 1994 to November 2003 when he retired. Mr. James was familiar with a reduction in the printing of Chinese Yellow Pages, Inc. directories from the September 8, 1998 order for 100,000 to 80,000. Mr. Cunningham authorized the reduction in the number of directories to be printed. Mr. James was unaware that Mr. Cunningham had apologized to Ms. Yen over the reduced production of Chinese Yellow Pages, Inc. directories by GTE. An unidentified employee of Chinese Yellow Pages, Inc. requested that the additional 20,000 copies of the 1999 directory be printed. But the additional 20,000 directories were never printed because of the six-week estimated printing requirement. Mr. James heard that Mr. Cunningham was later fired. Mr. Cunningham extorted money from Mr. Wu, the former owner of Chinese Yellow Pages, Inc.

The parties stipulated that Leonard Lyons was qualified to testify concerning plaintiffs’ damages. Mr. Lyons had a law degree and a master’s degree in business administration in finance and investments. Mr. Lyons worked for the Resolution Trust Corporation investigating potential causes of action for failed savings and loans. Mr. Lyons was hired by plaintiffs to determine whether there were lost profits and diminution in their value. In that capacity, Mr. Lyons reviewed: the revenues generated after Mr. Browning acquired Chinese Yellow Pages, Inc.; the “yellow magic system” of record keeping for the company to capture revenues and accounts year by year between 2001 and 2004; and the 1998 and 2000 records for the period when Mr. Wu was the owner of Chinese Yellow Pages, Inc., including a database of accounting records related to revenues. Mr. Lyons also compared and merged into a major database approximately 2,500 to 2,700 accounts per year. After reconciling the two databases, Mr. Lyons came very close to calculating the actual numbers as to whether the accounts were renewals or those of new customers. The goal of the review was to determine if there was evidence or any reason, other than the negative information spread by defendants, for the reduction in customer numbers and revenues during 2001 and subsequent years. Mr. Lyons used the following components to determine the damages suffered by plaintiffs as a result of the negative information: the diminution in value of the business; the lost profits, which is a subset of the damages of the loss and value of the business; and the increased financing costs to operate the business.

Mr. Lyons ultimately set forth three projections of lost profits from 2001 to 2009 resulting from the negative information spread by defendants: at a growth rate of 6.5 percent year, the lost profits were $5,795,570; at a 6.5 percent growth rate from 2001 to 2004 and then a 4 percent growth rate from 2005 to 2009, the projected total loss were $4,931,381; and at a 4 percent growth rate from 2001 to 2009, the lost profits of $3,359,81. Mr. Lyons determined that the damages from the defendants’ spreading of negative information were within a $3-to-$5 million range. He also found, “[T]he business was harmed in terms of the value of the business in the little bit higher range because that incorporates the [goodwill] of the business in addition to the lost profits.” Mr. Lyons utilized a macroeconomic basis to examine both the state and national economy during the relevant period of 2001 to 2005 as well as plaintiffs’ growth prior to the settlement of the initial lawsuit. Mr. Lyons observed that the yellow pages directory business in the nation from the 1990’s forward grew rapidly including beyond the year 2000. Plaintiffs were growing at a rate higher than the yellow pages directory industry as a whole. Mr. Lyons’ review included an analysis of Mr. Browning’s management practices. Mr. Browning had many years of business experience and knew how to control costs. Nothing related to Mr. Browning’s ownership indicated a change in customer retention rates. There was also a stable sales force which would indicate they would continue to increase their revenue or have solid relationships with their repeat customers. On the other hand, Overseas Marketing had significant sales force rotation.

Mr. Lyons examined the 1999 class action and shortfall issues. Plaintiffs gave approximately 60 percent of its advertisers a 20 percent refund. There was no broadly disseminated information about the class action until after the 2001 settlement. As a result, the shortfall did not appear to be a direct cause of the 2001 reduction in customer retention. In his experience as a fraud investigator, Mr. Lyons found that fraud accusations could severely damage a company’s reputation.

Between 1998 and 2000, Chinese Yellow Pages, Inc. increased revenue by approximately $282,000. In 2001, the revenue decreased by $65,000, despite the fact that the sales campaign was extended by one month. If Chinese Yellow Pages, Inc. had closed sales on its usual schedule, the revenues decrease would have been approximately $300,000. In addition, there was a decrease of 140 net customers for the year 2001. In the previous year, Chinese Yellow Pages, Inc. gained 151 customers. Mr. Lyons noted that what Mr. Browning referred to as the “smear campaign” in 2001 involved the distribution of information to potential and existing customers that “bad things” were occurring. This distribution of negative information included the settlement packet and allegations Mr. Browning was doing “bad things.” In addition to lost customers, Mr. Lyons also considered that plaintiffs had to give discounts and free upgrades in order to maintain customer loyalty.

The customer renewal rate averaged 90.4 percent between 1998 and 2000. In 2001, the customer renewal rate dropped to 79 percent. Thereafter, the renewal rate gradually increased over the following years to 80, 83, 86, and 91 percent. Mr. Kao testified that his business had grown at approximately 5 percent per year. Without the dissemination of negative information, Mr. Lyons projected that plaintiffs would have grown between 4 and 6.5 percent each year. That projection is consistent with Ms. Yen’s testimony that Chinese Yellow Pages, Inc. had been growing approximately 5 percent per year from 1996 to 2000. Mr. Lyons testified that plaintiffs and Overseas Marketing compete in a two-party system for the Southern Chinese community advertisers. During the same period of time after 2001, if Overseas Marketing had growth rate of 5 percent, those gains were losses to plaintiffs.

Mr. Lyons surmised that based upon a 4 percent growth factor, plaintiffs’ lost profits were $3,359,817. He considered the 4 percent growth rate to be a “very, very conservative” estimate. Mr. Lyons also reviewed all companies involved in this type of industry over the five years prior to trial. He studied what the companies sold for versus their revenues. Ultimately, Mr. Lyons concluded that under a 6.5 percent growth rate, the damage to plaintiffs was $5.8 million at the time of trial. Lost profits make up part of the loss of business value. In addition, Mr. Browning was forced to increase borrowing costs, which is another form of damages.

In addition to the decrease in customers, plaintiffs had to give discounts or free upgrades to maintain customer confidence. Mr. Lyons found no other cause for plaintiffs lost revenues and customers. Mr. Lyons’ review of the deposition transcript of Dr. Jubin Merati, an economist retained by defendants, did not suggest any other cause for plaintiffs’ losses. Mr. Lyons testified his calculation of plaintiffs’ losses did not include any duplication of damages.

The parties stipulated that Dr. Merati was qualified to testify as to damage issues on behalf of defendants. Dr. Merati has a Ph.D. in economics and is a forensic economist. Dr. Merati was retained to examine if there were any damages sustained by plaintiffs as a result of any of defendants’ actions. Dr. Merati reviewed Mr. Lyons’ analysis. Dr. Merati formed the opinion there was no correlation between what happened to plaintiffs and any of defendants’ alleged actions. Dr. Merati testified plaintiffs suffered no financial harm. Dr. Merati concluded plaintiffs’ revenues merely “flattened out.” He cited figures which showed that the earnings in 1998 and 1998 were about $2.4 million and continued to stay in that range until 2001. The earnings figure then dropped in 2001 by about $60,000 which out of $2.4 million “is nothing” in Dr. Merati’s view. The figures continued another $95,000 up and down and then back up again. The earnings figure was up at the $2.4 million range in 2005. Dr. Merati stated that Mr. Lyons had improperly used regression analysis to reach an opinion which showed financial losses. According to Dr. Merati, Mr. Lyons’ opinion concerning financial losses was inaccurate. This was because: Mr. Lyons used 2 years to project the next 10 years of business activity; Mr. Lyons failed to use 3 to 5 years of earnings to make a projection; Mr. Lyons’ methodology was based on “wrong assumptions” and mathematical errors; Mr. Lyons used billion dollar companies to get comparable values to a $2 million business; Mr. Lyons incorrectly utilized the multiples which are applied to profits not revenues; the loan penalty could not have been caused by the $60,000 loss of revenue; and Mr. Lyons did not take into account the discounts Chinese Yellow Pages, Inc. should have given to its customers after the 1999 lawsuit.

The parties stipulated that Dr. Robert Grayson was qualified to testify concerning advertising. Dr. Grayson has a Ph.D. in business; a masters of business administration degree; and a bachelor’s degree in economics. Dr. Grayson was employed to render an opinion as to why people advertise. Dr. Grayson testified that there was a “duopoly” between plaintiffs and Overseas Marketing in the Southern California Chinese market for yellow pages advertisements. Credibility and reputation are very important and any damage to reputation would have a significant impact on one of the company’s revenues. A directory typically weighs about seven and one-half pounds and he could not “fathom” why anyone would want more than one. The fact that plaintiffs were charging a lower rate than Overseas Marketing should have overcome everything. If defendants’ allegations were believed, that would be a factor in an advertiser’s decision to buy advertising space from Chinese Yellow Pages. If the advertisements and negative statements were repeated, there could be an impact on an advertiser to the extent the allegations are believed.

D. Pretrial and Trial Proceedings

On October 28, 2005, at the final status conference, the trial court ordered the parties to jointly submit jury instructions and jury verdict forms. The trial court stated: “[E]verything has to be joint. I want to make one thing real plain. I don’t do anything for you. If you can’t agree on something, it won’t happen at all. When I have had counsel who can’t agree on the joint statement of the case, I don’t tell the jury what the case is about. I won’t tell them a word except that it isn’t criminal. [¶] And if you can’t agree on a verdict form, I’ll take an oral verdict. I don’t do your work, so you have to agree. Okay.”

On November 4, 2005, the trial court discussed trial duration estimates. One of defendants’ lawyers, Christopher Kim, reminded the court that it had previously set aside eight days for trial on July 21, 2004. The trial court stated: “I’m not going to give you eight. I’m going to give you five. I’m going to give you the 16th, the 17th, the 18th, the 21st and 22nd. So figure out how to do it in five.” The trial court decided that the time would be split evenly between the plaintiffs and defendants. Defense counsel interposed no objections.

Trial began on November 15, 2005. The trial court granted defendants’ in limine motion to exclude testimony about Chinese culture including the community’s interest in rumor and fear of litigation. The trial court told the parties they had been allocated a total of 18 hours for testimony, opening statements, instruction, and closing argument. Defense counsel interposed no objections. The trial court advised the parties that the trial schedule would have to be changed. This was because the trial court was unavailable on the morning of Monday, November 21, 2005, but that trial would be conducted in the afternoon. The trial court noted that it intended to compensate for the lost time on November 21, 2005, by conducting jury selection on November 15, 2005. The jury was selected and empanelled.

As noted previously, before jury selection commenced, the trial court stated it expected to complete the trial by Monday afternoon, November 21, 2005. On November 18, 2005, the direct examination of Mr. Lyons, the last of plaintiffs’ witnesses, concluded. Prior to the cross examination of Mr. Lyons, the trial court raised the issue of scheduling the defense witnesses’ testimony. The following transpired: “The Court: We’re not having proceedings Monday morning, as you recall, I’m sure, and I want to complete the evidence on Monday afternoon. [¶] Mr. Kim: Yes. [¶] The Court: And I think we can’t do that. [¶] Mr. Kim: I’ll rush through faster. I’m sorry. [¶] The Court: How much more do you have, Mr. Kim? [¶] Mr. Kim: Quite a bit. [¶] The Court: Quite a bit. You want to use your time – [¶] Mr. Kim: No, I’m not going to use all my time. [¶] The Court: I would get him off in the next five minutes, if I were you. [¶] Mr. Kim: I can’t do that, your honor. [¶] The Court: How much time do you need, then? [¶] Mr. Kim: By ‘fast’ I’m thinking about at least 20 to 30 minutes, probably more like 30.”

At this point, during the discussion, the trial court asked one of plaintiffs’ attorneys, James Grant, if he intended to conduct redirect examination. Mr. Grant stated no redirect examination of Mr. Lyons would be conducted. The trial court then asked Mr. Kim if he wanted to ask the jury to stay until 4:30 p.m. The trial court also stated that it did not want to cut Mr. Kim off if the jury would stay late. Mr. Kim replied he would rather wait until Monday and then added: “I’ve got four hours, your honor.” Mr. Kim’s comment prompted the following: “The Court: No, that’s not going to happen anymore. We’re going to complete the testimony. Didn’t you just tell me you’d complete your testimony on Monday afternoon? [¶] Mr. Kim: Your honor, I going to use whatever hours I have. [¶] The Court: No, you’re not. . . .” As will be apparent, the trial court did not carry out this suggestion.

The jurors were then excused for the weekend. After the jurors were excused, the subject of scheduling witness testimony was resumed. Mr. Kim stated that he intended to call three or four witnesses and he characterized their testimony as “quick.” The trial court subsequently calculated that plaintiffs had used 9 hours and 25 minutes exceeding their allotted time by 25 minutes. Plaintiffs were given an additional 25 minutes for closing. Defendants, which used 6 hours and 25 minutes (including closing), objected to giving plaintiffs additional time. However, Mr. Kim did not request additional time to present defense evidence.

Later, after the jury was instructed, the trial court discussed the verdict form with counsel. Mr. Grant, co-counsel for defendants, stated that he had a problem with the portion of the form dealing with defamation. To which the trial court replied: “Just agree on one version for the verdict form. I don’t care which it is, but make it simple. I will give a general verdict and then a general verdict form if you can’t agree on it. I don’t want to spend any more time on this case. This case is ancient and you still can’t agree on the verdict form.” After a noon recess, the trial court stated, “The two Mr. Grants with respective parties are before the court and submitted a general verdict form which you know is more than just a general verdict form, and you stipulated to have this sent in the jury room; is that correct?” Mr. Kim and plaintiff’s counsel responded, “Yes, your honor.” The jury returned a $3.5 million verdict in favor of plaintiffs on all the claims. The jury found: defendants’ conduct warranted a punitive damages award; Overseas Marketing breached the settlement agreement with Chinese Yellow Pages, Inc.; and plaintiffs did not breach the settlement agreement.

E. The Punitive Damages Phase

The trial court ordered production of defendants’ financial information for the punitive damages phase of the trial. Defendants objected to any testimony by Mr. Lyons as to the reliability of their evidence concerning their financial condition. Defendants further argued: plaintiffs failed to identify Mr. Lyons as an expert witness on this issue; there was no reasonable opportunity to depose Mr. Lyons; and the parties had entered into a stipulation regarding disclosure of expert witnesses. The stipulation provides in part, “6. This stipulation and Order does not apply to any opinion and/or the basis for any opinion that is only offered in rebuttal, where the opinion to which the rebuttal is offered . . . at trial and was not disclosed prior to trial.” The trial court found the stipulation did not encompass the punitive damages phase of the trial and defense counsel should have known that an expert witness would be called to testify on the financial condition issue. Because the jury had already found punitive damages were warranted, the trial court ruled that evidence would be limited to “net worth.”

After the jury was instructed, plaintiffs called Bing Kho, who was Mr. Kao’s accountant. Mr. Kho had been hired a few days before the punitive damage phase of the trial. Mr. Kho provided a personal financial statement for Mr. Kao. Mr. Kho looked at appraisal reports for the real estate and company financial statements for Overseas Marketing and South Bay Corporation. Mr. Kao was asked whether he had a 401K plan or retirement plan, certificate of deposits, savings, and anything else of financial value. Mr. Kao responded that he had a checking account containing $9,000 and no other cash assets. Mr. Kho did not look at any documents to support Mr. Kao’s statements. Mr. Kho testified that he did a compilation which is the lowest level of accounting service that he could provide. As such, he could not vouch for its accuracy. Mr. Kao admitted the statement was not prepared in compliance with generally accepted accounting principles which require audited computation of financial data.

Mr. Kho testified that Mr. Kao owned three properties, one of which is commercial with a value of $2 million with a $400,000 mortgage. The net worth of the commercial property was between $1.6 and $1.7 million. Mr. Kao also owned a house free and clear with a value of $1.275 million. Mr. and Mrs. Kao wholly own Overseas Marketing which had a book value of $194,962. Mr. Kao acknowledged this is not the fair market value of the company. Mr. Kho concluded that Mr. Kao’s financial worth totaled about $3.3 million.

Mr. Kao testified that Overseas Marketing grossed $4.5 million in revenue as of October 31, 2005. The estimate did not include any accounts receivable. Mr. Kao had no idea what the amount of the accounts receivable were or what his bonus would be. Mr. Kao estimated that he received about $500,000 in cash from Overseas in 2004 but after taxes he was had only $9,000 in cash assets.

Mr. Lyons testified in rebuttal to Mr. Kho. Mr. Lyons agreed with Mr. Kho’s real estate appraisals. However, Mr. Lyons disagreed with: Mr. Kao’s personal financial statement; Mr. Kao’s financial net worth calculation; and the value of the businesses. According to Mr. Lyons, Mr. Kao’s financial statement was based on a compilation of information given to Mr. Kho, the accountant, rather than an audit of financial data which is done for reliability. The financial statement was not calculated on a tax basis and did not utilize generally accepted accounting principles. Mr. Kho should have used the “Statement of Position” under the American Institute of Public Accountants. Mr. Kho should have used the current market value of assets and liabilities. Mr. Lyons calculated the fair market value of Overseas Marketing as $11.4 million (based on a 3.9 multiple of revenue less a 35 percent discount as a private company) and $14.7 million (based on a 5.0 multiple of revenue as a market leader). Mr. Lyons calculated the value of South Bay Area Yellow Pages, an Overseas Marketing affiliate, to be between $2 million and $2.58 million. Mr. Lyons concluded that Mr. and Mrs. Kao had a net worth between $16 million and $20 million. The jury awarded punitive damages of $500,000 against Mr. Kao and $250,000 against Overseas.

On December 15, 2005, the trial court denied plaintiffs’ permanent injunction request and defendants’ motions to dismiss the defamation claims. Judgment was entered on January 6, 2006. Defendants’ new trial and judgment notwithstanding the verdict motions were denied on March 6, 2006. Defendants filed a notice of appeal on April 3, 2006.

III. DISCUSSION

A. Trial Management

Defendants argue their due process rights were violated by the trial court’s management of the trial. Defendants assign as prejudicial error: the trial court’s order that the trial, which occurred Thanksgiving week, would conclude before the holiday; the arbitrary allocation of 18 hours evenly divided between the parties for trial; and depriving defense counsel of his full time and allocating additional time to plaintiff to examine witnesses and close.

The due process claim does not provide a basis for reversal for two reasons. First, Overseas has not cited anything in the record that shows it objected to the trial court’s management of the case on due process grounds nor has any reason been presented which warrants us considering this issue for the first time on appeal. Hence, the constitutional claim is waived. (In re S. B. (2004) 32 Cal.4th 1287, 1292, fn. 2; People v. Champion (1995) 9 Cal.4th 879, 918.)

Second, as defendants concede, trial management is committed to the discretion of the court. (Bergman v. Rifkind & Sterling, Inc. (1991) 227 Cal.App.3d 1380, 1386; Moyal v. Lanphear (1989) 208 Cal.App.3d 491, 497.) A trial court has inherent power to regulate the proceedings and to effect an orderly disposition of the issues presented by the matter. (Bauguess v. Paine (1978) 22 Cal.3d 626, 635, superseded by statute on alternative grounds, as stated in Olmstead v. Arthur J. Gallagher & Co. (2004) 32 Cal.4th 804, 809; Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, 1377-1378.) Errors in trial management can only provide grounds for reversal where the trial court has exercised its discretion in a capricious or arbitrary manner and where there has been a miscarriage of justice. (Cal. Const., art. VI, §13; Blank v. Kirwan (1985) 39 Cal.3d 311, 331; Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)

We need not determine whether the trial court’s management orders were erroneous in whole or in part. Rather, we conclude defendants have failed to demonstrate any prejudice to them because of the time limitations imposed by the trial court. On Friday, November 18, 2005, after plaintiffs rested, Mr. Kim advised the trial court that he did not intend to use his all of his allotted time. The trial court stated that it wanted to complete the case by Monday afternoon. Mr. Kim agreed. The following colloquy then occurred: “The Court: And I think we can’t do that. [¶] Mr. Kim: I’ll rush through faster. I’m sorry. [¶] The Court: How much more do you have, Mr. Kim? [¶] Mr. Kim: Quite a bit. [¶] The Court: Quite a bit. You want to use your time – [¶] Mr. Kim: No, I’m not going to use all my time. [¶] The Court: I would get him off in the next five minutes, if I were you. [¶] Mr. Kim: I can’t do that, your honor. [¶] The Court: How much time do you need, then? [¶] Mr. Kim: By ‘fast’ I’m thinking about at least 20 to 30 minutes, probably more like 30.”

At this point, the trial court asked one of plaintiffs’ attorneys if he intended to conduct redirect examination. Mr. Grant stated he did not intend to conduct redirect examination. The trial court then asked Mr. Kim if he wanted the jury to stay until 4:30 p.m. The trial court also stated that it did not want to cut Mr. Kim off if the jury would stay late. Mr. Kim replied that he would rather wait until Monday and then added: “I’ve got four hours, your honor.” This statement prompted the following: “The Court: No, that’s not going to happen anymore. We’re going to complete the testimony. Didn’t you just tell me you’d complete your testimony on Monday afternoon? [¶] Mr. Kim: Your honor, I going to use whatever hours I have. [¶] The Court: No, you’re not. . . .” The court then excused the jury for the weekend.

The trial court then asked of Mr. Kim how many witnesses he intended to call on Monday. Mr. Kim said he intended to call certain additional witnesses but that the examination “would be quick.” The trial court subsequently calculated that plaintiffs had used 9 hours and 25 minutes exceeding their allotted time by 25 minutes. Plaintiffs were given an additional 25 minutes for closing. Mr. Kim, who had used 6 hours and 25 minutes, objected to giving plaintiffs additional time. The defense witnesses all testified. Defendants have cited no evidence, documentary or testimonial, which was excluded by the trial court’s management orders or style of presiding. Therefore, defendants have failed to establish any prejudice based on the trial court’s November 18, 2005 orders.

B. Sufficiency Of The Evidence

1. Overview

Plaintiffs argue the evidence is insufficient. We review the judgment for substantial evidence. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053, citing Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429.) All evidence must be viewed in the light most favorable to the determination below and conflicts in evidence must be resolved in favor of upholding the judgment. (Bickel v. City of Piedmont, supra, 16 Cal.4th at p. 1053; Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) Under this standard, it is well established that the credibility of witnesses and the weight assigned to their testimony are solely within auspices of the factfinder. (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1121-1122; Stafford v. Mach (1998) 64 Cal.App.4th 1174, 1182.)

2. Causation and Damages

Defendants argue there was no substantial evidence to support the causation or damages elements of plaintiffs’ claims. Defendants argue the verdict is based solely on factually unsupported opinion testimony concerning causation and damages. Defendants reason there is no evidence any advertisers stopped or reduced their business activity with defendants. In the trial court, defendants presented evidence the damages model used by Mr. Lyons was inaccurate. Defendants repeat the arguments on appeal as follows : the regression analysis was not based on independent evidence; Mr. Lyons claimed that 1999 performance data was not usable but acknowledged on cross-examination that he had the 1999 data; Mr. Lyons ignored Mr. Browning’s testimony that 70 percent of plaintiffs’ advertisers knew about the shortfall due to settlement agreements and refund checks; Mr. Lyons ignored a judicial admission that the class-action cross-complaint undermined plaintiff’s relationships with its customers and Mr. Wu’s failure to disclose the shortfall; there was contradictory evidence about the number of competitors in the business (Mr. Kao testified there were four and not two as plaintiff maintained); and Mr. Lyons ignored or falsely stated the national and state economies which showed fiscal setbacks and economic declines in 2000 and 2001. Defendants further contend that Mr. Lyons’ causation opinion failed to properly assess the effect of the class action on damaging plaintiffs’ reputation.

The weight and credibility of witnesses offering opinion testimony concerning lost profits is a matter for the trier of fact to determine. (Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 489-490.) The evidence on this issue was conflicting and must be reviewed in a light most favorable to the verdict. (Laico v. Chevron U.S.A., Inc. (2004) 123 Cal.App.4th 649, 659; Wright v. Beverly Fabrics, Inc. (2002) 95 Cal.App.4th 346, 351.) An opinion is not substantial evidence when it is based on speculative assumptions and on facts which are not otherwise proved. (Pacific Gas & Electric Co. v. Zuckerman (1987) 189 Cal.App.3d 1113, 1135-1136; Hyatt v. Sierra Boat Co. (1978) 79 Cal.App.3d 325, 338-339.)

There is substantial evidence defendants’ misconduct was a legal cause of plaintiffs’ losses. Dr. Grayson, who was retained by defendants, testified that Overseas Marketing and plaintiffs compete in a duopoly in the Southern California Chinese community. The directories are almost identical and the directory which is printed first will likely be the one a consumer will use. This is because consumers will not want more than one yellow pages directory in their homes. Plaintiffs’ advertisements were less expensive than those of Overseas Marketing. Thus, plaintiffs should have had an advantage in the duopoly. Dr. Grayson also conceded on cross-examination that a “steady drum beat” of negative information such as the radio advertisements could impact an advertiser’s decision to purchase directory advertising.

There was evidence that Overseas Marketing, as one of the competitors in a duopoly, produced and distributed documents entitled Permanent Injunction Packet to potential customers of plaintiffs. The permanent injunction packet included an unsigned print order for 80,000 directories from GTE. The order did not include a quotation. The actual contract for the 1999 directories was for 100,000 copies. According to Ms. Yen, the distribution of the unsigned order would suggest to advertisers that Chinese Yellow Pages was “cheating.” Overseas Marketing also took out its own radio advertisements which suggested that its competitor “cheated” advertisers.

Ms. Yen also recalled a telephone conversation with Ms. Wu, a distributor for and advertiser in the Chinese Yellow Pages, Inc. During the course of that conversation, Ms. Wu received a telephone call on another phone from Mr. Sun, a salesperson for Overseas Marketing. Ms. Wu placed the call from Mr. Sun on a speaker phone. Ms. Yen could hear the conversation between Mr. Sun and Ms. Wu. Mr. Sun asked Ms. Wu, “‘So are you going to advertise with us?’” Ms. Wu responded, “‘No, I am not planning to.’” Mr. Wu said: “Well, why do you want to advertise with Chinese Yellow Pages? They’re not a good company. They’re dishonest and they financially have problems. They’ll go bankrupt. So why do you want to advertise with them?’”

There was testimony that, during the preceding years before Overseas Marketing acted to disseminate the information to the potential advertisers, Chinese Yellow Pages, Inc. had a growth rate of about five percent per year. After the dissemination of negative information, plaintiffs experienced a decrease in advertisers even though its prices were lower than prices charged by Overseas Marketing. Yet Overseas Marketing had a corresponding increase in the number of advertisements purchased for its directories. Dr. Grayson testified the fact that plaintiffs were charging a lower rate than Overseas Marketing should have overcome all other considerations. If an advertiser believed the negative information promulgated by Overseas Marketing, it would be a factor in the decision to buy advertising from plaintiffs. If the advertisements and statements were steadily repeated, there would be an impact on an advertiser to the extent the negative information was believed. In addition, there was evidence that plaintiffs had to delay a publication date due to renewal problems with its former advertisers. The evidence showed that Overseas Marketing would obtain an advantage over plaintiffs in such a setting. This is because Overseas Marketing’s directories would be completed first. As Dr. Grayson testified, an advantage would be obtained because he could not “fathom” why any person would want two seven and one-half pound yellow pages directories in their homes. Under the circumstances, a jury could reasonably infer that defendants’ conduct caused advertisers not to purchase advertising space from plaintiffs.

As to the damage issue, citing Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870, 884, defendants argue that Mr. Lyons “relied on legally improper methodologies” such as “loss of gross revenue” rather than lost profits. Defendants assert that Mr. Lyons improperly measured damages as diminution in market value based on the same faulty methodology of loss of revenue rather than lost profits. In Kids’ Universe v. In2Labs, supra, 95 Cal.App.4th at page 884, we did not conclude that loss of revenue was an illegal measure of damages. Rather, we actually held, “A plaintiff must show loss of net pecuniary gain, not just loss of gross revenue.” (Accord Gerwin v. Southeastern Cal. Assn. of Seventh Day Adventists (1971) 14 Cal.App.3d 209, 222-223.) We further held: “‘“Net profits are the gains made from sales ‘after deducting the value of the labor, materials, rents, and all expenses, together with the interest of the capital employed.’ [Citation.]”’” (Kids’ Universe v. In2Labs, supra, 95 Cal.App.4th at p. 884 quoting Gerwin v. Southeastern Cal. Assn. of Seventh Day Adventists, supra, 14 Cal.App.3d at pp. 222-223 and Resort Video, Ltd. v. Laser Video, Inc. (1995) 35 Cal.App.4th 1679, 1700.)

Further, in Kids’ Universe our discussion of lost profits as damages involved those for an unestablished business. (Kids’ Universe v. In2Labs, supra, 95 Cal.App.4th at pp. 873-874, 883-888.) This case involves an established business for which there is a distinction concerning lost profits as damages. In Kids’ Universe we stated: “The Supreme Court set forth the law concerning lost profits as damages in Grupe v. Glick (1945) 26 Cal.2d 680, 692-693, as follows: ‘[W]here the operation of an established business is prevented or interrupted, as by a tort or breach of contract or warranty, damages for the loss of prospective profits that otherwise might have been made from its operation are generally recoverable for the reason that their occurrence and extent may be ascertained with reasonable certainty from the past volume of business and other provable data relevant to the probable future sales. [Citations.] On the other hand, where the operation of an unestablished business is prevented or interrupted, damages for prospective profits that might otherwise have been made from its operation are not recoverable for the reason that their occurrence is uncertain, contingent and speculative. [Citations.] . . . But although generally objectionable for the reason that their estimation is conjectural and speculative, anticipated profits dependent upon future events are allowed where their nature and occurrence can be shown by evidence of reasonable reliability. [Citations.] All of these [cited] cases recognize and apply the general principle that damages for the loss of prospective profits are recoverable where the evidence makes reasonably certain their occurrence and extent.’ [Citations.] In Natural Soda Prod. Co. v. City of L. A. (1943) 23 Cal.2d 193, 199, the Supreme Court held: ‘The award of damages for loss of profits depends upon whether there is a satisfactory basis for estimating what the probable earnings would have been had there been no tort. If no such basis exists, as in cases where the establishment of a business is prevented, it may be necessary to deny such recovery. [Citations.] If, however, there has been operating experience sufficient to permit a reasonable estimate of probable income and expense, damages for loss of prospective profits are awarded. [Citations.]’ Contrary to plaintiffs’ assertion, the rule regarding proof of lost profits from an unestablished business applies in tort as well as contract cases. [Citations.] Uncertainty as to the amount of profits is not fatal to such a claim. [Citations.]” (Kids’ Universe v. In2Labs, supra, 95 Cal.App.4th at pp. 882-883.)

This case involves an established business. There was testimony by plaintiffs’ employees as to the operation and volume of the business. Mr. Lyons discussed diminution in value, increased costs of financing, lost profits, growth rates, and revenues. The evidence “from past volume of business and other provable data” shows that the lost profits were not based on speculation or a necessarily faulty methodology. (Grupe v. Glick, supra, 26 Cal.2d at p. 692; Kids’ Universe v. In2Labs, supra, 95 Cal.App.4th at p. 883.)

3. Contract Breach

Defendants argue they may not be held liable for contract breach. The contract at issue is the settlement agreement which resolved the initial lawsuit. The third amended complaint alleges Overseas Marketing breached the settlement agreement by misrepresenting its terms. According to the third amended complaint, Overseas Marketing misrepresented the disclaimer of liability of Chinese Yellow Pages, Inc. and the release of all claims. We agree with defendants that nothing in the settlement agreement prevented them from misrepresenting the settlement agreement. Thus, there is no substantial evidence a contract breach occurred. No doubt, misrepresenting the terms of the settlement agreement can be tortious; but its is not a contract breach. The judgment must be modified to delete any reference to liability based on breach of contract. However, the erroneous jury finding did not affect defendants’ rights in any prejudicial manner as to plaintiffs’ remaining claims. (Code Civ. Proc., § 475; Eisenberg, Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2006) ¶ 8:288, p. 8-158 (rev. #1, 2006).)

4. Interference with Contractual Relationships and Advantages

a. overview

Defendants argue the evidence is insufficient to support the intentional interference with contract and prospective economic advantage verdicts. The elements of a cause of action for intentional interference with contractual relations and prospective advantage are: a valid contract or prospective relationship; the defendant’s knowledge of the contract; the defendant’s intentional acts designed to interfere with the contract or relationship; actual disruption of the contract or prospective advantage; and damage. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55; Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514.) The Supreme Court has held, “[A] plaintiff seeking to recover for an alleged interference with prospective contractual or economic relations must plead and prove as part of its case-in-chief that the defendant not only knowingly interfered with the plaintiff’s expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of interference itself.” (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393; see also Westside Center Associates v. Safeway Stores 23, Inc. (1996) 42 Cal.App.4th 507, 521, fn. 16.) Defendants assert plaintiffs did not prove any actual disruption of any contract or relationship which cannot be based on a “market theory” or “lost opportunity” approach; the jury instructions improperly referred to William Li to support the “improper means” requirement; the competition privilege applies as a matter of law to statements about a competitor; and defendants’ failure to request jury instructions is not a forfeiture of the competition privilege issue on appeal.

b. the market theory analysis

Defendants claim that there was no evidence of any contracts or economic relationships which were actually disrupted because of their conduct. Defendants rely on Westside Center Associates v. Safeway Stores, Inc., supra, 42 Cal.App.4th at pages 520-529, a decision of the Fifth Appellate District. In this respect, defendants argue that there can be no claim of interference on a “market theory” of recovery. In Westside Center Associates, the market theory analysis arose in the context of a dispute between a company which owned part of a shopping center and supermarket, which occupied an anchor position in the complex. At issue was whether the shopping center owner could recover on a market theory of liability for interfering with all “possible” or “potential” buyers of the property. The potential buyers were unidentified. (Id. at pp. 520, 523.) Westside Center Associates held that the shopping center owner’s “‘interference with the market’ theory of liability” by itself was insufficient to demonstrate the existence of a prospective relationship. (Id. at p. 528.) It bears emphasis Westside Center Associates was an appeal by the plaintiff—the exact opposite of the procedural scenario present here where plaintiffs prevailed in the trial court. The discussion of our Fifth District colleagues’ opinion must be viewed in that contrast.

The case at bench is distinguishable on its facts from Westside Center Associates. Plaintiffs did not rely solely on a market theory to support their lost profit claims. Rather, plaintiffs relied on evidence that the two directories competed for advertisers in the Southern California Chinese community. Plaintiffs had an existing advertising client base with annual renewals. Plaintiffs also had had a steady growth rate of about five percent that was interrupted after defendants disseminated the Permanent Injunction Packet and made radio announcements. The two companies competed in a “duopoly” for the same Southern California Chinese customer base. The prices charged by Overseas Marketing were higher, but it had a positive growth rate during the applicable period when plaintiffs were losing income. There was also evidence plaintiffs began having problems with their renewals. Plaintiffs’ former customers stopped renewing their advertisements. This failure to renew was in part because of the customers’ perceptions about plaintiffs’ honesty. Plaintiffs’ existing business with its client base refusing to renew coupled with the lapse in growth rate was not merely a speculative deduction. Rather, it was the substantial evidence of business relationships and corresponding expectancies which were sufficient to demonstrate an economic relationship with a probable future economic benefit to plaintiffs. Thus, there was sufficient evidence for the jury to infer that defendant’s false accusations caused customers to stop purchasing advertising space from plaintiffs.

c. competition privilege

Overseas contends it was entitled to an instruction on the competition privilege, which applies when: a relationship between a competitor and third person concerns a competitive matter between the plaintiff and the defendant; the defendant does not employ an “improper means”; the defendant does not intend a restraint of trade; and the defendant acts to advance its own competitive interest. (Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1256; see also Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 880.) Defendants argue that because neither libel nor slander were proven, there is no evidence improper means were used as part of the competitive environment.

This issue has been forfeited. No doubt, defendants raised the issue of “competitive privilege” in their answer. But the competition privilege issue was not raised during the trial nor did defendants request an instruction on the issue. The issue, has thus, been forfeited. (Mayes v. Bryan (2006) 139 Cal.App.4th 1075, 1090-1091; Stevens v. Owens-Corning Fiberglas Corp. (1996) 49 Cal.App.4th 1645, 1653.)

Furthermore, there is no merit to defendants’ argument in their reply brief that they were not required to raise the competitive privilege issue or request such an instruction in the trial court. Defendants contend the competition privilege question depends on undisputed facts and, therefore, applies as a matter of law. But the inferences to be drawn from the evidence were in dispute as noted by the argument in defendants’ opening and reply briefs. There was evidence that defendants engaged in conduct which was independent of the interference itself such as taking out radio advertisements. The evidence was disputed as to whether defendants engaged in wrongful conduct such that the competition privilege did not apply as a matter of law. The issue cannot be resolved as a matter of law.

d. intentional interference instruction

The jury was instructed that plaintiffs were required to prove that defendants engaged wrongfully in misrepresentation.¹ In Della Penna v. Toyota Motor Sales, U.S.A., Inc., supra, 11 Cal.4th at page 393, our Supreme Court set forth the following black letter statement of California law: “[A] plaintiff seeking to recover for an alleged interference with prospective contractual or economic relations must . . . prove as part of its case-in-chief that the defendant not only knowingly interfered with the plaintiff's expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of interference itself.” (Accord Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc., supra, 95 Cal.App.4th at p. 1256.) The trial court’s instructions fully complied with the requirements imposed in Della Penna.

1 The intentional interference with prospective economic relations instructions stated in part: “To establish this claim. [plaintiffs] must prove all of the following: 1. That [plaintiffs and their advertisers] were in economic relationship that probably would have resulted in an economic benefit to [plaintiffs]; [¶] 2. That [defendants] knew of the relationship; [¶] 3. That [defendants] intended to disrupt the relationship; [¶] 4. That [defendants] engaged in wrongful conduct through [misrepresentation.]” (Final brackets in original.]

Likewise, no error occurred because Mr. Li was mentioned in the instruction on tortious interference with contractual relations. As noted, Mr. Li worked for Bank Card Services. Mr. Li’s had used the directory published by plaintiffs, but stopped doing so. Mr. Li told Ms. Chi, an employee of plaintiffs, he had heard her employer does not print the advertised number of copies of its annual directory. Mr. Li also said: plaintiffs print fewer copies of their directory; plaintiffs’ directory came out later than Chinese Consumer Yellow Pages; plaintiffs do not distribute their annual directories to the areas where most Chinese consumers are located; and plaintiffs’ directory is not as effective as the one distributed by Overseas Marketing. According to Mr. Li, plaintiffs’ directory is not used by consumers because they only want one telephone book in their homes. Mr. Li said his primary concern was that he did not think that plaintiffs were printing enough copies. Mr. Li continued to hold this belief when he was provided proof that plaintiffs were ordering and delivering 100,000 directories.

Defendants reason that Mr. Li’s testimony was insufficient to demonstrate any improper means were used by them. The jury was instructed, “[CHINESE YELLOW PAGES] claims that [CONSUMER YELLOW PAGES AND ALAN KAO] intentionally interfered with an economic relationship between [CHINESE YELLOW PAGES] and [NUMEROUS ADVERTISERS INCLUDING WILLIAM LI, WHO RECEIVED MISINFORMATION REGARDING CHINESE YELLOW PAGES, THROUGH A VARIETY OF MEANS, WHICH DISRUPTED CHINESE YELLOW PAGES’ RELATIONSHIPS WITH THESE ADVERTISERS] that probably would have resulted in an economic benefit to [CHINESE YELLOW PAGES].” In their reply brief, defendants argue there was no evidence that they made any misrepresentations to Mr. Li. There was, however, substantial evidence Mr. Li was a customer of plaintiffs who received inaccurate information about plaintiffs from employees of Overseas Marketing. Thus, it was not error to include Mr. Li in the foregoing instruction.

e. the defamation claims

Defendants present three arguments concerning plaintiffs’ defamation claims. Defendants argue: no defamation as a matter of law was committed and thus plaintiffs were required to present evidence of special damages; no defamation occurred; and instructional error occurred. For the following reasons, we reject defendants’ contentions.

First, defendants have not established that proof of special damages was required. Both defamation and trade libel require proof of an intentional publication of a false and unprivileged statement. (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 104; ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010.) However, plaintiffs were not pursuing a trade libel claim. Rather, plaintiffs alleged and proved defamation. Slander is a form of defamation. (Civ. Code, § 44; Mann v. Quality Old Time Service, Inc., supra, 120 Cal.App.4th at p. 106). Civil Code section 46 provides: “Slander is a false and unprivileged publication, orally uttered, and also communications by radio or any mechanical or other means which . . . : [¶] 3. Tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits . . . . [¶] 5. Which, by natural consequence, causes actual damage.” Words within Civil Code section 46 are deemed slanderous per se. (Mann v. Quality Old Time Service, Inc., supra, 120 Cal.App.4th at p. 106-107; Albertini v. Schaefer (1979) 97 Cal.App.3d 822, 829.) A corporation may claim injury for defamation. (Id. at p. 830; Di Giorgio Fruit Corp. v. AFL-CIO (1963) 215 Cal.App.2d 560, 571.) A corporate plaintiff is not limited to a trade libel claim, which requires proof of special damages. (Mann v. Quality Old Time Service, Inc., supra, 120 Cal.App.4th at p. 109; Erlich v. Etner (1964) 224 Cal.App.2d 69, 73.) No proof of special damages is required when a statement is slanderous per se. (Mann v. Quality Old Time Service, Inc., supra, 120 Cal.App.4th at p. 106-107 [slander]; Albertini v. Schaefer, supra, 97 Cal.App.3d at p. 829 [slander].) Likewise, no proof of special damage is required when a statement is libelous per se. (Washer v. Bank of America (1943) 21 Cal.2d 822, 829, disapproved on different point in MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d 536, 551; Rosenberg v. J.C. Penny Co. (1939) 30 Cal.App.2d 609, 619.)

There is substantial evidence that defendants engaged in conduct described in Civil Code section 46, subdivisions (3) and (5). Defendants defamed plaintiffs by disseminating false and unprivileged statements in the Permanent Injunction Packet, making radio broadcasts, and communications with advertisers. Plaintiffs proved that the statements tended to injure their business reputation. Hence, no proof of special damages was required as the jurors reasonably could have found the misstatements were defamatory per se.

Second, there is substantial evidence defendants defamed plaintiffs. There is no merit to defendants’ argument that because plaintiffs were not specifically identified by name in the radio advertisements no defamation occurred. The evidence showed that there was a “duopoly” in the Chinese language directory market. The jury could reasonably find the words conveyed the meaning that plaintiffs cheated their advertisers. The Permanent Injunction Packet contained documents which purported to show that plaintiffs had only ordered 80,000 copies of its directory while advertising a circulation of 100,000 copies. The information also suggested that plaintiffs had admitted they were found liable in the initial unfair competition action. The radio advertisements represented to the Southern California Chinese community that plaintiffs “cheat” their advertisers. The radio station’s program manager testified those advertisements were listened to by Southern California Chinese community. The jury could reasonably have concluded that defendants’ conduct damaged plaintiffs’ business reputation.

Third, no instructional error, nor any that was prejudicial, occurred. Defendants argue the trial court erred by failing to correctly instruct on causation by refusing to give three of proposed special instructions.² Cause-in-fact determinations are made under the substantial factor test. (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 968-969; Mitchell v. Gonzales (1991) 54 Cal.3d 1041, 1048-1054.) Our Supreme Court has held, “A tort is a legal cause of injury only when it is a substantial factor in producing the injury.” (Soule v. General Motors, Corp. (1994) 8 Cal.4th 548, 572; Mitchell v. Gonzales, supra, 54 Cal.3d at pp. 1053-1054.) Our state’s appellate courts have held that a substantial factor is something more than a slight, trivial, negligible, or theoretical reason. (Rutherford v. Owens-Illinois, Inc., supra, 16 Cal.4th at p. 968; Espinosa v. Little Co., of Mary Hospital (1995) 31 Cal.App.4th 1304, 1314.)

2 Defendants submitted the following proposed instruction: “Causation of Plaintiffs’ Damages— [¶] In this case, plaintiffs . . . assert that they lost customers who stopped advertising or reduced their advertising or refused to advertise in their Chinese Yellow Pages directory because of the wrongful conduct of defendants . . . . Plaintiffs also assert that they suffered other damages because of defendants’ wrongful conduct. [¶] In order for plaintiffs to recover damages from defendants, plaintiffs have the burden of proving that their damages were caused by defendants’ conduct. Proof of causation cannot be based on mere speculation or conjecture unsupported by any real evidence. To recover damages from defendants for lost customers, plaintiffs must show by a preponderance of the evidence that it is reasonably probable that such customers would have continued to advertise in plaintiffs’ Chinese Yellow Pages directory but for defendants’ conduct. A mere possibility of such causation is not enough to carry plaintiffs’ burden of proof.” Additionally, defendants offered the following causation instruction: “Temporal Sequence and Causation—In this case, plaintiffs . . . assert that [defendants] began engaging in wrongful conduct commencing in or about March 2001. As a result, plaintiffs assert that some of their customers stopped advertising or reduced their advertising or refused to advertise in plaintiffs’ Chinese Yellow Pages directory for the years 2001 through 2005. [¶] The mere fact that plaintiffs had less business or customers in 2001 through 2005 in comparison to prior years is not sufficient to show that defendants’ conduct caused plaintiffs to lose such business or customers. The mere fact that one event occurred before another later event does not prove that the earlier even caused the later event.” Finally, defendants requested the following instruction be read to the jury: “Existence of Other Causative Factors— [¶] In this case, plaintiffs . . . assert that they lost customers who stopped advertising or reduced their advertising or refused to advertise in their Chinese Yellow Pages directory because of the wrongful conduct of defendants . . . . [¶] Defendants assert that plaintiffs lost advertisers because of other reasons unrelated to defendants’ conduct. If you find that plaintiffs lost advertisers because of such other reasons and plaintiffs are unable to eliminate such other reasons as the cause of their injury, you may not attribute plaintiffs’ loss of advertisers to defendants’ conduct.”

Here, the trial court instructed the jury that in order for plaintiffs to prevail, they must find that defendants’ conduct was “a substantial factor” in causing harm. The instruction was given in connection with Judicial Council of California Civil Jury Instructions (2003-2004), CACI No. 2201—Intentional Interference with Contractual Relations and 1704—Defamation. Thus, the trial court properly instructed the jury that it had to find that the conduct was a substantial factor. However, as drafted, none of defendants’ proposed instructions accurately and completely conveyed the applicable standards for a cause-in-fact determination. The proposed special instructions were argumentative and would tend to mislead the jury because they do not refer to the substantial factor test. (Soule v. General Motors Corp., supra, 8 Cal.4th at p. 572; Fields v. Yusuf (2006) 144 Cal.App.4th 1381, 1388.) No instructional error occurred in this regard.

In any event, defendants have not demonstrated they were prejudiced by the trial court’s refusal to give their proposed causation instructions. (Soule v. General Motors Corp., supra, 8 Cal.4th at pp. 580-581; People v. Watson (1956) 46 Cal.2d 818, 836.) The jury impliedly found that defendants’ conduct was a substantial factor in causing injury to plaintiffs. Nothing indicates that the jury was confused about the substantial factor element of plaintiffs’ case. The jury did not ask for further instructions or submit any questions on this issue. The verdict was not close. Accordingly, it is not reasonably probable defendants would have received a more favorable result had the trial court given any or all of their three proposed causation instructions.

f. miscellaneous liability phase claims

Defendants raise several instructional error and verdict form contentions that warrant only brief comment. First, defendants contend the jury was improperly instructed on willful suppression of evidence. But, there was evidence that Mr. Kao directed the creation and distribution of defamatory packages of materials to advertisers. Mr. Kao testified that there were hundreds of copies of the packet made. Nevertheless, defendants never produced a copy of the materials. Defendants also distributed copies to advertisers but did not identify the parties to whom they were distributed. Under the circumstances, it was not error to instruct the jury on willful suppression of evidence. (Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 994, disapproved on another point in Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 664 [employer lost sexual harasser’s personnel file which reasonably would contain performance evaluations]; De Vera v. Long Beach Pub. Transportation Co. (1986) 180 Cal.App.3d 782, 795-797 [jury instruction on willful suppression of evidence allowed where common carrier negligently failed to preserve evidence concerning bus accident].)

Second, defendants argue the trial court should not have given CACI No. 320 [“Interpretation-Construction Against Drafter”] and CACI No. 351 [“Special Damages”]. Defendants have not demonstrated prejudicial error because these instructions were given. (Soule v. General Motors Corp., supra, 8 Cal.4th at pp. 580-581; People v. Watson, supra, 46 Cal.2d at p. 836.) Third, defendants argue CACI No. 1703 [“Defamation per quod-Essential Factual Elements (Private Figure-Matter of Public Concern)”] should have been given. Defendants have failed to demonstrate any prejudice resulted from the failure to give CACI No. 1703. (Soule v. General Motors Corp., supra, 8 Cal.4th at pp. 580-581; People v. Watson, supra, 46 Cal.2d at p. 836.)

Fourth, defendants argue they were “force-fed” the verdict form by the trial court, thereby intimidating defense counsel not to object. Defendants cite as error the absence of a special verdict on the defamation and interference causes of action as recommended by CACI Nos. 1704 and VF-2002. However, defendants failed to object to the special verdict form before the jury was discharged. Defendants also stipulated to the verdict form. Defendants’ verdict form contentions are forfeited. (Woodcock v. Fontana Scaffolding & Equip. Co. (1968) 69 Cal.2d 452, 456, fn. 2; Jensen v. BMW of North America (1995) 35 Cal.App.4th 112, 131.) And the suggestion the defense attorneys were intimidated, browbeaten, or frightened to the point that they were too timorous to object is entirely untrue. The defense attorneys, particularly Mr. Kim, stood their ground and interposed objections when they disagreed with the trial court’s rulings.

g. the punitive damages award

1. Mr. Lyons’ testimony

Defendants argue the punitive damage award must be set aside because: Mr. Lyons was allowed to testify during the punitive damages phase of the trial; the parties had stipulated that undisclosed expert witnesses could not be called; the trial court issued an order to that effect; and Mr. Lyons was not disclosed as an expert witness on the issue of defendants’ financial condition. Defendants objected on the ground Mr. Lyons was not disclosed as a expert witness for the punitive damages phase of the trial and they did not have the opportunity to depose him on this issue. The trial court overruled the objection on the ground the undisclosed expert stipulation and order did not encompass Mr. Lyons who was called to rebut defendants’ financial condition evidence. We find no abuse of discretion.

First, the financial condition information was submitted by Mr. Kho, an accountant retained by Mr. Kao. The stipulation and order state: “6. This stipulation and Order does not apply to any opinion and/or the basis of any opinion that is only offered in rebuttal, where the opinion to which the rebuttal is offered . . . at trial and was not disclosed prior to trial.” Mr. Lyons was called to rebut the financial condition information submitted by defendants. The trial court did not err in admitting Mr. Lyons’ rebuttal testimony based on the stipulation. (Code Civ. Proc., §§ 2016.030, 2034.300, 2034.310, subd. (b).)

Second, Civil Code section 3295, subdivisions (a)(1) and (c) preclude a plaintiff from conducting pretrial discovery to obtain evidence of financial condition to support a punitive damages claim without a court order. In order to obtain such an order, a plaintiff must establish “a substantial probability” of prevailing on the claim. (Civ. Code, § 3295, subd. (c).) Thus, no pretrial discovery on the issue, was permitted, in the absence of a court order. After the verdicts on liability and non-punitive damages were returned, the trial court issued an order on November 28, 2005, directing defendants to produce evidence of their financial condition by 3 p.m. the following day. Thus, there was no pretrial evidence on which a witness could base an opinion prior to the trial court’s post-verdict order. Once defendants complied with the order, plaintiffs offered to submit Mr. Lyons for an Evidence Code section 402 examination. Defendants declined plaintiffs’ offer. Defendants knew that plaintiffs intended to request a punitive damages award. We agree with the trial court that defendants knew or should have known that plaintiffs would call a witness to counter the financial condition information, which was submitted by Mr. Kho. Under the circumstances, the trial court did not abuse its discretion in allowing Mr. Lyons to rebut defendants’ financial condition evidence.

2. Sufficiency of the evidence

Defendants argue there was no evidence they acted maliciously. Civil Code section 3294, subdivision (a) provides, “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” Citing Bardis v. Oates (2004) 119 Cal.App.4th 1, 7, 25, defendants argue we utilize a de novo standard of review. Bardis held that a de novo standard of review is used to determine whether a punitive damages award is so excessive it violates the federal due process clause. (Bardis v. Oates, supra, 119 Cal.App.4th at p. 18; see Romo v. Ford Motor Co. (2002) 99 Cal.App.4th 1115, 1149-1152, disapproved on a different point in People v. Ault (2004) 33 Cal.4th 1250, 1272, fn. 15.) Bardis further held: “Under California law, a punitive damages award may be reversed as excessive ‘only if the entire record, viewed most favorably to the judgment, indicates the award was the result of passion and prejudice.’ (Stevens v. Owens-Corning Fiberglas Corp. (1996) 49 Cal.App.4th 1645, 1658.)” (Bardis v. Oates, supra, 119 Cal.App.4th at p. 25.)

We agree with plaintiffs that whether an award lacks evidentiary support is examined under a substantial evidence standard of review which accords all presumptions in favor of the verdict. (Kelly v. Haag (2006) 145 Cal.App.4th 910, 916; Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1536, fn. 10; see also Baxter v. Peterson (2007) 150 Cal.App.4th 673, 679.) The jury was presented with evidence that Mr. Kao misrepresented to the Southern California Chinese community, including plaintiffs’ existing customers and their prospective advertisers, the nature and scope of the injunction. The Permanent Injunction Packet contained a document which showed that Chinese Yellow Pages had only ordered 80,000 copies of the directory. In conjunction with the packet, defendants disseminated radio advertisements over the largest Chinese language radio station. The advertisements could lead a listener to conclude that plaintiffs cheated advertisers. The jury found the statements were defamatory and warranted punitive damages. Thus, the record contains sufficient evidence that defendants acted maliciously.

h. judicial notice requests

In connection with defendants’ causation contentions and its various challenges to Mr. Lyons’ opinions, they have requested judicial notice of the statistical abstracts from United States Census Bureau and the California Department of Finance. According to defendants, the abstracts would show that Mr. Lyons’ opinions were based on false conclusions because there was a decline nationally in industrial production in 2001, 2002, and 2003. For California, defendants argue that this state’s economic growth dropped from 9.1 percent in 2000 to 2.0 percent in 2001 with a decline of about $720 million from 2000 to 2001. The judicial notice request is denied because defendants failed to present the evidence at trial and have offered no explanation as to why it was not presented there to counter the Mr. Lyons’ opinions. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3; Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 813.) Furthermore, judicial notice is also improper because opinion testimony would be required to explain the meaning of the statistical data as it applied in this case. (Schuhart v. Pinguelo (1991) 230 Cal.App.3d 1599, 1609, fn. 7; Dean W. Knight & Sons, Inc. v. First Western Bank & Trust Co. (1978) 84 Cal.App.3d 560, 568.) The evidence showed that there was a limited and specialized market for advertisements for the Southern California Chinese community yellow pages. In other words, we lack expertise or even an evidentiary basis to consider these statistics as undisputed evidence that if there was a economic decline in the national and state economies, there was no potential growth for plaintiffs’ directories during the applicable period. (See Evid. Code, § 452, subd. (h); Edelstein v. City and County of San Francisco (2002) 29 Cal.4th 164, 171, fn. 3.)

Plaintiffs seek judicial notice of documents showing the real property appraisal report submitted in support of a motion to stay enforcement of the judgment. Plaintiffs claim that such documents would establish that Mr. Kao “and/or” his financial statement misstated his true financial condition. These documents are subject to interpretation and dispute and as such are not proper matters for judicial notice. (StorMedia, Inc. v. Superior Court (1999) 20 Cal.4th 449, 457, fn. 9; Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 569; Kilroy v. State (2004) 119 Cal.App.4th 140, 145.) More importantly, the content of the documents is not material to any issues raised in this appeal. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2; Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748 fn. 6.) Accordingly, plaintiffs’ judicial notice requests are denied.

IV. DISPOSITION

The judgment is reversed only insofar as it finds a contract breach recurred. The judgment is affirmed in all other respects. Plaintiffs, Chinese Yellow Pages, Inc. and Chinese Yellow Pages, LP, are awarded their costs on appeal from defendants, Chinese Overseas Marketing Service Corporation and Alan Kao.

We concur: ARMSTRONG, J., KRIEGLER, J.