## Facts

- A Mexican AT&T affiliate contracted with a Mexican construction company to build a factory in Guadalajara; after termination for poor work, the affiliate pursued arbitration.
- A Mexican law firm and its attorney were retained on a contingency fee to prosecute the matter; after a $7.8 million arbitration award, the parties renegotiated so counsel would receive about half of any amount collected, and the client would not revoke counsel’s collection authority or settle without consent.
- The contractor mounted a public-relations campaign that drew government attention; AT&T directed an internal investigation conducted in Mexico and concluded continued enforcement efforts harmed AT&T’s business interests in Mexico.
- The affiliate revoked counsel’s power of attorney and decided not to pursue collection of the award, eliminating counsel’s expected contingent fee.
- Counsel sued AT&T and Lucent for intentionally inducing the affiliate to breach the fee agreement by revoking collection authority and abandoning collection.

## Issues

1. Under California’s governmental interest choice-of-law test, whether New York law or the law of Jalisco, Mexico governed the tortious interference claim.
2. Whether Jalisco law recognizes a cause of action analogous to tortious interference with contract, and, if reframed as an “illicit acts” theory, whether the claim was time-barred and properly preserved.

## Decision

- The Ninth Circuit affirmed summary judgment for AT&T and Lucent.
- Applying California choice-of-law rules, the court held Jalisco law governed because the dispute and relevant conduct were centered in Mexico and Mexico’s regulatory interest would be more impaired if its law were displaced.
- The court accepted that Jalisco law does not recognize a standalone tort of interference with contract.
- Any alternative “illicit acts” theory was not reached because the plaintiff waived appellate challenge to the district court’s limitations ruling that such a claim was untimely.

## Legal Principles

- In diversity cases, a federal court applies the forum state’s choice-of-law rules.
- California’s governmental interest approach asks (1) whether there is a true conflict, (2) each jurisdiction’s interest in applying its law, and (3) which interest would be more impaired if its law were not applied.
- When the gravamen of a dispute concerns relationships formed, performed, and regulated in a foreign jurisdiction, that jurisdiction’s law may govern despite a defendant’s incorporation elsewhere.
- If the applicable substantive law does not recognize the asserted cause of action, summary judgment is proper.
- Arguments not adequately raised or developed may be treated as waived on appeal, including challenges to a limitations ruling.

## Conclusion

The court held that Jalisco law governed a cross-border interference claim arising from Mexico-centered legal and business conduct, and because Jalisco did not recognize tortious interference—and any timely Mexican-law alternative was waived—the defendants were entitled to summary judgment.


Coufal Abogados v. AT&T, Inc., 223 F.3d 932 (9th Cir. 2000)