executive liable for false advertising can't be made to disgorge salary, 9th Circuit rules

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

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

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

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

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

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

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

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

Lanham Act: The disgorgement ruling was erroneous. “Casden’s salary is not his profits.” The statute says that, under the statute, to assess “profits,” the plaintiff “shall be required to prove defendant’s sales only” and the “defendant must prove all elements of cost or deduction claimed.” “But MET failed to show that Casden had any sales.” Hologenix made sales, but it wasn’t the defendant (citing Dewberry Group, Inc. v. Dewberry Engineers, Inc., 604 U.S. 321 (2025)). Without sales, no profits.

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