DC Modesto, LLC v. Sarkis CA5

Opinion

Filed 9/28/26 DC Modesto, LLC v. Sarkis CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

DC MODESTO, LLC et al. F089571 Plaintiffs and Respondents, (Super. Ct. No. CV-24-009363) v. ANGILBERT SARKIS, OPINION Defendant and Appellant.

APPEAL from a judgment of the Superior Court of Stanislaus County. John R. Mayne, Judge. Gavrilov & Brooks, Michael Coleman and Eliezer M. Cohen; Dhillon Law Group, Michael A. Columbo; Renner, Shaw, Mann and Christopher G. Renner for Defendant and Appellant. Frost, Christoper Frost, David Shackelford and Nicholas Lauber for Plaintiffs and Respondents. -ooOoo- Defendant and appellant Angilbert Sarkis appeals from an order granting a preliminary injunction in favor of plaintiffs and respondents DC Modesto, LLC doing business as Levels, CV Merced, Inc., and CV McHenry, Inc. (collectively, plaintiffs). We reverse. FACTUAL AND PROCEDURAL BACKGROUND I. The Parties Plaintiffs are the owners of three cannabis dispensaries that do business as “Levels” (Levels) located in Modesto and Merced. Plaintiffs filed suit against defendants Sarkis and “The Premier Group”1 alleging four causes of action against the defendants for violation of the Cartwright Act (Bus. & Prof. Code, § 16700 et seq.),2 unfair competition (id., at § 17200), interference with prospective economic advantage, and unjust enrichment due to the defendants’ alleged unfair and anticompetitive conduct. Sarkis has ownership interests in a number of cannabis dispensaries located throughout California, which he markets under the name “The Premier Group” (Premier), including two dispensaries located in Modesto: Phenos Collective, Inc. (PCI) and Patient Care First, Inc. (PCF). PCI and PCF were added as defendants to the litigation after plaintiffs filed their motion to obtain the preliminary injunction which is the subject of this appeal. Sarkis is the chief executive officer and president of PCI and PCF.

1 In his opening brief on appeal, Sarkis states that plaintiffs dismissed The Premier Group as a defendant in the litigation. Plaintiffs did not confirm this fact in their respondent’s brief and the dismissal is not mentioned in the appellate record. 2 Unless otherwise indicated, all further statutory references are to the Business and Professions Code.

2. II. The Complaint On November 19, 2024, plaintiffs filed their original complaint (the complaint)3 against defendants Sarkis and Premier (Sarkis defendants) and Does 1 through 50. The complaint identifies plaintiffs as “affiliated cannabis retailers located in Modesto and Merced …, that do business as Levels and [that] have common ownership and management.” The complaint identifies Premier as “a cannabis retailer with [10] locations including in Modesto, Merced” and other California locations, and states that Sarkis is “the owner and principal of Premier.” In the complaint, plaintiffs allege Sarkis and Premier, each, were, and are, “the agents, servants, alter egos and/or employees” of each other and other defendants, that Sarkis and Premier have “such a unity of interest and ownership that the individuality or separateness of Sarkis and Premier has ceased,” that all defendants were acting in concert with each other in doing the acts alleged in the complaint, and all defendants were members of an alleged conspiracy in violation of California law. Plaintiffs allege that Sarkis and Premier engaged in unfair and anticompetitive business practices to prevent plaintiffs from competing with them and “unlawful[ly] scheme[d] to prevent [plaintiffs] from having access to the popular cannabis brands and products it needs to entice customers to visit [plaintiffs’] store[s] and purchase [their] products.” Plaintiffs further allege Sarkis and Premier “decided to wield [their] substantial clout and influence by intimidating, coercing and threatening cannabis distributors with economic sanctions to inhibit and stifle [plaintiffs’] ability to compete for customers.” According to the complaint, Sarkis and Premier “threatened distributors 3 The register of actions reveals that plaintiffs amended their complaint on more than one occasion after filing their motion for a preliminary injunction. The amended complaints are not part of the record on appeal.

3. of popular cannabis products and brands that if [Sarkis] found out they were selling to [plaintiffs], … Premier would refuse to purchase their products.” Under their first cause of action, plaintiffs allege the Sarkis defendants’ conduct is “a per se illegal restraint of trade in violation of the Cartwright Act” (italics omitted) (§ 16720 et seq.), or if not a per se illegal restraint, that it “violates the [Cartwright] Act under the rule of reason.”4 Plaintiffs allege that, “unless restrained,” Sarkis and Premier “will continue to unreasonably limit, reduce or suppress actual and potential competition in the market and will continue to prevent [plaintiffs] from fairly competing.” In their second cause of action, plaintiffs contend the Sarkis defendants’ conduct is unfair, fraudulent, and unlawful under section 17200. In support of their section 17200 claim for fraudulent activity, plaintiffs allege the Sarkis defendants’ conduct violates Civil Code section 1710, subdivision 3.5 In support of their section 17200 claim for unlawful activity, plaintiffs allege the Sarkis defendants’ conduct violates California Administrative Code, title 14, section 15088.5.6 4 “Under [the] Cartwright Act …, some restraints of trade are treated as per se unlawful, while others are analyzed under the ‘rule of reason.’ ‘In general, only unreasonable restraints of trade are prohibited. [Citation.] However, “there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.” [Citation.] …’ Under the rule of reason, the challenged conduct is unlawful only if its anticompetitive effects outweigh its procompetitive effects.” (Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc. (2011) 198 Cal.App.4th 1366, 1374.) 5 Subdivision 3 of Civil Code section 1710 defines actionable “deceit” as “[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact.” 6 The California Administrative Code is now referred to as the California Code of Regulations. Section 15088.5 of title 14 of the California Code of Regulations pertains to the recirculation of environmental impact reports. Given the context of the litigation, we suspect the citation may be incorrect.

4. In their third and fourth causes of action, respectively, plaintiffs allege Sarkis and Premier’s unlawful, anticompetitive conduct has interfered with plaintiffs’ prospective economic advantage by preventing them from being able to stock certain brands of cannabis in order to compete against said defendants, and that said defendants have been unjustly enriched. III. The Motion for a Preliminary Injunction On December 16, 2024, plaintiffs filed their motion for a preliminary injunction against Sarkis and Premier. The motion was premised on plaintiffs’ contention that Premier had “enormous leverage over smaller-independent [cannabis] dispensaries and vendors” and used that leverage to “restrain trade and create a near-monopoly over the sale of cannabis” to plaintiffs’ detriment. Plaintiffs contend that Sarkis defendants “threatened distributors of popular cannabis products and brands that if [they] found out they were selling to Levels, that Premier would refuse to purchase their products.” Plaintiffs contend Sarkis defendants “made this threat to dozens of the distributors who sell the most popular cannabis products in the market, and, in particular, targeted the sellers of products stocked at [plaintiffs],” and that “distributors have acceded” to these threats “and are now too afraid to sell their products to [plaintiffs].” Specifically, plaintiffs contended Sarkis and Premier entered into “unlawful agreements with various vendors” and “prohibit[ed] those vendors [from] sell[ing] to any of Premier’s competitors, including [plaintiffs].” After a large number of objections to plaintiffs’ evidence in support of the motion were lodged by Sarkis, plaintiffs submitted additional evidence to support their motion with their reply paperwork. On January 24, 2025, the motion came on regularly for a hearing. The trial court concluded certain evidence submitted with plaintiffs’ reply paperwork appeared relevant to the merits of the motion and, rather than striking the evidence, permitted Sarkis to file a sur-reply. The hearing was continued to a later date.

5. Sarkis filed a sur-reply along with additional evidence in opposition to plaintiffs’ motion. In response, plaintiffs again filed additional evidence to support its motion but the trial court struck those filings as unauthorized. On February 19, 2025, the trial court heard oral arguments on plaintiffs’ motion and took the matter under submission. On February 25, 2025, the court issued its ruling after the hearing. In it, the court ruled on the parties’ respective objections to evidence in support and opposition to the motion. The court granted plaintiffs’ motion, modified plaintiffs’ proposed injunctive order, and required plaintiffs to post an undertaking in the amount of $20,000 to effectuate the preliminary injunction. IV. Evidence Submitted by Plaintiffs in Support of the Motion After the trial court ruled on the parties’ respective objections to evidence, the admissible evidence before the court included the following: A. Shan Bal’s Initial Declaration The following averments were made in the initial declaration of Shan Bal in support of plaintiffs’ motion for a preliminary injunction: Shan Bal, plaintiffs’ general manager and the owner of CV Merced, Inc. and CV McHenry, Inc., stated that plaintiffs operate three cannabis dispensaries “in areas in direct competition to Premier”—i.e., Modesto and Merced. Bal refers to plaintiffs’ dispensaries as “Levels,” which, presumably, is a fictitious business name under which the dispensaries operate. Bal states that Levels has been doing business since 2019, and that “Levels’[s] goal is to provide the best and largest selection of cannabis at an affordable price.” Bal declared, “Premier is the largest cannabis dispensaries [sic] in the Central Valley region, which gives Premier enormous leverage over independent dispensaries as well as cannabis vendors.” “On information and belief, … Sarkis is the owner and/or managing principal of Premier.”

6. Levels’s retail operations and Premier’s retail operations are “less than three miles away from each other and compete for the same customers” and both obtain their inventory from “various cannabis distributors that offer brand name products desired by consumers.” “Upon information and belief, Premier typically purchases 20 [to] 30 times (or greater) the volume of product as Levels from common distributors.” Cannabis “customers develop brand loyalty and seek out certain brands,” which makes it “essential that cannabis retailers, like Levels, carry popular brands.” Levels’s first store opened in 2019, and another store opened in April 2023. Up until that point and for a brief time thereafter, “Levels was able to stock and carry all of the most popular brands” but “starting in or around May of 2023, Levels started receiving calls from their vendors stating that they are no longer able to work with or supply [product] to Levels.” In his initial declaration, Bal attempted to attribute the alleged refusal of various cannabis distributors to sell product to Levels to communications between Sarkis and those distributors. Notably, the trial court sustained objections to Bal’s averments in that regard based primarily on grounds of hearsay. Similarly, the court sustained hearsay objections to the documents that Bal submitted in an effort to corroborate those averments. As a result, most of the evidence submitted by Bal in his original declaration was determined to be inadmissible by the court. Accordingly, we do not credit such matter in our review of the order granting plaintiffs’ motion for a preliminary injunction. B. Shan Bal’s Reply Declaration In his reply declaration, Bal averred that the following cannabis brands last accepted orders from Levels in the month and year indicated: Dimebag (May 2023); Gelato (June 2023); Smokie[z] (September 2023); Claybourne (March 2024); and High 90s (August 2024). In addition, Bal averred that the brand Bodega Boyz, which PCI carries, “has refused to accept any orders from Levels.”

7. Bal further declared that in 2021, he “instituted a business policy for all [his] stores that all products would be discounted 30%” in order to remain competitive, and “to attract and retain customers.” He submitted copies of webpages from Weedmaps.com showing the price PCI charged for seven different cannabis products from a total of four different brands or vendors (Himalaya, High 90s, Gelato, and Claybourne) and submitted Levels’s internal records which showed the prices charged by Levels for the same products. The internal records of Levels shows the date of sale at the price level indicated (ranging from April 5, 2023, through July 29, 2024) but the webpages showing the advertised prices of PCI for those same products are undated and Bal did not provide dates for those webpages in his declaration. The trial court sustained an objection to Bal’s averment that the brands identified in his reply declaration refused to sell to Levels at the request of Sarkis or his corporations. Consequently, there is no admissible evidence to that effect in either Bal’s initial declaration or his reply declaration. Plaintiffs have not argued on appeal that objections were sustained by the trial court in error. In their respondents’ brief, plaintiffs acknowledge that the court “sustained the majority of Sarkis’s evidentiary objections … and overruled all of Plaintiffs’ objections to Sarkis’s evidence” and state, “[i]n advancing their arguments …, Plaintiffs only rely upon evidence admitted by the trial court.” C. Alexis Maxwell’s Declaration Alexis Maxwell averred that she is a “sales representative at Kiva Sales and Services (‘Kiva’),” which sells approximately 20 different cannabis brands and supplies to cannabis dispensaries, and that, since approximately October 2024, she was assigned Kiva’s account with Levels. She declared, “The brands Kiva is prohibited from selling to 8. Levels include Gelato among others.” There is no admissible evidence of the reason for this prohibition in the record on appeal.7 D. Klent Jewett’s Declaration Klent Jewett declared that he is the manager and owner of Illa Guerilla, LLC; that “[s]ometime after August 2023, a sales representative from [Premier]/[PCI] informed [him] that if Illa Guerilla LLC were to work with or sell to Levels, then [Premier] would cease ordering from Illa Guerilla LLC”; that “[s]ince in or around August 2023, [Premier] has not purchased any orders from Illa Guerilla LLC; and that he communicated these facts to Shan Bal. V. Evidence Submitted by Sarkis in Opposition to the Motion8 Also before the trial court was the following evidence submitted by Sarkis. A. Sarkis’s Initial and Sur-Reply Declarations Sarkis made the following averments in his original declaration: Sarkis states he has ownership interests in a number of cannabis dispensaries located throughout the state of California; that the dispensaries he owns in whole or in part are marketed under Premier; that he is the chief executive officer and president of PCI and PCF located in Modesto; and that he oversees inventory purchases for his dispensaries. He stated that 7 Sarkis objected to the declaratory statement to which this footnote is appended. However, the trial court did not rule on the objection and Sarkis has not renewed the objection on appeal. In any event, whether Kiva was prohibited from selling certain brands to Levels appears to be a matter within the personal knowledge of Maxwell—but the reason for this prohibition is not contained in any admissible evidence. The court sustained objections to statements by Maxwell wherein she averred that “it is common knowledge” that PCF maintains a “do-not-sell to list created by … Sarkis.” Consequently, we do not credit the latter averment. 8 Among the sur-reply evidence submitted by Sarkis was a declaration from his attorney indicating his discussions with opposing counsel in an attempt to clarify contentions made in plaintiffs’ moving papers and, pursuant to the trial court’s request at the January 24, 2025 initial hearing, to clarify the actual relief that plaintiffs were seeking in their proposed order. The declaration is not relevant to the issues before us and has no bearing on our opinion.

9. Premier “is not a business entity” or a registered fictitious business name—it is only a marketing phrase he uses to describe his cannabis-related companies. Sarkis declared that Modesto has “several other dispensaries … including the massive conglomerate, Cookies, which has developed global recognition” and has “over 70 retail locations, including a storefront minute[s] from [a Levels] shop.” Sarkis described some of his business strategies including, without limitation, ensuring his dispensaries offer competitive pricing, and that his retail salespeople “offer excellent customer service.” “One important business strategy,” he declares “is ensuring products in [his] stores are not oversaturated by other products in the same market. [He] make[s] intentional decisions about what inventory [he] want[s] in [his] stores.” Sarkis stated that having “shelves … stocked with top-tier, desirable products, [that] are not oversaturated in the relevant market, is important to our business model.” Sarkis declared that like other industries, “the cannabis market has top-tier, mid-level, and low-tier retailers”; that his dispensaries “are top-tier brick and mortar dispensaries that provide a unique and exciting shopping experience…. Lower-tier stores, such as those [p]laintiffs operate, often feel like a corner store or ‘bodega.’ ” Sarkis declared that he has “no problem selling the same products as other top-tier competitors”; that he competes with top-tier dispensaries by providing “the same or similar products at competitive prices”; that this “fosters competition among the top-tier retailers, and benefits our brand in the marketplace”; that he does “not wish for [his] stores to be associated with mid-level and low-tier stores and thus, [he] aim[s] to carry different products to prevent customer confusion”; and that “when Levels began carrying certain products also available at [PCI] and PCF, [he] became less inclined [to] have [his] employees re-purchase those products.” “Upon learning of this business decision,” he stated, “it appears that some of those distributors started declining to sell to Levels.” He denied, however, that he ever “demand[ed] or coerce[d] the distributors to stop selling to 10. Levels” and denied that “any of [his] dispensaries have agreements that require distributors to refuse business to Levels.” Sarkis declared that PCI and PCF “sell many of the same products as [Levels]” but that they are sold “at lower prices.” Sarkis stated that he confirmed this by comparing prices for these products sold in common by Levels, PCI and PCF, as advertised on Weedmaps.com, and stated it was his understanding that cannabis retailers control the pricing for their products that appear on Weedmaps.com. Sarkis further stated that he “discovered several brands on Levels’[s] webpage, which Levels now erroneously claims they are blocked from purchasing from distributors” and that, when he “accessed Levels’[s] webpage in December of 2024, the company was advertising products for sale from brands like Gelato, Claybourne, High 90s, Dimebag, and Smokiez.” Sarkis attached to his declaration copies of the webpages referenced in this paragraph. In his sur-reply declaration, Sarkis further averred that he “do[es] not recall personally working with or communicating with … Illa Guerilla, LLC, … Klent Jewett” or with “Kiva Sales and Services, or Alexis Maxwell.” Sarkis reiterated that he “never prohibited a distributor from selling to [Levels], and ha[s] never stated or suggested that [he] would ‘penalize’ or ‘retaliate’ against a distributor selling to [Levels].” He candidly admits, however, that he “ha[s] communicated to distributors that we do not want to stock certain products that are sold in lower tier stores” and that, just as distributors “have the discretion to sell their products to whoever they want to,” “[PCI] and PCF have the discretion to determine which products to sell.” Sarkis identified a number of factors that influence his decisions on which products to sell “including market saturation, price, prior sales metrics, and future sales projections.” He indicated his dispensaries “must be selective with the brands we choose to work with, and the products [PCI] and PCF sell. If a brand suddenly becomes oversaturated due to widespread availability, or its prestige diminished because it is sold 11. in lower tier stores or all over town, its availability on our shelves negatively impacts” the PCI and PCF brands. Sarkis stated he “developed this strategy by observing other successful retailers that do not carry products that are saturated in other lower tier retailers.” He identified more than a dozen well-known companies he contends employ a similar strategy. He also stated he has employed this strategy “since before Levels opened a store in Modesto.” Sarkis stated that the largest cannabis retailers in Modesto, which also operate “throughout the Central Valley and much of California, are Cookies and Stiizy,” that both retailers have stores within three minutes of plaintiffs’ stores, and that both retailers (and other cannabis retailers) carry the same cannabis brands as PCI and PCF. He stated that “there are several thousands of product lines that are on the market and which [p]laintiffs, and other retailers, can choose to sell.” B. Natasha Parra’s Declaration In her declaration, Natasha Parra declared that she is “an independent contractor who does work for several different cannabis dispensaries, including [PCI] and [PCF]”; and that she is “a compliance and licensing manager” for PCI and PCF and “ha[s] been performing a variety of services for these dispensaries … since approximately 2017.” She compiled, and created a table of, information concerning “a handful of brands which are sold by [PCI] and [PCF].” Included in that information was the “out-the-door price” charged by PCI and PCF for select products within those brands. She stated her “data reveals an overall decrease in prices of [p]roducts sold by PCF and [PCI].” However, she clarified that her data does not include all products within the selected brands that are sold by PCF and PCI, and that other brands and products are also sold by PCF and PCI. The reduction in prices “is part of the companies’ overall strategy to price their products as competitively as possible.” She stated that, based on her “eight years of experience in the cannabis industry” as well as her “discussions with other industry professionals” and her “ongoing research of sales trends,” “[she] ha[s] noticed a general trend of decreasing 12. sales over the last few years” and that “consumers have generally been spending less and less money on cannabis.” Parra further stated that she has “never coerced or threatened any cannabis distributors, and [is] not aware of anyone associated with [PCI] or PCF making any such threats.” C. Kayla Pinedo’s Declaration Kayla Pinedo declared that she “ha[s] been the purchasing manager for PCF and [PCI] for at least the last six years” and that she is “the person that ultimately provides and orders all product for PCF and [PCI], and [is] the only employee authorized to do so.” With regard to Jewett’s declaration in support of plaintiffs’ motion, Pinedo declared she “ha[s] not purchased any products from Illa Guerilla since around August 2023” because the representative who worked for Illa Guerilla, named Tyler, and with whom they were used to working with, began working for a different distributor. She averred that the products distributed by Illa Guerilla are distributed by other companies including Tyler’s current employer, and that PCF and PCI “continue to purchase the same products that [they] previously purchased from Illa Guerilla” from Tyler. Pinedo declared that she “do[es] not actively reach out to distributors to order products; rather, distributors contact [her]” and solicit PCF and PCI’s business. She averred that “Illa Guerilla has only solicited … product sales” from her twice since August 2023 and that she opted not to order the products through Illa Guerilla because she “had already ordered those products from other sources” or the products were “older products that [they] didn’t want to carry.” She stated that she did not stop ordering products from Illa Guerilla because it was selling product to Levels and that she “was unaware of Illa Guerilla even selling products to [Levels].” She also observed that “[i]t is 13. unclear what ‘sales representative’ Mr. Jewett is referring to [in his declaration], as [she is] the only employee authorized to make the purchasing decisions.” Pinedo averred she “ha[s] never prohibited a distributor from selling to [Levels], and ha[s] never stated or suggested that [she] would ‘penalize’ or ‘retaliate’ against distributors selling to [Levels].” She stated that “[their] stores invest in marketing and displaying a limited number of brands.” Like Sarkis, she avers that she has told distributors that she “do[es] not want to stock … certain brands if they are widely available and sold at all stores across town, and specifically if those brands are also sold at lower tier ‘mom and pop’ stores.” VI. The Preliminary Injunction Issued by the Trial Court On March 10, 2025, the trial court issued a formal order granting plaintiffs’ motion for a preliminary injunction. The order provided as follows:

“[Sarkis defendants], and each of them, any of their officers, directors, agents, servants, employees, and attorneys, and all persons acting in concert or in participation with [Sarkis defendants], and each of them, are hereby enjoined and restrained from:

“1. Requiring, requesting, or communicating with distributors, suppliers, vendors, firms, or corporations [Sarkis defendants] do business with to cease selling products to Plaintiffs;

“2. Continuing, maintaining, entering into, and attempting to enter into any agreement or understanding with any distributor, supplier, vendor, firm, or corporation to limit supply or to refuse to sell products to Plaintiffs and/or any other retailer[;]

“3. Urging, inducing, coercing, or pressuring, or attempting to urge, induce, coerce, or pressure any distributor, supplier, vendor, firm, or corporation it does business with to limit supply or to refuse to sell products to Plaintiffs and/or any other retailer[;]

“4. Refusing to purchase any product from distributors, suppliers, vendors, firms or corporations where the reasons for such refusal or discrimination is, in whole or in part, express or implied, that the distributors, supplier, vendor, firm, or corporation selling the product has sold or proposed to sell the same product to Plaintiffs[;]

14. “5. Retaliating against, penalizing, imposing any consequence, or otherwise taking any adverse action against any distributors, suppliers, vendors, firms or corporations including but not limited to, cancelling, terminating, refusing to renew or in any manner impairing any contract, agreement or understanding, express or implied, to purchase from said entity for the reason, in whole or in part, that such person, firm or corporation sold product or proposes to sell product to Plaintiffs and/or any other retailer;

“6. Including Plaintiffs on any ‘Do-Not-Sell’ lists that [Sarkis defendants] distribute or otherwise communicate with their distributors, suppliers, vendors, firms, and/or corporation;

“7. Purchasing any product from distributors, suppliers, vendors, firms or corporations on the condition, agreement or understanding, express or implied:

“A. That the distributor, supplier, vendor, firm, or corporation selling the product shall not sell the product to Plaintiffs or any other retailer;

“B. That the distributor, supplier, vendor, firm, or corporation only sell product to [Sarkis defendants] and not [to] Plaintiffs or other retailers[;]

“8. Participating or attempting to participate in any form of monopolization, unlawful restraints of trade, and other unlawful trade practices, including without limitation, requiring distributors, suppliers, vendors, firms, or corporations they do business with to stop selling to Plaintiffs and/or other retailers;

“9. Such other equitable relief as the Court deems just and appropriate.

“[Sarkis defendants], and each of them, and any of their officers, directors, agents, servants, employees, and attorneys, and all person acting in concert or in participation with [Sarkis defendants], and each of them, are hereby required to:

“10. Immediately cease and desist from the above-described unlawful restraints of trade, monopolization, and attempted monopolization[;]

15. “11. Immediately remove Plaintiffs from any ‘Do-Not-Sell’ lists that [Sarkis defendants] distribute or otherwise communicate to their distributors, suppliers or vendors;

“12. Immediately permit and allow distributors, suppliers, and vendors that [Sarkis defendants] do business with to sell products to Plaintiffs without consequence, penalty, retaliation, fear of retaliation, or otherwise any adverse action from [Sarkis defendants]. [Sarkis defendants] shall communicate to such distributors, suppliers, and vendors that they are authorized to sell to Plaintiffs and that doing so will not result in any adverse action, penalty, or restriction.

“[T]he above Preliminary Injunction is effective on March 7, 2025 or upon posting of the bond/undertaking, whichever is later. Plaintiffs are required to file a bond or undertaking in the sum of twenty-thousand dollars ($20,000.00) within ten (10) court days of entry of this order.” On March 20, 2025, plaintiffs gave notice that they had posted the required bond, and the preliminary injunction went into effect according to its terms. VII. The Appeal On March 25, 2025, Sarkis timely appealed the trial court’s order granting plaintiffs’ motion for a preliminary injunction. DISCUSSION I. Standard of Review “ ‘ “The general purpose of a preliminary injunction is to preserve the status quo pending a determination on the merits of the action. [Citation.] ‘ “The granting or denial of a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy. It merely determines that the court, balancing the respective equities of the parties, concludes that, pending a trial on the merits, the defendant should or … should not be restrained from exercising the right claimed by him [or her].” ’ ” ’ ” (Jamison v. Department of Transportation (2016) 4 Cal.App.5th 356, 361.) “The trial court’s decision on the propriety of granting … injunctive relief is reviewed for abuse of discretion [citations], but its underlying factual determinations are reviewed for substantial evidence [citation], and its resolution of legal issues is subject to 16. de novo review.” (DiQuisto v. County of Santa Clara (2010) 181 Cal.App.4th 236, 276– 277.) We consider “whether the trial court abused its discretion in ‘ “evaluat[ing] two interrelated factors when deciding whether or not to issue a preliminary injunction. The first is the likelihood that the plaintiff will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm the defendant is likely to suffer if the preliminary injunction were issued.” ’ ” (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1109.) II. Preliminary Injunctions “A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor.” (Code Civ. Proc., § 527, subd. (a).) A party moving for injunctive relief must make the necessary showing with admissible evidence. (People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 21.) “ ‘An injunction may grant both prohibitive and mandatory relief ….’ ” (Ironridge Global IV, Ltd. v. ScripsAmerica, Inc. (2015) 238 Cal.App.4th 259, 265, fn. 4.) A prohibitory injunction “requires no action [on the part of enjoined party] and merely preserves the status quo,” whereas a mandatory injunction requires the enjoined party to take affirmative action. (Daly v. San Bernardino County Bd. of Supervisors (2021) 11 Cal.5th 1030, 1035.) “When … the preliminary injunction mandates an affirmative act that changes the status quo, it is scrutinized even more closely on appeal: ‘ “ ‘ “The judicial resistance to injunctive relief increases when the attempt is made to compel the doing of affirmative acts. A preliminary mandatory injunction is rarely granted, and is subject to stricter review on appeal.” ’ ” ’ ” (City of Corona v. AMG Outdoor Advertising, Inc. (2016) 244 Cal.App.4th 291, 299.) “ ‘ “[T]he granting of a mandatory injunction pending the trial, and before the rights of the parties in the subject matter which the injunction is designed 17. to affect have been definitely ascertained …, is not permitted except in extreme cases where the right thereto is clearly established and it appears that irreparable injury will flow from its refusal.” ’ ” (Santa Clara Valley Water Dist. v. Eisenberg (2025) 117 Cal.App.5th 714, 728.) Sarkis contends aspects of the preliminary injunction are mandatory because they require that plaintiff purchase products it does not want. Plaintiffs concede portions of the preliminary injunction are mandatory but they argue those provisions “are necessary to effectuate the prohibitory purpose [of the injunction] and prevent evasion,” citing People ex rel. Brown v. iMergent, Inc. (2009) 170 Cal.App.4th 333. In iMergent, the court issued a preliminary injunction that enjoined the defendant “from conducting any further business in California without first complying with” the Seller Assisted Marketing Plan (SAMP) Act’s9 disclosure provisions, an Act to which it was subject. (iMergent, at p. 342.) The Act “imposes a duty on the seller of SAMP’s to make certain disclosures to the Attorney General and the prospective purchasers.” (iMergent, at p. 336.) Plaintiffs’ quote the iMergent court wherein it wrote: “Any aspects of the injunctions that require [the] defendants to engage in affirmative conduct are merely incidental to the injunction’s objective to prohibit [the] defendants from further violating California’s consumer protection law. Accordingly, the injunction is prohibitory in nature.” (Id. at p. 342.) The iMergent court distinguished it from cases that involved injunctions that were mandatory in nature, for example Paramount Pictures Corp. v. Davis (1964) 228 Cal.App.2d 827 where the actress Bette Davis was sued for specific performance of a contract to act in a movie and the injunction prohibited her from “performing any work as an actress prior to completing her contract with Paramount, even for her current employer.” (People ex rel. Brown v. iMergent, Inc., supra, 170 Cal.App.4th at pp. 342– 343, citing Davis at pp. 833–834, 838.) The iMergent court stated the Davis injunction 9 Civ. Code, § 1812.200 et seq.

18. was mandatory “because it compelled her ‘to violate her contract with [her current employer] and to surrender a status and rights lawfully held by her ….’ ” (iMergent, at p. 343.) The iMergent court continued: “In Ambrose v. Alioto (1944) 62 Cal.App.2d 680, another specific performance case, the defendant was ordered to deliver fish to the plaintiff and enjoined from performing her current contract to deliver fish to another company. The court concluded that the injunction was mandatory, reasoning as follows: ‘The result and effect of the decree is not only mandatory in character but compels the performance of a substantive act and also contemplates a change in the relative position or rights of the parties which existed at the time the decree was entered.’ ” (iMergent, at p. 343, citing Ambrose, at p. 686.) Here, at least two provisions of the preliminary injunction are mandatory in nature—paragraph 4 which enjoins the Sarkis defendants from refusing to purchase products where the reason for the refusal is, “in whole or in part,” due to the fact that same product has been sold to Levels, and paragraph 5 which enjoins the Sarkis defendants from refusing to renew contracts on substantially the same grounds. These provisions do not merely maintain the status quo. They require that the Sarkis defendants enter into additional contracts they may not wish to enter into for reasons based on their subjective intent and not tied to any alleged unlawful combination or conspiracy. At a minimum, the injunction warrants this court’s close scrutiny. (City of Corona v. AMG Outdoor Advertising, Inc., supra, 244 Cal.App.4th at p. 299.) III. The Cartwright Act The Cartwright Act “ ‘generally outlaws any combinations or agreements which restrain trade or competition or which fix or control prices’ [citation], and declares that, with certain exceptions, ‘every trust is unlawful, against public policy and void’ (§ 16726).” (Pacific Gas & Electric Co. v. County of Stanislaus (1997) 16 Cal.4th 1143, 1147, italics added.) The Cartwright Act defines a “trust” as follows:

19. “A trust is a combination of capital, skill or acts by two or more persons for any of the following purposes:

“(a) To create or carry out restrictions in trade or commerce.

“(b) To limit or reduce the production, or increase the price of merchandise or of any commodity.

“(c) To prevent competition in manufacturing, making, transportation, sale or purchase of merchandise, produce or any commodity.

“(d) To fix at any standard or figure, whereby its price to the public or consumer shall be in any manner controlled or established, any article or commodity of merchandise, produce or commerce intended for sale, barter, use or consumption in this State.

“(e) To make or enter into or execute or carry out any contracts, obligations or agreements of any kind or description, by which they do all or any or any combination of any of the following:

“(1) Bind themselves not to sell, dispose of or transport any article or any commodity or any article of trade, use, merchandise, commerce or consumption below a common standard figure, or fixed value.

“(2) Agree in any manner to keep the price of such article, commodity or transportation at a fixed or graduated figure.

“(3) Establish or settle the price of any article, commodity or transportation between them or themselves and others, so as directly or indirectly to preclude a free and unrestricted competition among themselves, or any purchasers or consumers in the sale or transportation of any such article or commodity.

“(4) Agree to pool, combine or directly or indirectly unite any interests that they may have connected with the sale or transportation of any such article or commodity, that its price might in any manner be affected.” (§ 16720, italics added.) IV. The Cartwright Act Cause of Action With regard to plaintiffs’ Cartwright Act claim, Sarkis argues, among other things, that the Act “does not prohibit unilateral conduct” and observes that the Act requires “a combination of capital, skill or acts by two or more persons” (§ 16720, italics added).

20. Sarkis cites to Bondi v. Jewels by Edwar, Ltd. (1968) 267 Cal.App.2d 672 (Bondi), wherein the court stated the Act “contemplates concert of action by separate individuals or entities maintaining separate and independent interests” (id. at p. 678). Sarkis argues that, to the extent plaintiffs are alleging a combination or conspiracy between Sarkis and his affiliated dispensaries, no Cartwright Act violation can be shown because he and his dispensaries do not maintain separate and independent interests. Sarkis further argues there is no evidence that he or his dispensaries entered into any agreement to boycott plaintiffs’ dispensaries. Sarkis contends the conduct that forms the basis of plaintiffs’ claims is unilateral conduct and is protected under the holding in United States v. Colgate & Co. (1919) 250 U.S. 300 (Colgate). Plaintiffs contend Sarkis has forfeited any argument based on the Colgate holding because Sarkis failed to make any mention of the case at the trial court level. Plaintiffs also argue that “[t]he trial court reasonably and implicitly inferred that Sarkis’s efforts to ‘freeze out the competition’ … resulted in implied agreements not to sell product to [p]laintiffs.” Plaintiffs argue the Jewett declaration, along with “reasonably drawn inferences from Sarkis’s declaration, significantly his failure to deny his efforts to ‘freeze out the competition’ …, is sufficient to uphold the injunction.” A. No Forfeiture of Argument Based on Colgate We disagree with plaintiff’s contention that Sarkis has forfeited any argument based on Colgate. Sarkis argued to the trial court that his conduct was unilateral and that unilateral conduct is insufficient to constitute violation of the Cartwright Act. He cited numerous cases in support of the proposition, including several cases that expressly relied on the holding in Colgate including, without limitation, G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 267–268 (G.H.I.I.), Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 720, and Drum v. San Fernando Valley Bar Assn. (2010) 182 Cal.App.4th 247, 254 (Drum). “[T]he doctrine of forfeiture does not apply where … a party raises additional 21. support for a theory that was argued below.” (Unilab Corp. v. Angeles–IPA (2016) 244 Cal.App.4th 622, 641, fn. 7.)

B. No Conspiracy Based on Combination/Agreement Between Sarkis Defendants, PCI and/or PFC In Bondi, the plaintiff and the defendants were competitors in the jewelry business. (Bondi, supra, 267 Cal.App.2d at p. 674.) The defendants included the corporation (i.e., the defendants’ jewelry store) and its officers and directors. (Ibid.) One of the defendant officers/directors asked the plaintiff to close his business and to come work for defendants’ jewelry store. (Ibid.) The plaintiff did so. (Ibid.) After the plaintiff closed his business, the defendants reneged on their promise to employee the plaintiff. (Id. at pp. 674–675.) The plaintiff sued for breach of contract, promissory fraud, and for violation of the Cartwright Act. (Id. at pp. 674–676.) The trial court sustained a general demurrer to each of the three causes of action and entered a judgment of dismissal. (Id. at pp. 673–674.) On appeal, the Bondi court reversed the judgment of dismissal but determined that the demurrer was properly sustained as to the third cause of action for violation of the Cartwright Act. (Bondi, supra, 267 Cal.App.2d at p. 678.) The Bondi court observed that the plaintiff was claiming “the defendant corporation entered into a combination or conspiracy with its officers and directors, who were at all times acting as the agents of the corporate defendant.” (Id. at p. 677.) The court held that the Cartwright Act “contemplates concert of action by separate individuals or entities maintaining separate and independent interests” and determined the plaintiffs’ Cartwright Act cause of action “charges only wrongful conduct on the part of a single entity acting through its officers and agents.” (Id. at p. 678.) “[A] corporation cannot conspire with itself or its agents for purposes of the antitrust laws.” (Kolling v. Dow Jones & Co., supra, 137 Cal.App.3d at p. 720.)

22. To the extent plaintiffs or the trial court may have relied on an alleged conspiracy between Sarkis, Premier, PCI, and PCF (or any combination of them), we agree with Sarkis that such concerted action is not actionable under the Cartwright Act. C. Unilateral Conduct and the Absence of Evidence of an Agreement As mentioned, Sarkis also argues the conduct that forms the basis of plaintiffs’ claims is unilateral conduct protected under the holding in Colgate. In Colgate, the United States Supreme Court affirmed the sustaining of a demurrer and the quashing of an indictment against Colgate & Company brought under the Sherman Act.10 (Colgate, supra, 250 U.S. at pp. 301–302, 308.) The issue before the court was “ ‘whether a manufacturer of products shipped in interstate trade, is subject to criminal prosecution under the Sherman Act, for entering into a combination in restraint of such trade and commerce, because he agrees with his wholesale and retail customers, upon prices claimed by them to be fair and reasonable, at which the same may be resold, and declines to sell his products to those who will not thus stipulate as to prices. This, at the threshold, presents for the determination of the court how far one may control and dispose of his own property; that is to say, whether there is any limitation thereon, if he proceeds in respect thereto in a lawful and bona fide manner. That he may not do so fraudulently, collusively, and in unlawful combination with others, may be conceded.’ ” (Colgate, at pp. 304–305.) In affirming the judgment of the district court, the high court wrote: “In the absence of any purpose to create or maintain a monopoly, the [Sherman Act] does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. And, of course, he may announce in advance the circumstances under which he will refuse to sell. ‘The trader or manufacturer … carries on an entirely 10 15 U.S.C. § 1 et seq.

23. private business, and can sell to whom he pleases.’ [Citation.] ‘A retail dealer has the unquestioned right to stop dealing with a wholesaler for reasons sufficient to himself ….’ ” (Colgate, supra, 250 U.S. at p. 307, italics added.) “ ‘California courts have adopted the Colgate doctrine for purposes of applying the Cartwright Act.’ ” (Beverage v. Apple, Inc. (2024) 101 Cal.App.5th 736, 750 (Beverage), quoting Chavez v. Whirlpool Corp. (2001) 93 Cal.App.4th 363, 370 (Chavez); G.H.I.I., supra, 147 Cal.App.3d at p. 267; Drum, supra, 182 Cal.App.4th at p. 254.) As stated in Chavez, “[t]he Cartwright Act prohibits every trust, defined as ‘a combination of capital, skill or acts by two or more persons’ for specified anticompetitive purposes. [Citation.] The federal Sherman Act prohibits every ‘contract, combination … or conspiracy, in restraint of trade.’ [Citation.] The similar language of the two acts reflects their common objective to protect and promote competition. [Citations.] Since the Cartwright Act and the federal Sherman Act share similar language and objectives, California courts often look to federal precedents under the Sherman Act for guidance.” (Chavez, supra, 93 Cal.App.4th at p. 369.) “In order to state a claim under the Cartwright Act, a plaintiff must allege ‘ “the formation and operation of the conspiracy and the illegal acts done in furtherance of the conspiracy.” ’ [Citations] Conversely, a claim describing only a unilateral refusal to deal without alleging a corresponding illegal conspiracy or combination does not state an actionable antitrust claim. [Citation.] This premise, that ‘[a]bsent a legal provision to the contrary, a private party generally may choose to do or not to do business with whomever it pleases’ without violating antitrust laws (Drum[, supra,] 182 Cal.App.4th [at p. 254]), is known as the Colgate doctrine …. [Citation.] In Colgate, ‘the Supreme Court recognized that, subject to antitrust laws such as the Sherman Act, there is a “long recognized right of [a] trader or manufacturer engaged in an entirely private business, 24. freely to exercise his own independent discretion as to parties with whom he will deal.” ’ ” (Beverage, supra, 101 Cal.App.5th at pp. 749–750, italics added.) “The Colgate doctrine is ‘firmly entrenched in antitrust jurisprudence.’ [Citation.] It reflects a limitation to the reach of antitrust liability, grounded in the concept that ‘a single firm’s conduct, absent the danger of monopolization, is not the object of intense antitrust scrutiny because to treat it with such scrutiny would heighten “the risk that the antitrust laws will dampen the competitive zeal of a single aggressive entrepreneur.” ’ [Citation.] ‘[C]oncerted action poses a substantially greater risk of anticompetitive harm than does independent behavior’ because it ‘ “deprives the marketplace of the independent centers of decisionmaking that competition assumes and demands.” ’ ” (Beverage, supra, 101 Cal.App.5th at p. 750.) “It is well settled that the antitrust laws do not preclude a trader from unilaterally determining the parties with whom it will deal and the terms on which it will transact business. [Citations.] An antitrust case must be based upon conspiratorial rather than unilateral conduct.” (G.H.I.I., supra, 147 Cal.App.3d at pp. 267–268, italics added.) Plaintiffs argue that “[t]he trial court reasonably and implicitly inferred that Sarkis’s efforts to ‘freeze out the competition’ … resulted in implied agreements not to sell product to [p]laintiffs.” In support of this argument, plaintiffs state that an implied agreement to unlawfully restrain trade is sufficient to demonstrate an unlawful agreement to restrain trade, and that an express agreement to that effect is not necessary, citing Roland Machinery Co. v. Dresser Industries, Inc. (7th Cir. 1984) 749 F.2d 380, 392, decided under section 3 of the Clayton Act (15 U.S.C. § 14). We agree that an implied agreement to unlawfully restrain trade is sufficient to raise a cognizable antitrust claim. (See Beverage, supra, 101 Cal.App.5th at p. 751; Drum, supra, 182 Cal.App.4th at p. 255.) However, in the case at bar we have no evidence of an agreement, express or implied, between Sarkis (and/or his affiliated 25. dispensaries), on the one hand, and third parties such as distributors of various cannabis brands, on the other hand, to engage in anticompetitive conduct. Plaintiffs rely on the declaration of Jewett and the declarations of Sarkis to support their claim that Sarkis entered into such agreements. In his original declaration, Sarkis readily admits that he has chosen a business strategy to supply cannabis products that “are not oversaturated by other products in the same market” and that he wants to avoid stocking his shelves with products that are available in “lower tier” stores. He desires to maintain a “top-tier” status not only by being selective about the products he stocks in inventory, but also by providing his customers with what he believes is a “unique and exciting shopping experience.”11 Sarkis states he does not want his dispensaries “to be associated with mid-level and low-tier stores and thus, aim[s] to carry different products to prevent customer confusion.” Thus, when Levels (plaintiffs’ dispensaries) began carrying the same products he was carrying in his stores he “became less inclined to have [his] employees re-purchase those products. He denies ever having “demand[ed] or coerce[d] … distributors to stop selling to Levels” and denies that he or his dispensaries have entered into “agreements that require distributors to refuse business to Levels.” However, he states that when distributors learned of his decision to carry a different product line from stores that he considers to be lower tier, “it appears that some of those distributors started declining to sell to Levels.”

11 To achieve the goal of providing the customer with a unique and exciting shopping experience, Sarkis states he is selective about the location of his dispensaries, decorates the stores in ways which he believes elevate their status above those of stores he believes “feel like a corner store or ‘bodega,’ ” has amenities such as big screen televisions and comfortable, well-appointed waiting areas, and hires staff he believes provide “excellent customer service.” “Additional factors that [he] consider[s] include wait time for customers, accessibility of product information online and in person, versatility in cannabis strains and products [they] offer, quality of product, advertising, and public relations.”

26. In his sur-reply declaration, Sarkis reiterated that he has “never prohibited a distributor from selling to [Levels], and ha[s] never stated or suggested that [he] would ‘penalize’ or ‘retaliate’ against a distributor selling to [Levels].” He admits that he has “communicated to distributors that we do not want to stock certain products that are sold in lower tier stores.” He reiterated his considerations in distinguishing his stores from stores he considers lower tier and that his decision to sell particular products is “based on numerous independent factors, including market saturation, price, prior sales metrics, and future sales projections. Thus, deciding whether to dedicate limited shelf-space to a given product, and/or whether to invest in and expend resources in displaying and marketing a product, and training staff on a product, is not made lightly.” Nothing in Sarkis’s declarations show, or tend to show, any agreement or conspiracy between Sarkis and his dispensaries, on the one hand, and any other third party, on the other hand, to engage in anticompetitive conduct. At most, it demonstrates that Sarkis made known to cannabis distributors his business strategy of differentiating his companies based, in part, on product differentiation—a practice condoned in Colgate. (Colgate, supra, 250 U.S. at p. 307.) Jewett declared that “[s]ince in or around August 2023, [Premier] has not purchased any orders from [his company]” and that “after August 2023, a sales representative from [Sarkis’s dispensaries] informed [him] that if [his company] were to work with or sell to Levels, then [Premier] would cease ordering from [his company].” The Jewett declaration plainly demonstrates there was no agreement between Jewett or his companies, on the one hand, and Sarkis or his dispensaries, on the other hand. Similarly, it fails to show any agreement between Sarkis (and/or his dispensaries) and any other third party. Nor is there any solicitation of an agreement or conspiracy evident from anything contained in the Jewett declaration. Arguably, Jewett’s declaration at most shows that a sales representative from Sarkis’s companies made Sarkis’s business strategy known to Jewett. But even a liberal reading of Jewett’s 27. declaration fails to establish any sort of anticompetitive combination or any attempt to form such a combination. None of the above evidence relied on by plaintiffs shows, or tends to show, any agreement, combination, or conspiracy between Sarkis and his dispensaries, on the one hand, and other third parties, on the other hand, to engage in anticompetitive conduct. In analyzing plaintiffs’ motion, the trial court determined “[t]here is at least one direct allegation that Defendant Sarkis is telling people not to work with Levels” and that “[t]his is not permitted under case law prohibiting enforcement of agreements to freeze out competitors,” citing Eastman Kodak Co. v. Image Technical Services, Inc. (1992) 504 U.S. 451.12 The trial court did not state the particular evidence it was relying on in making the above statements. Of course, a mere allegation is insufficient to meet plaintiffs’ burden of demonstrating a likelihood of prevailing on the merits. (See People v. Pacific Land Research Co., supra, 20 Cal.3d at p. 21.) To the extent the trial court’s comments were in reference to the declaration of Jewett, we have concluded this evidence is insufficient to show any sort of agreement, combination, or even an attempt to arrive at an agreement or combination in restraint of trade.

12 Neither party discusses Kodak in their briefs on appeal. Kodak involved Eastman Kodak Company’s (Kodak) attempts to limit the ability of customers to use independent service organizations (ISOs) to service Kodak’s products and to limit the ability of ISOs to perform such services by selling replacement parts “only to buyers of Kodak equipment who use Kodak service or repair their own machines” and by entering into agreements with original equipment manufacturers (OEMs) that the OEMs “would not sell [Kodak parts] to anyone other than Kodak,” by “pressur[ing] Kodak equipment owners and independent parts distributors not to sell Kodak parts to ISO’s,” and by taking “steps to restrict the availability of used [Kodak] machines.” (Eastman Kodak Co. v. Image Technical Services, Inc., supra, 504 U.S. at p. 458.) The facts of Kodak bear little similarity to the facts set forth in Jewett’s declaration and, as mentioned, we are of the opinion that Jewett’s declaration does not support an inference that any anticompetitive agreements were arrived at, or sought.

28. The remaining evidence proffered in support of plaintiffs’ motion for preliminary injunctive relief is likewise devoid of any facts that would tend to show an illegal combination or even an attempt to form an illegal combination. In Chavez, the court stated, “a manufacturer’s announcement of a resale price policy and its refusal to deal with dealers who do not comply coupled with the dealers’ voluntary acquiescence in the policy does not constitute an implied agreement or an unlawful combination as a matter of law.” (Chavez, supra, 93 Cal.App.4th at p. 372.) “[T]here must be some … evidence showing that the manufacturer and distributors were not acting independently, but had achieved ‘ “a meeting of the minds” ’ or ‘ “a common scheme.” ’ ” (Id. at p. 371.) “ ‘[E]vidence must be presented both that the distributor communicated its acquiescence or agreement, and that this was sought by the manufacturer.’ ” (Ibid., quoting Monsanto Co. v. Spray-Rite Service Corp. (1984) 465 U.S. 752, 764, fn. 9) There must be some evidence that “ ‘tend[s] to exclude the possibility that the manufacturer and nonterminated distributors were acting independently’ and must ‘reasonably tend[] to prove that the manufacturer and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.’ ” (Chavez, at p. 372, quoting Monsanto, at pp. 764, 768.) Here, the evidence submitted in support of plaintiffs’ motion does not in any way exclude the possibility that Sarkis and his dispensaries were acting independently in communicating their product purchase preferences and policy to not stock the same products as those sold in what Sarkis considered to be lower-tier stores. The evidence submitted is not inconsistent in any way with Sarkis’s contention that he was acting independently and, as mentioned, does not tend to show any agreement, combination or conspiracy to engage in anticompetitive conduct. Consequently, we conclude there is no 29. evidence before us that would tend to show plaintiffs have a likelihood of prevailing on the merits of their Cartwright Act claim.13 V. The Unfair Competition Law Cause of Action Section 17200 defines unfair competition to “mean and include any unlawful, unfair or fraudulent business act or practice.” “ ‘[A] business practice need only meet one of [those] three criteria to be considered unfair competition.’ ” (Naranjo v. Doctors Medical Center of Modesto, Inc. (2025) 111 Cal.App.5th 408, 434–435.) Here, plaintiffs have not submitted evidence of any fraudulent business practices on the part of Sarkis or his dispensaries. Their unfair competition claim is premised on the “unlawful” and “unfair” prongs of the Unfair Competition Law (UCL). “By proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech).) The UCL “makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law.” (Ibid.) To the extent plaintiffs contend that Sarkis and his dispensaries have engaged in “unlawful” conduct, their motion for a preliminary injunction is premised solely upon an alleged violation of the Cartwright Act. As discussed in the preceding section of this opinion, the evidence submitted at this early stage of the litigation in support of plaintiffs’ motion for a preliminary injunction is insufficient to demonstrate a likelihood of prevailing on the merits of a Cartwright Act claim. Consequently, the evidence in 13 We reiterate that our determination in this regard is not an adjudication of the merits of plaintiffs’ claims. (Jamison v. Department of Transportation, supra, 4 Cal.App.5th at p. 361.) Our determination is only that the admissible evidence submitted by plaintiffs in support of their motion is insufficient to demonstrate any likelihood of prevailing on the merits.

30. support of plaintiffs’ motion is likewise insufficient to demonstrate a likelihood of prevailing on a UCL claim premised on the “unlawful” prong of section 17200. Plaintiffs contend, however, that their UCL cause of action does not depend on a Cartwright Act violation. In that regard, plaintiffs rely on the “unfair” prong of the UCL. They contend that the evidence demonstrates that the Sarkis defendants’ conduct “ ‘threatens an incipient violation of antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or … harms competition,’ ” quoting Cel-Tech, supra, 20 Cal.4th at p. 187. Plaintiffs contend the evidence supports the trial court’s finding that Sarkis is “operat[ing] ‘in a manner that increases [the] consumer prices of some products’ ” and that this conduct “limits consumer choice.” Plaintiffs state that Sarkis is “using purchasing power to coerce distributors into boycotting a competitor.” Sarkis contends the holding in Colgate provides a safe harbor against plaintiffs’ claim and that “the trial court erred in relying upon the ‘broad-based policies’ of the UCL.” Sarkis relies on Chavez and Beverage to support his contention. In Chavez, as in the case before us, the plaintiffs asserted causes of action for both a violation of the Cartwright Act and unfair and unlawful business practices under the UCL. (Chavez, supra, 93 Cal.App.4th at pp. 366–367.) After determining that the alleged conduct of the Chavez defendants did not constitute a viable Cartwright Act violation because the alleged behavior of said defendants was independent activity and was “behavior permitted under the Colgate doctrine,” the court went on to consider the viability of the plaintiffs’ UCL cause of action. (Chavez, at pp. 373–375.) The Chavez court citing Supreme Court precedent wrote, “[a]lthough conduct may be ‘unfair’ even if there is no statute prohibiting the conduct, conduct is not actionable under the [UCL] if a statute expressly precludes an action based on the conduct.” (Chavez, supra, 93 Cal.App.4th p. 374, citing Cel-Tech, supra, 20 Cal.4th at pp. 183– 184; Cel-Tech, at p. 182 [“When specific legislation provides a ‘safe harbor,’ plaintiffs 31. may not use the general unfair competition law to assault that harbor.”].) Similarly, the Chavez court concluded “as a matter of law that conduct … the courts have determined to be permissible under the Colgate doctrine cannot be deemed ‘unfair’ under the [UCL].” (Chavez, at p. 375.) “If the same conduct is alleged to be both an antitrust violation and an ‘unfair’ business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not ‘unfair’ toward consumers. To permit a separate inquiry into essentially the same question under the [UCL] would only invite conflict and uncertainty and could lead to the enjoining of procompetitive conduct.” (Ibid.) Here, the alleged conduct that forms the basis of plaintiffs’ Cartwright Act claim is the same conduct upon which plaintiffs rely to support their UCL claim. In Beverage, the plaintiffs argued that Chavez was wrongly decided and that “the implication from Chavez that a ‘safe harbor’ can be found outside of explicit statutory language immunizing specific conducts cannot be reconciled with [the] Cel-Tech … court’s declaration that the ‘Legislature’s mere failure to prohibit an activity does not prevent a court from finding it unfair.’ ” (Beverage, supra, 101 Cal.App.5th at p. 753, citing Cel-Tech, supra, 20 Cal.4th at p. 184.) In rejecting this assertion, the court determined that the “description of qualifying ‘safe harbors’ in Cel-Tech was not limited solely to instances where explicit statutory language either authorizes conduct as lawful or imposes a litigation bar. Instead, the court explained that ‘safe harbors’ can arise in two ways: ‘If the Legislature has permitted certain conduct or considered a situation and concluded no action should lie, courts may not override that determination.’ [Citations.] Building on that concept, the court emphasized the principle that a plaintiff may not ‘ “plead around” an “absolute bar to relief” simply “by recasting the cause of action as one for unfair competition.” ’ [Citation.] This rule ensures that courts are not imposing ‘their own notions of the day as to what is fair or unfair’ under the guise of the UCL ….”

32. (Beverage, at p. 753.) “In substance, that is exactly what Chavez held; a plaintiff cannot plead around the absolute bar imposed by the Colgate doctrine by resurrecting a failed antitrust claim as an unfair business practice under the UCL .…” (Beverage, at p. 753.) The Beverage court observed that “the Colgate doctrine ‘has been a basic part of antitrust law concepts since it was first announced in 1919’ by the United States Supreme Court. [Citation.] Rather than retreat from the doctrine over time, the high court continues to recognize its viability. [Citations.] The Colgate doctrine was first recognized by California courts in 1979.” (Beverage, 101 Cal.App.5th at p. 754.) The court further observed that, although the Cartwright Act had been “amended … at least twice since 1979” and “numerous times since 1919,” “it has not undermined the applicability or effect of the Colgate doctrine.” (Beverage, at p. 754.) The court wrote, “[b]ecause ‘[w]e generally presume the Legislature is aware of appellate court decisions’ [citation], its inaction on this subject for at least the past 45 years is significant.” (Ibid.) The court also remarked that a number of California courts have “adopted and applied” the Chavez holding (Beverage, at p. 754, citing several cases), and that the Ninth Circuit has held similarly that “a ‘categorical legal bar’—as opposed to express statutory language—can also operate as a ‘safe harbor’ against UCL liability in the area of antitrust.” (Beverage, at pp. 754–755, citing Epic Games, Inc. v. Apple, Inc. (9th Cir. 2023) 67 F.4th 946, 1001.) The Beverage court concluded that, “[b]ecause both antitrust laws and the UCL are designed to protect and promote competition for the benefit of consumers [citations], logic dictates that there can be no harm to consumers under the UCL based on the same unilateral practices that have been historically accepted as procompetitive and categorically shielded from antitrust liability by the Colgate doctrine. [Citation.] This remains true whether the ‘unlawful’ and ‘unfair’ prongs [of section 17200] are considered jointly or separately.” (Beverage, supra, 101 Cal.App.5th at pp. 755–756.)

33. Plaintiffs seek to distinguish Beverage based on the fact that the lower court in Beverage found that the “ ‘[p]laintiffs’ causes of action under the Cartwright Act and the “unlawful” prong of the UCL were legally insufficient by application of the Colgate doctrine,’ ” whereas here “the trial court did not find that Sarkis’s conduct constituted permissible unilateral conduct.” We acknowledge the difference between the trial court’s rulings in this case and those in Beverage. Notwithstanding, we have reviewed the evidence in this matter and have found that the evidence is simply insufficient to support the court’s finding that Sarkis’s conduct was not unilateral action. Plaintiffs seek to distinguish Chavez based on the fact that the case was brought by a consumer rather than a competitor. Plaintiffs do not explain, however, why this distinction should make a difference and we see no reason why it would. We conclude there is no evidence in support of plaintiffs’ motion that demonstrates plaintiffs are likely to prevail on the merits of their Cartwright Act and UCL claims. VI. Interim Harm We now turn to the second consideration in determining whether to grant a preliminary injunction, i.e., “the relative interim harm to the parties from issuance or nonissuance of the injunction.” (Butt v. State of California (1992) 4 Cal.4th 668, 678.) “The trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction. [Citation.] Of course, ‘[t]he scope of available preliminary relief is necessarily limited by the scope of the relief likely to be obtained at trial on the merits.’ [Citation.] A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Butt v. State of California, supra, 4 Cal.4th at p. 678, italics added.) Similarly, our high court has stated that a “court will consider the probability of the plaintiff’s ultimately prevailing in the 34. case and … will deny a preliminary injunction unless there is a reasonable probability that plaintiff will be successful in the assertion of his rights. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) Having determined that plaintiffs have failed to submit evidence that would allow a court to determine that plaintiffs have a likelihood of prevailing on the merits of their claims, we are of the opinion that no showing of interim harm by plaintiffs would have permitted the trial court to grant the preliminary injunction. Even if we were to more favorably view plaintiffs’ admissible evidence as showing a slight likelihood of prevailing on the merits, we are of the opinion that plaintiffs’ showing of interim harm was of insufficient strength to warrant the trial court granting the preliminary injunction for the reasons set forth below. VII. The Balancing of Harms On appeal, Sarkis argues plaintiffs have not “demonstrate[d] they would suffer irreparable injury in the absence of an injunction.” The trial court found that this was plaintiffs’ “weakest prong” but determined that plaintiffs’ “continued business viability is at least in substantial question.” Sarkis cites to Friedman v. Friedman (1993) 20 Cal.App.4th 876, wherein the court stated, “[c]ase law has made it clear that mere monetary loss does not constitute irreparable harm in the context of proposed injunctive relief unless there is some showing that one against whom injunctive relief is sought is insolvent or otherwise unable to respond in damages.” (Id. at p. 890.) “At most,” Sarkis argues, “this case presents a claim that [plaintiffs] have suffered economic damages stemming from their inability to sell certain popular products due to [Sarkis’s] conduct.” Sarkis observes, correctly, that there is no evidence before the court that demonstrates he is insolvent or could not respond in damages if plaintiffs ultimately obtained an award of damages. He further contends plaintiffs have not shown that they will suffer any harm—let alone that the balance of harms tilts in favor of granting preliminary injunctive relief.

35. Plaintiffs’ evidence of irreparable harm consists solely of statements contained in Bal’s initial and reply declarations. Bal averred that because “[m]any customers develop brand loyalty and seek out certain [cannabis] brands” “it is essential that cannabis retailers, like Levels, carry popular brands.” Bal averred that his vendors called and told him that “they are no longer able to work with or supply to Levels” and provided a list of more than a dozen vendors who, presumably, so advised him. (However, there is no admissible evidence that attributes these vendors’ stated inability to supply Levels with product to any conduct on the part of Sarkis or his affiliated dispensaries.) Bal also declared that he has run out of stock from five of those vendors. However, there is no information presented as to how much business plaintiffs have lost or might reasonably expect to lose as a result of this asserted stock depletion—in terms of dollars, percentage of plaintiffs’ total business, or otherwise. Plaintiffs have also stated that to “stay competitive in the market, beginning in or around 2021, [Bal] instituted a business policy for [Levels] that all products would be discounted 30%. This is common in the industry to attract and retain customers.” Yet, this policy, instituted in 2021, was instituted before any of the conduct at issue, which is alleged to have occurred in 2023. We agree that “continued business viability” is an important consideration in determining whether to grant injunctive relief. However, even if we were to conclude that plaintiffs had made a slight showing that they are likely to prevail in the litigation—a showing we have determined was not made by plaintiffs—their showing of irreparable harm is of insufficient strength to warrant injunctive relief. Given our conclusions in this matter, we need not consider Sarkis’s remaining arguments on appeal.

36. DISPOSITION The order granting plaintiffs’ motion for a preliminary injunction is reversed. Sarkis is entitled to his costs on appeal.

HARRELL, J. WE CONCUR:

MEEHAN, Acting P. J.

GUERRA, J.

37.