This section contains the nature of the case and procedural background.

Electromedics designs, manufactures, and markets medical equipment and disposable devices, focusing on blood therapy and surgical care. P and D sought to acquire Electromedics. Electromedics designs, manufactures, and markets medical equipment and disposable devices, focusing on blood therapy and surgical care. P and D sought to acquire Electromedics. P was an active contender in the competition for a merger. P expressed a strong interest in purchasing Electromedics under the condition that P would have an exclusive right to negotiate and would receive a termination fee, which would be $2-4 million, in the event negotiations fell through. D proposed a merger at $6.125 per share. The Electromedics board did not answer. Electromedics entered into a final agreement and merger plan with P. The exclusive agreement required Electromedics to refrain from marketing the sale of the company or contacting other 'suitors.' The agreement also included the following 'termination fee' provision: ....Electromedics will pay P within five business days after demand by P a termination fee equal to $3,000,000. P's final bid was $ 6.375 per share. The day after D sent Electromedics a new formal offer of $ 6.75 per share. P agreed to match that bid. D increased its bid to $ 6.875 per share and put $3 million in escrow to cover the possible termination fee to P. P made it clear that it expected Electromedics to pay the $ 3 million termination fee if it accepted D's bid. The Electromedics board authorized a merger with Medtronic at $6.875 per share. P demanded payment of the termination fee. The merger agreement with D prohibited Electromedics from paying the fee without D's prior written consent. P brought this action, alleging breach of contract, unjust enrichment, tortious interference with contract, and a claim for attorney fees and costs. The district court used a 'liquidated damages analysis to determine the validity of the fee provision in question.' The court granted D's motion for summary judgment holding that Electromedics did not intend to liquidate P's damages when they agreed to the three million dollar penalty fee. P appealed.

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