CACI No. 2202. Intentional Interference With Prospective Economic Relations

Judicial Council of California Civil Jury Instructions (2017 edition)

Download PDF
2202.Intentional Interference With Prospective Economic
Relations—Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] intentionally interfered
with an economic relationship between [him/her/it] and [name of third
party] that probably would have resulted in an economic benefit to
[name of plaintiff]. To establish this claim, [name of plaintiff] must prove
all of the following:
1. That [name of plaintiff] and [name of third party] were in an
economic relationship that probably would have resulted in an
economic benefit to [name of plaintiff];
2. That [name of defendant] knew of the relationship;
3. That [name of defendant] engaged in [specify conduct determined
by the court to be wrongful];
4. That by engaging in this conduct, [name of defendant] [intended
to disrupt the relationship/ [or] knew that disruption of the
relationship was certain or substantially certain to occur];
5. That the relationship was disrupted;
6. That [name of plaintiff] was harmed; and
7. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
New September 2003; Revised June 2013, December 2013
Directions for Use
Regarding element 3, the interfering conduct must be wrongful by some legal
measure other than the fact of the interference itself. (Della Penna v. Toyota Motor
Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393 [45 Cal.Rptr.2d 436, 902 P.2d 740].)
This conduct must fall outside the privilege of fair competition. (PMC, Inc. v.
Saban Entertainment, Inc. (1996) 45 Cal.App.4th 579, 603 [52 Cal.Rptr.2d 877],
disapproved on other grounds in Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal.4th 1134, 1159 fn. 11 [131 Cal.Rptr.2d 29, 63 P.3d 937].) Whether
the conduct alleged qualifies as wrongful if proven or falls within the privilege of
fair competition is resolved by the court as a matter of law. If the court lets the
case go to trial, the jury’s role is not to determine wrongfulness, but simply to find
whether or not the defendant engaged in the conduct. If the conduct is tortious, the
judge should instruct on the elements of the tort.
Sources and Authority
• “The tort of intentional or negligent interference with prospective economic
advantage imposes liability for improper methods of disrupting or diverting the
business relationship of another which fall outside the boundaries of fair
competition.” (Settimo Associates v. Environ Systems, Inc. (1993) 14
Cal.App.4th 842, 845 [17 Cal.Rptr.2d 757], internal citation omitted.)
• “The tort of interference with prospective economic advantage protects the same
interest in stable economic relationships as does the tort of interference with
contract, though interference with prospective advantage does not require proof
of a legally binding contract. The chief practical distinction between
interference with contract and interference with prospective economic advantage
is that a broader range of privilege to interfere is recognized when the
relationship or economic advantage interfered with is only prospective.” (Pacific
Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126 [270
Cal.Rptr. 1, 791 P.2d 587], internal citations omitted.)
• “The five elements for intentional interference with prospective economic
advantage are: (1) [a]n economic relationship between the plaintiff and some
third party, with the probability of future economic benefit to the plaintiff; (2)
the defendant’s knowledge of the relationship; (3) intentional acts on the part of
the defendant designed to disrupt the relationship; (4) actual disruption of the
relationship; and (5) economic harm to the plaintiff proximately caused by the
acts of the defendant.” (Youst v. Longo (1987) 43 Cal.3d 64, 71, fn. 6 [233
Cal.Rptr. 294, 729 P.2d 728].)
• “The question is whether a plaintiff must plead and prove that the defendant
engaged in wrongful acts with the specific intent of interfering with the
plaintiff’s business expectancy. We conclude that specific intent is not a required
element of the tort of interference with prospective economic advantage. While
a plaintiff may satisfy the intent requirement by pleading specific intent, i.e.,
that the defendant desired to interfere with the plaintiff’s prospective economic
advantage, a plaintiff may alternately plead that the defendant knew that the
interference was certain or substantially certain to occur as a result of its
action.” (Korea Supply Co., supra, 29 Cal.4th at p. 1154, original italics.)
• “[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,supra, 11 Cal.4th at p.
• “With respect to the third element, a plaintiff must show that the defendant
engaged in an independently wrongful act. It is not necessary to prove that the
defendant acted with the specific intent, or purpose, of disrupting the plaintiff’s
prospective economic advantage. Instead, ‘it is sufficient for the plaintiff to
plead that the defendant “[knew] that the interference is certain or substantially
certain to occur as a result of his action.” ’ ‘[A]n act is independently wrongful
if it is unlawful, that is, if it is proscribed by some constitutional, statutory,
regulatory, common law, or other determinable legal standard.’ ‘[A]n act must
be wrongful by some legal measure, rather than merely a product of an
improper, but lawful, purpose or motive.’ ” (San Jose Construction, Inc. v.
S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544–1545 [67 Cal.Rptr.3d 54],
internal citations omitted.)
• “Della Penna did not specify what sort of conduct would qualify as ‘wrongful’
apart from the interference itself.” Limandri v. Judkins (1997) 52 Cal.App.4th
326, 340 [60 Cal.Rptr.2d 539].)
• “Justice Mosk’s concurring opinion in Della Penna advocates that proscribed
conduct be limited to means that are independently tortious or a restraint of
trade. The Oregon Supreme Court suggests that conduct may be wrongful if it
violates ‘a statute or other regulation, or a recognized rule of common law, or
perhaps an established standard of a trade or profession.’ . . . Our Supreme
Court may later have occasion to clarify the meaning of ‘wrongful conduct’ or
‘wrongfulness,’ or it may be that a precise definition proves impossible.” (Arntz
Contracting Co. v. St. Paul Fire and Marine Insurance Co. (1996) 47
Cal.App.4th 464, 477–478 [54 Cal.Rptr.2d 888], internal citations omitted.)
• “Commonly included among improper means are actions which are
independently actionable, violations of federal or state law or unethical business
practices, e.g., violence, misrepresentation, unfounded litigation, defamation,
trade libel or trade mark infringement.” (PMC, Inc., supra, 45 Cal.App.4th at p.
603, internal citation omitted.)
• “[A] plaintiff need not allege the interference and a second act independent of
the interference. Instead, a plaintiff must plead and prove that the conduct
alleged to constitute the interference was independently wrongful, i.e., unlawful
for reasons other than that it interfered with a prospective economic advantage.
[Citations.]” (Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th
1395, 1404 [168 Cal.Rptr.3d 228].)
• “The question has arisen as to whether, in order to be actionable as interference
with prospective economic advantage, the interfering act must be independently
wrongful as to the plaintiff. It need not be. There is ‘no sound reason for
requiring that a defendant’s wrongful actions must be directed towards the
plaintiff seeking to recover for this tort. The interfering party is liable to the
interfered-with party [even] “when the independently tortious means the
interfering party uses are independently tortious only as to a third party.” ’ ”
(Crown Imports LLC,supra, 223 Cal.App.4th at p. 1405, original italics.)
• “[O]ur focus for determining the wrongfulness of those intentional acts should
be on the defendant’s objective conduct, and evidence of motive or other
subjective states of mind is relevant only to illuminating the nature of that
conduct.” (Arntz Contracting Co., supra, 47 Cal.App.4th at p. 477.)
• “[A]n essential element of the tort of intentional interference with prospective
business advantage is the existence of a business relationship with which the
tortfeasor interfered. Although this need not be a contractual relationship, an
existing relationship is required.” (Roth v. Rhodes (1994) 25 Cal.App.4th 530,
546 [30 Cal.Rptr.2d 706], internal citations omitted.)
• “If a party has no liability in tort for refusing to perform an existing contract,
no matter what the reason, he or she certainly should not have to bear a burden
in tort for refusing to enter into a contract where he or she has no obligation to
do so. If that same party cannot conspire with a third party to breach or
interfere with his or her own contract then certainly the result should be no
different where the ‘conspiracy’ is to disrupt a relationship which has not even
risen to the dignity of an existing contract and the party to that relationship was
entirely free to ‘disrupt’ it on his or her own without legal restraint or penalty.”
(Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242, 266 [45
Cal.Rptr.2d 90], original italics.)
• “Although varying language has been used to express this threshold
requirement, the cases generally agree it must be reasonably probable that the
prospective economic advantage would have been realized but for defendant’s
interference.” (Youst, supra, 43 Cal.3d at p. 71, internal citations omitted.)
• “Under [the competition] privilege, ‘ “a competitor is free to divert business to
himself as long as he uses fair and reasonable means.’ [Citation.]’ ” (I-CA
Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257,
292–293 [185 Cal.Rptr.3d 24].)
• “Since the crux of the competition privilege is that one can interfere with a
competitor’s prospective contractual relationship with a third party as long as
the interfering conduct is not independently wrongful (i.e., wrongful apart from
the fact of the interference itself), Della Penna’s requirement that a plaintiff
plead and prove such wrongful conduct in order to recover for intentional
interference with prospective economic advantage has resulted in a shift of
burden of proof. It is now the plaintiff’s burden to prove, as an element of the
cause of action itself, that the defendant’s conduct was independently wrongful
and, therefore, was not privileged rather than the defendant’s burden to prove,
as an affirmative defense, that it’s [sic] conduct was not independently wrongful
and therefore was privileged.” (Bed, Bath & Beyond of La Jolla, Inc. v. La
Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 881 [60
Cal.Rptr.2d 830].)
• “[I]n the absence of other evidence, timing alone may be suffıcient to prove
causation . . . . Thus, . . . the real issue is whether, in the circumstances of the
case, the proximity of the alleged cause and effect tends to demonstrate some
relevant connection. If it does, then the issue is one for the fact finder to
decide.” (Overhill Farms, Inc. v. Lopez (2010) 190 Cal.App.4th 1248, 1267
[119 Cal.Rptr.3d 127], original italics.)
• “There are three formulations of the manager’s privilege: (1) absolute, (2)
mixed motive, and (3) predominant motive.” (Halvorsen v. Aramark Uniform
Services, Inc. (1998) 65 Cal.App.4th 1383, 1391 [77 Cal.Rptr.2d 383].)
• “We conclude that a plaintiff seeking to state a claim for intentional interference
with contract or prospective economic advantage because defendant induced
another to undertake litigation, must allege that the litigation was brought
without probable cause and that the litigation concluded in plaintiff’s favor.”
(Pacific Gas & Electric Co., supra, 50 Cal.3d at p. 1137.)
Secondary Sources
5 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 741–754, 759
Chin et al., California Practice Guide: Employment Litigation, Ch. 5-E, Intentional
Interference With Contract Or Prospective Economic Advantage, ¶¶ 5:463, 5:470
(The Rutter Group)
Croskey et al., California Practice Guide: Insurance Litigation, Ch. 11-G,
Intentional Interference With Contract Or Economic Advantage, ¶ 11:138.5 (The
Rutter Group)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§§ 40.100–40.105 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.133 (Matthew Bender)
12 California Points and Authorities, Ch. 122, Interference, §§ 122.23, 122.32
(Matthew Bender)

© Judicial Council of California.