Advsr, LLC v. Magistro LTD., 3:19-cv-02670

Advsr (a deal adviser) entered a May 22, 2017 agreement with Magisto to facilitate a sale for a fee of 3% of the acquisition price, including a nine‑month post‑termination “tail” period for covered transactions.
Advsr introduced Magisto to IAC/Vimeo, aided due diligence and secured a favorable valuation range communicated on September 28, 2018; the Magisto–Vimeo transaction closed May 28, 2019.
Magisto’s CEO (Boiman) gave notice terminating Advsr’s contract in Dec. 2017 but agreed Advsr would work through the tail; Advsr continued to support negotiations and sought assurance it would be paid.
Yahal Zilka (major shareholder and board member) allegedly criticized Advsr, pressured to shorten the tail, concealed negotiations from the board, orchestrated a November 2018 LOI as a post‑tail pretext, instructed Boiman not to pay Advsr, and deleted related documents.
Advsr sued Magisto and Zilka for, inter alia, intentional interference with contractual relations and with prospective economic relations; Zilka moved to dismiss those two claims under Rule 12(b)(6).
The court denied Zilka’s motion: it found Advsr pleaded causation (including an allegation that Zilka instructed Magisto not to pay) and declined to apply the Ninth Circuit’s mixed‑motive rule, instead following California appellate law requiring a predominant‑motive showing to invoke the manager’s privilege.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of causation for interference claims	Advsr alleges Zilka’s acts (including instructing Boiman not to pay) caused the lost fee	Most alleged acts are internal governance or non‑causal; only instruction not to pay relates to harm	Pleading-stage causation satisfied; the instruction allegation alone is enough to survive dismissal
Applicability of manager’s privilege	Privilege inapplicable because Zilka acted for personal gain and concealed the deal	Privilege protects managers even if partly motivated by self‑interest (mixed‑motive)	Court applies predominant‑motive test (Huynh) and finds pleadings do not show as a matter of law that Zilka was predominantly motivated to benefit Magisto; denial of dismissal
Choice of law/precedent: L.A. Airways (9th Cir.) v. Huynh (Cal. Ct. App.)	State appellate decision (Huynh) better reflects how California Supreme Court would rule	Ninth Circuit precedent (L.A. Airways) endorses mixed‑motive rule and should bind federal courts	Court follows Huynh, concluding Ninth Circuit’s prior interpretation is not controlling where later state appellate authority suggests a different result
Dismissal on Rule 12(b)(6) despite affirmative defense	Advsr: allegations permit reasonable inference of liability	Zilka: manager’s privilege is an affirmative defense that warrants dismissal now	Court rejects early resolution on privilege given disputed motive facts; denies motion

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
Ashcroft v. Iqbal, 556 U.S. 662 (labels/conclusions insufficient; plausibility required)
Reeves v. Hanlon, 33 Cal.4th 1140 (elements of intentional interference with contract under California law)
Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (elements of intentional interference with prospective economic relations)
L.A. Airways, Inc. v. Davis, 687 F.2d 321 (9th Cir. decision adopting mixed‑motive manager’s privilege rule)
Huynh v. Vu, 111 Cal. App. 4th 1183 (California appellate decision adopting predominant‑motive test for manager’s privilege)
Olivet v. Frischling, 104 Cal. App. 3d 831 (early articulation of manager’s privilege limits)
Owen ex rel. Owen v. United States, 713 F.2d 1461 (federal courts may follow state appellate courts over earlier federal interpretations)
In re Watts, 298 F.3d 1077 (Ninth Circuit adherence to state appellate decisions when they conflict with earlier Ninth Circuit rulings)