1 Cal. App. 5th 39
Cal. Ct. App.2016Background
- Plaintiff Dan Popescu, an aluminum engineering manager, alleged Apple pressured his employer, Constellium, to terminate him after he refused to sign a restrictive "Development Agreement" and objected to Apple’s alleged anticompetitive scheme; Popescu was terminated on October 28, 2011.
- Popescu claimed (1) intentional interference with contractual relations (contract interference) and (2) intentional interference with prospective economic advantage (business interference).
- He alleged Constellium had promised up to one year’s severance (carried over from prior employer agreements) but the pleadings indicated no express for-cause employment term; the trial court concluded he was at-will.
- Apple demurred to the amended complaint; the trial court sustained the demurrer without leave to amend, ruling Reeves v. Hanlon barred a contract-interference claim by an at-will employee and that Popescu failed to plead an independently wrongful act for business interference.
- The Court of Appeal reversed: it held (a) Popescu was properly alleged to be at-will but Reeves does not bar a contract-interference claim by an employee who is the victim of a third party’s interference with his at-will employment, and (b) Popescu adequately pleaded independently wrongful conduct (anticompetitive agreements and alleged trade-secret misappropriation) to support the business-interference claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Whether an at-will employee must plead the defendant’s conduct was independently wrongful to state a contract-interference claim | Popescu: Reeves does not apply; he alleged all elements of interference and need not show independent wrong when a third party induced his employer to terminate him | Apple: Reeves requires an independent wrongful act for interference with at-will employment, so Popescu’s contract claim fails | Held: Reeves’ independent-wrongdoing rule applies to employer-vs.-competitor hiring scenarios addressed in Reeves, but not to an employee suing a third party who induced his employer to terminate him; contract-interference claim survives plausibly pleaded elements |
| 2) Whether a noncontracting third party with an economic interest is immune from interference claims ("not a stranger" defense) | Popescu: Apple was not an agent or party to his employment contract; third parties with economic interests can be liable | Apple: It had a legitimate interest in the project and thus cannot be liable as not a stranger to the employment relationship | Held: Applied Equipment does not broadly immunize third parties with economic interests; Apple was not categorically immune and may be liable if elements are pleaded |
| 3) Whether Popescu pleaded an at-will employment relationship | Popescu: His contract restricted Constellium’s termination ability and was not at-will | Apple: Contract provisions (severance/benefits) show at-will status; prior authority compels that conclusion | Held: The pleadings properly show an at-will relationship (statutory presumption and contract language interpreted as terminable at will) |
| 4) Whether Popescu pleaded an independently wrongful act sufficient for a business-interference claim | Popescu: Apple’s insistence on the Development Agreement, alleged trade-secret misappropriation, and anticompetitive scheme are independently wrongful | Apple: Reporting a recording and urging an investigation are lawful; Popescu lacks standing to allege the antitrust/trade-secret harms directly | Held: Accepting allegations as true, Popescu pleaded independently wrongful conduct (anticompetitive agreements and related scheme) that interrupted his economic relationship; business-interference claim survives demurrer |
Key Cases Cited
- Reeves v. Hanlon, 33 Cal.4th 1140 (Cal. 2004) (held that where a competitor hires away at-will employees, plaintiff must plead defendant engaged in an independently wrongful act)
- Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal.4th 376 (Cal. 1995) (plaintiff must show defendant’s interference was wrongful beyond interference itself in prospective economic advantage claims)
- Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503 (Cal. 1994) (party to a contract generally is not liable in tort for interference with its own contract; tort duty not owed by contracting parties)
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (Cal. 2003) (independently wrongful conduct must be proscribed by some determinable legal standard; clarified intent element)
- Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118 (Cal. 1990) (elements of intentional interference with contractual relations)
- Quelimane Co. v. Stewart Title Guaranty Co., 19 Cal.4th 26 (Cal. 1998) (contract interference need not allege defendant’s conduct be wrongful apart from the interference itself)