This is an appeal from a judgment for damages entered against the defendants (appellants here) on two separate claims, each presenting significant questions for our decision. The first claim was based on section 1 of the Sherman Act. 15 U.S.C. § 1 (1976). The second, arising out of the samé transaction, alleged a pendent state claim for tortious interference with prospective business advantage. The appeal as to that aspect of the case raises an interesting question, apparently one of first impression under California law, concerning essential elements in the definition of the tort. We previously reversed a summary judgment of dismissal granted in favor of the defendants on the antitrust claim.
DeVoto v. Pacific Fidelity Life Ins. Co.,
Antitrust Claim
In DeVoto I, we determined that plaintiffs had standing and that their allegations were sufficient to state a claim for relief; 2 we must now determine whether the evidence adduced at trial was sufficient to carry plaintiffs’ burden of proof.' We conclude that it was not.
At the outset, it must be said that the defendants’ actions are to be judged by the rule of reason, not by a per se rule.
*1344
Even assuming that the package offered by American was more desirable than Pacific’s and that Bankers cancelled Pacific’s contract solely for the purpose of keeping the business in the Transamerica family, that does not constitute a per se violation of the antitrust laws. We think this point was established by our opinion in
DeVoto I.
The court noted there that the corporate relationship between Bankers and Pacific “when allowed to intrude into the free marketplace,
may produce
an anticompetitive effect such as the antitrust laws were designed to combat.”
Moreover, we do not believe a per se rule is appropriate in this type of case. The court has warned that “additions to the limited per se list are not to be made on an
ad hoc
basis. At least they are not to be made without evidence supporting a determination that the restraint is such as to have a pernicious effect on competition.”
Gough v. Rossmoor Corp.,
Of course, if such arrangements are not always injurious neither are they wholly commendable because, as DeVoto I points out, they introduce an “irrelevant and alien factor” into the free marketplace which may have anticompetitive effects. Upon those grounds we remanded for a factual inquiry into whether the practice was in this case unreasonable.
Turning now to a rule of reason analysis, we must determine whether the plaintiffs below carried their burden of proof. A crucial aspect of a plaintiff’s case under the rule of reason is a demonstration that the alleged conduct of the defendant had some market impact.
See Times-Picayune Publishing Co. v. United States,
The Supreme Court has stated that the appropriate focus in determining reasonableness under section 1 focuses on “the percentage of business controlled, the strength of the remaining competition, [and] whether the action springs from business requirements or purpose to monopolize.”
United States v. Columbia Steel Co.,
On the facts of this case, moreover, it is not even clear that there has been an adverse effect on the 1% of the market in question. The only market effect about which there was any evidence concerns the quality of the product offered to consumers; plaintiffs allege that the insurance policy which Pacific offered was less desirable than American’s. Even assuming the allegation to be true, however, Bankers’ mortgagors were not required to buy Pacific’s or any other mortgage insurance. If American offered a better insurance policy, consumers were free to buy it. The most that can be said for the actions of defendants is that they reduced the likelihood that consumers would learn of the allegedly better policy.
See Gough, supra,
Plaintiffs apparently contend that de'spite the very small percentage impact on the relevant market, a violation of the rule of reason can be demonstrated merely by reference to the dollar volume of commerce affected by the alleged restraint. Plaintiffs note that Bankers had about 32,000 individual mortgagors with outstanding principal balances exceeding $500,000,000 in total. They contend that plaintiffs intended to exclude American from this market and that showing this exclusion is sufficient to carry the burden of demonstrating injury. To the extent this argument is an attempt to redefine the relevant market, it is precluded by the parties’ stipulation.
See American Motor Inns, Inc. v. Holiday Inns, Inc.,
The Supreme Court, in applying the rule of reason to mergers, has held that “[i]n determining what constitutes unreasonable restraint, we do not think the dollar volume is in itself of compelling significance.”
United States v. Columbia Steel Co.,
Bankers is essentially selling a list of names of its mortgagors; Pacific and American both tried to buy the list and Bankers ultimately sold to Pacific. The concern with respect to reciprocity is that a firm with power in one market as a seller will exercise that power to gain an advantage as a buyer in a different market. This is very similar to the concern with tying arrangements.
See
L. Sullivan,
supra,
§ 170 at 491. In the case at hand there is absolutely no evidence that the deal between Bankers and Pacific was made with any expectation or intention that Bankers would gain an advantage as a buyer of a product supplied by Pacific. As Professor Sullivan notes, “the need is not merely to find agreement, but to find a purchase made with reciprocal motive.”
Id.
§ 171 at 494. There was a failure to prove that the acts of defendants were part of a plan to encourage reciprocal dealing that resulted in a competitive injury, cf.
FTC v. Consolidated Foods Corp.,
In their attempt to demonstrate market impact, plaintiffs argue that
DeVoto I
is a conclusive decision that there was a significant adverse market effect. They point to the conclusion in
DeVoto I
that plaintiffs had met the jurisdictional requirement that the “acts complained of occur within the flow of, or substantially affect interstate commerce.”
DeVoto I, supra,
Plaintiffs failed to introduce any evidence to support a finding that there was an adverse effect on the relevant market. They have not shown that viewing the relevant market as a whole there was any effect on the price, quality or quantity of mortgage insurance, nor have they shown that there have been any effects on the structure of the market which might adversely affect the climate for competition.
See Continental T. V., Inc. v. GTE Sylvania Inc.,
Plaintiffs suggest that if Bankers’ decision were based solely on corporate affiliation that is the equivalent of an intent to impose an unreasonable restraint on trade and no more need be shown. Plaintiffs apparently rely on the statement in
United States v. Columbia Steel Co.,
State Tort Claim
Independently of the antitrust claims, the plaintiffs below sought relief upon a second theory, alleging tortious interference with their prospective business advantage. 3 They claimed commissions would have been paid to them as brokers for negotiation of the Bankers-American agreement and that the commissions were a business advantage lost as a result of Pacific’s inducing Bankers to repudiate the contract.
Bankers and Pacific defend by saying the inducement of the breach was done without any intent to cause injury to the brokers. The argument is not quite precise, for it should be phrased in terms of motive or specific purpose, not simply intent. When stated in this manner, we find the contention has merit, and we rule that plaintiffs’ judgment for tortious interference must be reversed because there was no evidence of any motive or purpose to injure them. 4
Tort law ordinarily imputes to an actor the intention to cause the natural and probable consequences of his conduct. See Restatement (Second) of Torts § 8A (1965). If the case turned on the issue of defendants’ intent in this sense of the term, we would say the trier of fact could find that the defendants had the necessary state of mind to harm the brokers, for they were aware of the brokers’ business relation and knew its disruption was substantially certain to follow once the principal contract with American was abrogated.
Tortious interference requires a state of mind and a purpose more culpable than “intent” under the Restatement definition, however. The fact of a general intent to interfere, under a definition that includes imputed knowledge of consequences, does not alone suffice to impose liability. Inquiry into the motive or purpose of the actor is necessary. The inducement of a breach, therefore, does not always vest third or incidental persons with a tort action against the one who interfered. Where the actor’s conduct is not criminal or fraudulent, and absent some other aggravating circumstances, it is necessary to identify those whom the actor had a specific motive or purpose to injure by his interference and to limit liability accordingly. The extent of liability, for this tort, is fixed in part by the motive or purpose of the actor. See Restatement (Second) of Torts § 766 & Comment j and § 767 & Comment d (1979).
We note at the outset a scarcity of pertinent authority on this issue. Although we do not find controlling precedent in California case law, or closely similar cases in other jurisdictions, we are confident the result we reach is consistent with the law California courts would announce if the issue were presented to them. Analysis of purpose and motive in the tort of business interference is not well developed in the *1348 case law, but a survey of the authorities in California and other jurisdiction^ illustrates the specific kinds of wrong the tort is intended to redress and clarifies why the defendants’ actions in this case are not tortious as to these plaintiffs.
The simplest case for allowing recovery is when there is an intended wrongful economic appropriation, as when the act of a defendant directly diminishes the value of the plaintiff’s interest and simultaneously or subsequently transfers that value to the defendant. Thus a competitor may be liable for commission of the tort if he intentionally interferes with a contract to which he is a stranger for the otherwise legitimate purpose of improving his competitive position at the expense of the plaintiffs.
See Imperial Ice Co. v. Rossier,
The wrongful appropriation may be by means other than interference with a formal contractual relation or a prospective business advantage. An example of such tortious interference, by a direct means of appropriation, is when two parties in a transaction cut out an agent or middleman and implicitly split between them the value of the lost commission.
See Buckaloo v. Johnson,
There are also cases where tortious interference is accomplished by a more indirect means. For instance, where the defendant acquired a business after depressing its value by telling prospective purchasers the defendant’s contract with the business would not be renewed, the statements were held tortious in a suit brought by the company.
Lowell v. Mother’s Cake and Cookie Co.,
In all these instances of contractual or business interference, some identifiable benefit accrues to the defendant which formerly belonged to the plaintiff, be it pecuniary or competitive. 5 The defendant’s spiteful satisfaction of an earlier grievance against the plaintiff would be a similar injury. It is the intentional attainment of an unjust advantage which underlies the requirement that the interference be improper, Restatement (Second) of Torts § 767 (1979), and motive or purpose is usually an accurate measure of the advantage the actor sought and of its just or unjust character.
In the instant case no purpose to injure the plaintiffs was demonstrated. *1349 The business relation between the brokers and American was of no concern to the defendants. Commissions anticipated by the broker did not, in any degree, motivate the defendants’ interference with the contract between Bankers and American. The object of the interference was the principal contract, not the brokers’ arrangement incidental to it. The brokers and their commissions were entirely unrelated to any motivation of the defendants, and it was not the goal or design of the interference to acquire the value of the commission. Absent a motive or purpose to injure the plaintiffs, or to appropriate an economic advantage belonging to them, or some other aggravating circumstances, the acts of Bankers or Pacific were not tortious as to the plaintiffs. The plaintiffs failed to establish these essential elements.
We have identified one class of cases in which recovery appears to have been allowed even though there is no improper purpose or advantage-taking by the defendant in relation to an interest owned or protected by the plaintiff. These involve a prospective purchaser who has asked a broker to negotiate the sale of property to him on specified terms, the broker’s commission to be paid by the vendor. The purchaser in these circumstances has been held liable for tortious interference with the contract or relation between the vendor and the broker when he decides at the last minute not to buy the property, even when this contract breach is based upon an understandable reason, such as financial difficulty. The following cases comprise the evolution of this somewhat obscure line of authority:
Buono Sales, Inc.
v.
Chrysler Motors Corp.,
Our opinion is not affected by the California Supreme Court’s recent decision in
J’Aire Corp. v. Gregory,
Our conclusion rests on the difference between the purpose of an intentional interference cause of action and the purpose of the cause of action established by J’Aire. The former cause of action tends to restrain impermissible behavior in the marketplace between competitors: it sets forth the ground rules of competition to confine business rivalry within acceptable bounds of conduct. W. Prosser, Handbook of the Law of Torts 952-62 (4th ed. 1971).
Two different considerations animate the California Supreme Court’s J’Aire decision; both concerns are for the purpose of preventing rigid categories of the injured party’s status or the nature of his injury from obscuring the more fundamental inquiry into the scope of an actor’s legally foreseeable impact and thus liability. Specifically, the California court’s opinion emphasizes that one may assume obligations by a contract that is in turn motivated in part by the promisee’s desire to benefit third parties and in which contract third parties are thereby interested, and for the unsatisfactory performance of which they may recover. The court also showed concern lest an injury due to negligence go unredressed simply because an intangible economic interest rather than a tangible one was injured. When the wrongful act is the same, the ability to recover should not hang on the fortuity of whether the injury is to the physical assets of a business rather than to its good will. 9 The fundamental inquiry is of course different in the case of intentional torts. Foreseeability is not at issue because it is not a requisite to recovery. Since all consequences, no matter how remote, harming a party with a cause of action for an intentional tort give rise to defendant’s liability, the inquiry focuses on the inherent and relational quality of the wrongful act rather than on the foreseeability of its consequences. See 4 B. Witkin, Summary of California Law § 9, at 2309 (8th ed. 1974); Epstein, Intentional Harms, 4 J. Legal Stud. 391 (1975), Note, The Tie That Binds: Liability of Intentional Tort-Feasors for Extended Consequences, 14 Stan.L.Rev. 362, 367 (1962) (suggesting liability-limiting principles in intentional torts deficient by comparison with negligent torts, where foreseeability provides limiting principle).
This brief discussion of two significantly different causes of action suggests why different principles have come to govern different kinds of wrongful acts even though these acts may incidentally produce similar effects. For the foregoing reasons we do not interpret the California Supreme Court in J’Aire to have undone, by silent implication, the established case law on intentional interference with economic advantage by its decision in the separate area of negligent interference.
Even if we were to assume that something like the six criteria of
J’Aire
would replace the definition of the intentional tort as we have outlined it above, we do not think that the brokers would be entitled to recover. The nature of the brokers’ business risks and the speculative quality of damages from lost commissions — to be calculated on the basis of the volume of sales that never occurred — are two factors specifically enumerated by the California court as precluding recovery.
See J’Aire, supra,
*1351 The facts of the case before us, examined in the light of our analysis of the tort of interference with business advantage, lead us to conclude that the defendants have no liability to the plaintiffs and that the judgment entered for the plaintiffs must be reversed.
The defendants have argued additional grounds for reversal of the judgment, matters which turn on the applicability of the statute of limitations and on the trial court’s evidentiary rulings admitting certain testimony on the issue of damages. In our view the plaintiffs have not countered these contentions with convincing reasons, but it is unnecessary for us to address them in view of our holding on the primary issue of tortious liability.
Each party shall bear its own costs on this appeal.
REVERSED.
Notes
. The jury found damages in the amount of $125,000 but reduced the figure by one-eighth because a party holding a one-eighth interest in plaintiffs’ business had not sued.
. Our holding that Sherman Act liability was not established makes it unnecessary to examine whether the
DeVoto I
holding — that brokers may bring the antitrust claim — survives the intervening decisions by the Supreme Court in
Illinois Brick Co. v. Illinois,
. The district court instructed the jury as follows:
There are no hard and fast rules governing whether or not a person is privileged to interfere with the contractual or business relations of another. In general, however, whether an intentional interference is justifiable depends upon a balancing of the importance, social and private, of the objective advanced by the interference against the importance of the interest interfered with, considering all circumstances including the nature of defendants’ conduct and the relationship between the parties. The burden of proof is on the defendants to establish a justification that there be [sic].
Reporter’s Transcript at 1338.
. Most of appellants’ arguments on the pendent state claim rely on assertion of privileges. These arguments are wholly without merit: appellants cite no case in which privileged competition involved inducing a breach of contract (as here, the contract between Bankers and American) or in which an affiliation such as that between Bankers and Pacific gave rise to a privilege.
See generally Buckaloo v. Johnson,
. This idea may also be expressed in other terms: whether or not the plaintiff has, as against defendant, a “property” right in the invaded interest, see Note, Interference With Contractual Relations: A Property Limitation, 18 Stan.L.Rev. 1406 (1966).
. This reliance exception is close to the facts of the J’Aire case, discussed below.
.
J’Aire
impliedly disapproves the decision of this court in
Standard Oil Co. v. United States,
. The court in J’Aire explained its holding by listing six criteria:
(1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct and (6) the policy of preventing future harm.
. This conforms with the broad language of California’s negligence principle, see Cal.Civ. Code § 1714(a) (West 1973);
Rowland v. Christian,
. I. e., the plaintiffs here were more remotely related to the principal transaction — between Bankers and American — than were the plaintiffs in J’Aire, which relates to criteria (1) and (4), see note 8 supra, and the moral and public policy considerations, as well as the certainty of the damages suffered, are weaker here than in J’Aire, which relates to criteria (3), (5), and (6). See note 8 supra.