Della Penna v. Toyota Motor Sales, USA, Inc.

S044053.Oct. [No. 1995.] PENNA,

JOHN DELLA Plaintiff and Appellant, SALES, U.S.A., INC., TOYOTA MOTOR Defendant and Respondent. Counsel

Korda, Wall, Johnson & Wall, Jr., Michael J. Korda and J. for Joseph Plaintiff and Appellant. Plourde, Jr., Laufer, Gibson, Crutcher,

William A. David D. Dunn & Paul G. Bower, Swanson, Daniel G. J. Andrew and John A. Chang Arguelles Defendant Respondent. Axelrad, Perrochet, Brand,

Horvitz & David M. Lisa Levy, Downey, & Rohwer and J. Keith as Amici Curiae on Seymour behalf of McKeag Defendant and Respondent.

Opinion reexamine, ARABIAN, J. granted review of light divergent We from the Court of and a evolution rulings Appeal doctrinal other state among courts, the of high elements the tort known as variously interference with relations,” economic contractual “prospective advantage,” “prospective relations,” and the allocation of the burdens “prospective of proof between the to such an action. conclude We that those Court of parties of a so-called Appeal opinions act” as a requiring proof “wrongful compo action, nent of the cause of it to the allocating burden proving decisions; are the better reasoned plaintiff, we that anal accordingly adopt own, as our ysis of this court to the disapproving language prior opinions Such a contrary. the views of several other requirement, incorporating Torts, much of the jurisdictions, Restatement Second of the better reasoned decisions of the Court academic and the views of Appeal, leading authorities, redresses the sensibly balance between for providing remedy economic behavior and business predatory keeping legitimate competition case, however, outside bounds. We do not in this litigative go beyond of a approving requirement of the showing wrongfulness part case; case, if to be made for plaintiff’s refinements to that any, adopting element of the that the tort—requiring plaintiff prove, example, act, defendant’s conduct amounted to an tortious or was a independently law, species behavior or was anticompetitive proscribed by positive motivated malice—can be considered on another and in by unalloyed day, another case. case,

In this after the trial court modified the standard instruction to jury automobile dealer to show that defendant require plaintiff Toyota’s interference with his business was re- relationships “wrongful,” jury turned a verdict for The Court of Toyota. reversed the ensuing Appeal and ordered a new trial on the burden of judgment ground plaintiff’s did not proof act and that the modified encompass proof “wrongful” jury instruction was therefore erroneous. Given our conclusion that the plaintiff’s burden does include that the defendant’s conduct was proof wrongful by itself, some measure other than an interference with the interest plaintiff’s we now reverse the Court and direct that the of the Appeal trial judgment court be affirmed.

I Penna, Della John an automobile wholesaler doing business as Pacific Motors, this brought action for defendant damages Motor against Toyota Sales, U.S.A., Inc., division, and its Lexus that certain alleging business Act, conduct of defendants both violated provisions Cali- Cartwright Code, fornia’s state (Bus. antitrust statute & Prof. 16700 et seq.), constituted an intentional interference with his economic relations. The for Della impetus Penna’s suit arose out of the 1989 introduction into the American car market of luxury Lexus Toyota’s automobile. Prior to intro- Lexus, showed, ducing the evidence manufacturer, at trial both the defendant, Motor Toyota distributor, Corporation, the American had been concerned about the that a possibility resale market for might develop the Lexus in Even Japan. the car though was manufactured in Japan, Toyota’s was to bar the marketing strategy vehicle’s sale on the Japanese domestic market rollout; until after the then, American even sales in Japan would be under only name, a different brand the “Celsior.” that auto Fearing wholesalers in the United States Lexus might models back to reexport Japan resale, that, for and concerned and the production of Lexus availability models in limited, the American market would reexports its jeopardize dealers, network of fledgling American Lexus inserted in Toyota its dealer- clause, agreements a “no ship export” that the dealer was providing “author- ized to sell [Lexus to only customers located in automobiles] the United States. that it will agrees not sell [Dealer] for resale or [Lexus automobiles] use outside the United States. agrees to abide by any export [Dealer] policy established by [distributor].”

Following market, introduction into the American it soon became that apparent some domestic Lexus units were diverted being for foreign sales, effect, to principally To counter Japan. this wrote Toyota managers to dealers, their retail them of the reminding “no-export” policy explaining exports foreign resale could jeopardize Lexus automo- supply biles available for the addition, United States market. In Toyota compiled list of “offenders”—dealers and others believed to be by Toyota involved in the heavily Lexus developing resale foreign market—which it distributed to Lexus dealers in the United States. American Lexus dealers were also warned that doing business with those whose names on the “of- appeared fenders” list lead might sanctions, to a series of graduated from reducing

a dealer’s allocation to reevaluation of the dealer’s franchise possible agreement.

During Della Penna did a years plaintiff profitable automobiles, as an business auto wholesaler Lexus from purchasing chiefly outlet, the Lexus of Stevens Creek retail at near retail price exporting 1990, however, them to for resale. late sources to Japan By plaintiff’s began as a result of the “offenders list.” Stevens Creek ceased dry up, primarily models to other sources selling declined to sell to him as plaintiff; gradually well. Sales,

In filed this lawsuit February against Motor plaintiff Toyota U.S.A., Inc., both state antitrust claims under alleging Act Cartwright and interference with his economic with Lexus retail dealers. At relationship case-in-chief, close the trial court plaintiff’s granted motion Toyota’s for nonsuit with Act remaining claim had respect Cartwright (plaintiff trial). abandoned a related claim—unfair previously competition—prior however, The tort cause of action went to the under the standard BAJI jury, instructions to such claims with one At applicable significant exception. of defendant and over the trial modified request plaintiff’s objection, judge BAJI No. 7.82—the basic instruction the elements of the tort and identifying the burden of indicating that defendant’s proof—to require plaintiff prove conduct was alleged interfering “wrongful.”1 verdict, three, The returned a divided nine to in favor of After jury Toyota. denied, Della Penna’s motion for a new trial he In was an appealed. the Court reversed the trial unpublished disposition, Appeal unanimously court’s that a judgment, ruling intentional interference with plaintiff alleging economic relations is not to establish as an element required “wrongfulness” case, of its facie and that it was error for the trial court to prima prejudicial have read the amended an instruction to that effect. The Court of jury Appeal trial; remanded the case to the trial court for a new we then granted Toyota’s for review and now reverse. petition 1The standard governing prospective instruction “intentional interference with 7.82, advantage,” (1) BAJI No. describes the essential elements of the claim as an economic another,

relationship plaintiff between the and “containing probable a future economic benefit (2) advantage (3) plaintiff,” knowledge relationship, to defendant’s of the existence of the “intentionally engaged designed disrupt” that defendant in acts or conduct to interfere with or (4) (5) relationship, disruption, damage the plaintiff actual as a result of defend sought by ant’s acts. The adopted by modification defendant and the trial court consisted in adding (3) “wrongful” the word in element between the words “in” and “acts.” The trial court jury plaintiffs special jury defining “wrongful required also read to the the instruction acts” support liability legitimate as conduct “outside the realm of business transactions .... Wrongfulness may by improper lie in the method used or virtue of an motive.”

II A have traced the of the so-called “inter Although legal origins historians law, the ference torts" as far back as Roman the historical proximate impetus their common for modem in mid- 19th law. development lay century English 663; (See, (1923) Breach Contract 36 Harv. L.Rev. e.g., Sayre, Inducing Note, Tortious With in the Contractual Relations Nineteenth Contract, (1980) The and Tort Harv. Century: Property, Transformation of Queen’s Lumley L.Rev. of the Bench in Gye opinion 749], E1. & B1.216 a that has a standard in case become torts Eng.Rep. casebooks, cited as the of the two —interference widely origin torts with contract and its with sibling, interference economic relat the ions2—in form which have come down to us. The they plaintiff Theatre, Queen’s the owned at which were He operas contracted presented. a services of Johanna soprano, Wagner, various perform entertainments between 15 and with the that April July stipulation Miss not Wagner would time perform elsewhere that without his during permission. case, an

In action on the the theater owner Gye, that owner of alleged theater, a rival knowing Wagner-Lumley agreement, “maliciously" interfered with the contract by to abandon her “enticing” Wagner agreement Lumley appear Gye’s theater. demurrer to the Gye’s complaint court, was overruled the trial that was affirmed mling justices Queen’s Bench on then novel somewhat grounds “enticing” someone to leave his her was not limited to employment disrupting between master and relationship servant but to “dramatic artiste” applied or, such Miss Wagner, which “wrongfully is the maliciously, notice, contract, same with thing, a service interrupt[ing]’’ personal regard of the less means the defendant (2 was an employed, actionable E1. & wrong. B1. at p. J.) per Crompton, dealt, course, in v. opinion Lumley Gye, 2 E1.& B1. 216

conduct contract, intended to induce the breach an not existing conduct intended to prevent persuade others not to contract with the That plaintiff. such an interference with prospective relations itself be might tortious was Queen’s confirmed the Bench over next the 40 In years. 2Throughout opinion, this in an effort to both clumsy avoid cumbersome locutions and acronyms (“IIPEA”), phrase we use the “interference with economic to refer relations” to the generally tort known as “intentional interference with contractual or economic form, distinguish relations” and to it cognate from the “intentional interference with contract.” union, (1893) Q.B. v. Russell

Temperton a labor em- (Temperton), builders, broiled in a with a firm of announced what would be dispute today called a intended to force a secondary boycott, resolution of the union’s of the builder to cease him grievances pressuring suppliers furnishing construction materials. A failure to with the union’s de- comply boycott mands, warned, were would result in union on those who suppliers pressure their not to deal bought with them. supplies builder, One such of the sued the union’s supplier Temperton, leadership, his business had been breaches of alleging injured by contracts supply him, and the refusal of others to do business with all as a result of the A Queen’s union’s threats. unanimous Bench the verdict for upheld jury’s on the v. 2 E1. plaintiff, reasoning part authority Lumley Gye, supra, Rolls, Esher, & B1. that in the words of Lord the Master of the “the distinction . . . between the claim for to break contracts inducing persons entered into . . . and . already . . not to enter into inducing persons contracts . . Q.B. 728.) . prevail.” (Temperton, supra, can[not] cases,

“There was the same intent in both because wrongful wrongful malicious,” Lord Esher wrote. “There was the same kind of injury that, It seems rather a fine distinction to where defendant plaintiff. say induces a not to out a contract made with maliciously person carry already actionable, and so it is but where he plaintiff injures plaintiff, injures from into a plaintiff by contract maliciously preventing person entering into, with the which he would otherwise have entered it is plaintiff, not Q.B. actionable.” (Temperton, observed,

As a number of courts and commentators have keystone 2 El. & Bl. liability imposed Lumley Gye, supra, Temper- ton, Q.B. to from the judge opinions justices, appears been have the “malicious” intent of a defendant in an enticing employee breach her contract with the and in the business of one plaintiff, damaging who refused to with the union in cooperate its aims. achieving bargaining While some have doubted whether the use of the word “malicious” act, amounted to more than an intent to it anything commit an knowing Dobbs, would (see, harm the With plaintiff e.g., 335, 347, Contractual 37), 34 Ark. Dean Relationships L.Rev. Keeton, the state of the tort assessing as late as remarked that “[w]ith action, intent to interfere as the usual basis of the the cases have turned almost the entirely defendant’s motive or and the means upon by purpose which he has to it. As in the cases of interference with sought accomplish contract, manner of intentional invasion of the interests any plaintiff’s may

383 (Prosser be sufficient if the is not a one.” & Keeton on Torts purpose proper 130, (5th 1984) ed. with Advantage, Prospective § was, It historians have this accent on the defend- legal suggested, early ant’s that was for the interference torts “intentionality” allying responsible relatives, a with their remote intentional torts of different order— quite or than one account of the false More battery, example, imprisonment. rise of the tort relied on Lord in has Bowen’s statement an interference case to do “intentionally contract that that which calculated the ordinary does, fact, of course events to which another in that damage, damage trade, is actionable if person’s just done without cause property (1889) excuse.” v. & (Mogul Steamship McGregor, Q.B.D. Co. Gow Co. 23 598, 613.)

One of this was the assimilation to the consequence superficial kinship interference torts of the and burden of the pleading proof of requirements “true” intentional torts: the that the need requirement only allege plaintiff so-called facie tort” the by showing defendant’s awareness of the “prima relation, it, a deliberate interference with and the result plaintiff’s Brown, (See, ing The Rise and injury. e.g., Threatened Demise the Prima 563; Note, (1959) Facie Tort 54 Principle Nw. U. L.Rev. Facie Prima (1952) Tort Doctrine 503.3) 52 Colum. L.Rev. this account of the By matter—the traditional view the one torts the the first by adopted Restatement of Torts—the burden then the defendant to demon passed is, strate that its conduct was privileged, by a “justified” recognized or, such context, defense as the of others protection more in this the likely Restatement, defendant’s own (See, competitive business interests. e.g., corns, 766, b-m, (1939) 50-63; Torts Arnold A.F. & Co. v. Pacific Ins., 710, Inc. (1972) 96]; 27 Cal.App.3d Cal.Rptr. [104 Professional Lowell Mother’s Cake & Cookie Co. Cal.App.3d [144 184].) 6 A.L.R.4th Cal.Rptr.

These related features of the economic relations tort and the require- led, however, ments its and defense surrounding proof calls for a reexam- ination and reform as 1920’s. early and the current Tracing origins century 3A ago, or so “prima notion of the regarded by legal facie tort” was leading day authorities of the as a principle vital jurisprudence reconstitution civil wrongs in the disintegration aftermath of the of the old common law forms of action. Competing “intentionality,” formulations aspect prima as an wrong, facie were offered such day (see luminaries of their as Dean Jurisprudence Pound 3 Pound 9), (See Justice Aikens v. Wisconsin Holmes. U.S. L.Ed. that, prima facie, S.Ct. has 3] [“It been considered intentional infliction action, temporal which, damages law, is a cause of as a matter of substantive whatever pleading, be the form of requires justification if the escape.”].) defendant is to that “a the two interference torts in Francis concluded Sayre status of law has resulted. .... ... . Courts still somewhat uncertain [H HD ‘malice,’ or the well-known formula which requires repeat punctiliously tort; ... as one of the of the but there has ‘without cause’ just requirements as to what constitutes ‘malice’ or ‘absence of been such a lack of agreement than that such words are little more becoming empty phrases justification’ of Is it not time to formulate the what these worn phrases .... problem Contract, Breach 36 Harv. L.Rev. Inducing mean?” (Sayre, of 674-675, omitted.) The nature of the itself seemed to wrong many fn. suit and the of coherent inviting hampering presentation unduly vague, others, in the view of effects of procedural defenses. More critically to a business essentially facie tort what principle applying prima led to even more untoward consequences. context one, such a slender Because the initial burden was plaintiff’s proof than the defendant’s conscious act and to no more amounting showing critics business argued legitimate competi- plaintiff’s injury, to (not tion could lead to time and lawsuits consuming expensive speak rival, based on conduct that was regarded by potential liability) by letter” world as both The “black commonplace commercial appropriate. of the Restatement of Torts the elements and proof rules surrounding tort, even “foreign lawyers reading some complained, might suggest order of Restatement as an matter the whole original competitive [that] American Carl (Statement facie of Professor industry prima illegal.” Perlman, With Contract Auerbach at ALI Proceedings, quoted A Clash Tort and Contract Doctrine and Other Economic Expectancies: 89; The Differing U. Chi. L.Rev. see also Myers, Treatment in Antitrust Efficiency Competition founded Law 77 Minn. L.Rev. an economic system [“In should not be liable of free upon principle competition, competitors tort for business seeking legitimate advantage.”].)

Calls for a reformulation of the elements and the means of establish- both Restate- the economic relations tort reached a around the time the ing height reflected in ment Second of Torts was and are being prepared publication criticism, the its from its version. Acknowledging departures predecessor’s American Law Institute discarded the facie tort prima requirement 766B, first A new that the defend- Restatement. section provision, required ant’s conduct be a multifactor “balancing” ap- “improper,” adopted for the in determining seven factors trier of fact proach, identifying weigh Torts, however, a defendant’s Second of declined Restatement liability. to take a on the of which of the bore the burden issue position parties on the “considerable on has the who burden of proof, relying disagreement and certain and that matters” the observation “the law in pleading proving (See this area has not but is still in a formative fully congealed stage.” Note, 37, addition, (1965 ed.) 5-6.) Rest.2d Torts ch. In the Introductory a Restatement Second that defendant liability provided might escape that his conduct was did include use showing not the of justifiable 768-771.) (Id., means.” “wrongful §§

B meantime, however, In the an number of state courts had increasing high traveled the well Restatement beyond Second’s reforms by redefining otherwise of the elements the economic recasting relations tort and the burdens its surrounding proof defenses. In Serv. Inc. v. Top Body Shop, Allstate Ins. Service), Co. Or. P.2d (Top 1365] “ Court, Oregon Supreme assessing this ‘most fluid and rapidly growing ” tort,’ noted that “efforts consolidate both unsettled lines recognized into a general development theory ‘tortious interference’ have brought to the surface the difficulties of the elements of so a defining tort general without within its a sweeping terms wide variety different socially very (Id. omitted.) conduct.” fn. criticisms,

Recognizing the force of these court on in went to hold Top Service, supra, 582 P.2d that a claim of interference with economic relations “is made out when interference in resulting injury another is wrongful by some measure beyond Defend- fact of interference itself. ant’s liability from may arise or motives from the use of improper improper means. They be may wrongful reason of statute or other regulation, law, rule of common recognized an established standard of a perhaps trade or profession. No question arises unless the privilege interference would be wrongful but it becomes an issue privilege; only the acts if charged would be tortious on the an part (Id. at unprivileged defendant.” added, omitted.) italics later,

Four years Service, the views of the Oregon Court Supreme Top supra, 582 P.2d were by the Utah In adopted Supreme Leigh Court. Furniture and (Utah Co. v. Carpet 1982) Isom 657 P.2d that court underlined the same concerns that had moved the Court in Oregon Supreme Service: “The Top with the tort problem prima facie is that approach basing on a liability mere showing defendant interfered with intentionally plaintiff’s relations makes actionable all sorts of contemporary otherwise examples legitimate such as efforts to persuasion, activities, others not to . . . certain or deal persuade engage with certain entities. The issue in for the major controversy—justification defendant’s left conduct—is to be resolved on the affirmative defense of In privilege. short, the facie to the tort of interference with prima approach (Id. 303.) economic relations too little of the requires plaintiff.” on, however, alternative, The Utah Court went to Supreme the reject multifactor the Restatement Second: “We concur in approach adopted by the (Second)'s Restatement of the facie tort because it rejection prima approach leaves too much about the for a uncertainty requirements recognized privi- and the defendant’s burden of lege these and other pleading proving matters. But we also the (Second)’s Restatement definition reject [Citation.]. of the tort (657 because of its We seek a better alternative.” P.2d complexity. alternative, concluded, That the court was the one advanced by Service, 1365, Court in Oregon Top 582 P.2d a “middle Supreme “the ground” more than the requires plaintiff allege prove prima tort, 304; facie (657 but not to all defenses negate P.2d at privilege.” 1158, see also (1989) Pleas v. Seattle 112 Wn.2d City 794 P.2d [774 [same]; 832, (1987) 1161-1163 v. Duggin Adams 234 Va. 221 S.E.2d [360 Service adopting Top requirements].) 836-837] [also so, Over the decade or close to a past courts of majority high American have jurisdictions into the economic relations tort vari imported ations on the Service line of Top rule that reasoning, explicitly approving in such a suit requires interfer plaintiff plead prove alleged ence was either tortious” “wrongful,” “improper,” “illegal,” “independently others, or some variant on these formulations. courts of Among high (Anderson (1981) New Mexico v. Dairy land Ins. Co. N.M. 155 P.2d 97 [637 837, means”]), (Federal Rhode Island [“wrongful Body Auto Works 840-841] 377, (R.I. 1982) v. Aetna Cas. & Sur. 447 A.2d 379-380 [“improper”]), 52, (Blake (1983) Connecticut v. 191 Conn. 257 A.2d Levy [464 54-55] [“in tortious”]), fact (Montrone New (1982) v. 122 N.H. 724 Hampshire Maxfield 1216, (Harsha A.2d Iowa v. State Sav. Bank [“wrongfully”]), [449 1217] 791, (Iowa 1984) 346 N.W.2d 799-800 A.L.R.4th [“improper [52 805] (semble)]), means” Arizona (Wagenseller v. Scottsdale Memorial Hosp. (1985) 1025, 147 Ariz. 370 P.2d interfer [710 [“improper” 1041-1043] ence]), (Turner 1106, Kansas v. Halliburton Co. 240 Kan. 1 P.2d [722 misconduct”]), (Krebsbach (Okla. Oklahoma v. Henley 1115] [“intentional 1986) 852, 725 P.2d 856-858 or unjustified”]), Virginia (Duggin [“unlawful Adams, 832, v. supra, 360 S.E.2d 836 tortious” [“illegal independently methods]), (Nat. 1988) Coll. Athletic Ass’n v. Kentucky 754 Hornung (Ky. 855, S.W.2d conduct”]), 859 or some New significantly wrongful [“malice

387 N.J. A.2d (Printing Mart v. Electronics. 739 Jersey Sharp [563 31, (Pleas Washington City without v. [“wrongfully justification”]), 39] 1158, Seattle, means”]), Colorado 774 P.2d 1161-1163 [“wrongful (Colo. 1990) Dev. v. Inv. Assoc. P.2d (Westfield Rifle (United Leasing Massachusetts Truck v. Geltman Corp. [“improper”]), (1990) 406 Mass. 811 N.E.2d [“improperly”]), Wyoming 21-23] [551 Gold, Const., 1991) (Four Inc. P.2d Nines v. Inc. (Wyo. interference]), (Idaho Idaho First Nat. Bank v. Valley Bliss [“improper” Foods 121 Idaho 266 some P.2d ‘wrongful by [“ [824 861] ”]), measure (Macklin fact interference itself’ beyond Maryland (1994) 334 Logan Md. A.2d [“improper wrongful 119] Lab., conduct”]), (Devine (Me. 1994) Maine v. Roche Inc. Biomedical 637 441, intimidation”]), A.2d 447 (State Montana Bd. v. Dentistry [“fraud of (1994) 954, act”]), Kandarian 268 Mont. 408 P.2d wrongful [886 959] [“a (U.S. and (1994) Anchor v. Georgia Mfg. Rule Industries 264 Ga. 295 [443 833, S.E.2d . . . element”]) have one or unlawjul adopted 836] [“some another of these variations.

Ill California, In the of the economic relations tort has development paral leled its evolution in other For jurisdictions. this court declined many years to 216, the of v. Bl. adopt holding Lumley Gye, supra, El. & on the ground that, Boyson (1893) 492], as we reasoned in v. Thorn 98 Cal. 578 P. [33 “[i]t is a truism of the law that an act which does not amount to a injury legal cannot be actionable because it is done a bad intent. . . . If it is right, and the means used to the breach are motive procure the cannot make right, it a . (Id. 583-584, . . .” wrong at In italics Ice Co. original.) Imperial v. (1941) however, Rossier 631], court, 18 Cal.2d 33 P.2d a unanimous [112 speaking through Justice Traynor, these pronounced Boyson statements in “not necessary decision” and be (Id. directed that they “disregarded.” California thus the of joined majority jurisdictions adopting view of the first Restatement of Torts that “an action lie for stating will unjustifiably (Id. added.) a breach of inducing contract.” italics In the Rossier, aftermath of Ice v. Imperial Co. 18 Cal.2d our economic early relations cases were two either the principally types, classic master servant pattern (see, pre-Lumley Gye cases e.g., Buxbom v. Smith 23 Cal.2d P.2d [hiring away [145 305] plaintiff’s employees defendant after had built his plaintiff business up distribute defendant’s and defendant had breached publication distribution contract held actionable “an unfair method of interference with advanta- relations”]) geous or those circumscribed kinds business rela- involving tions in which the plaintiff, real estate broker typically working attorney defendant

on a sued recover fees after had refused to share contingency, (see, sales or a Buckaloo v. injury recovery e.g., property proceeds personal (Buckaloo) Johnson 14 Cal.3d 815 537 P.2d Cal.Rptr. [122 865] refused to his broker’s commission on the sale of pay plaintiff [defendant after had sale with beach discussed directed property plaintiff buyers defendant; held, them to stated a claim for relief for intentional complaint relations].) interference with California cases thus reflected the historical origins development tort, as it stood to the revisions of the Restatement prior especially Second and the concurrent evolution in the case law. In Zimmerman v. Bank 319], America for Cal.App.2d Cal.Rptr. example, real estate that the defendant bank had plaintiff agent alleged “maliciously” induced third to breach an oral with him to broker the sale agreement parties of their In that the statute of frauds did not bar the property. holding claim, interference the Court of discussed the plaintiff’s Appeal relationship court, between the two interference torts. Justice Tobriner Writing both the source of the economic relations tort with its contractual aligned that bears a with Lord sibling employed language striking symmetry Q.B. Esher’s statement in 728: “The Temperton, supra, history tort,” wrote, he “discloses its essence. It a contemplates, basically, disruption of a not the breach of a contract. ... ... relationship, necessarily [U [^D ... We cannot conceive how the action for interference with an existing contract, unenforceable, lawful even could lower though status occupy than that of interference with a contract. If negotiations contemplating tort, interference with the constitutes the interference with the negotiations contract in which the must the negotiations constitute fructify necessarily (Zimmerman, 60.) tort.” supra, 191 at Cal.App.2d pp. America, This court endorsed the of Zimmerman v. Bank reasoning 55, Buckaloo, in

supra, 191 14 Cal.3d at a case in Cal.App.2d which the sued the seller and plaintiff of beachfront to buyers property recover for the loss of his from the damages commission sale of the land. claims, other Among that defendants had plaintiff alleged intentionally interfered with an out of the seller’s invitation to expectancy arising open brokers his discussions the sale of the preliminary regarding property with the buyers. the of the as sufficient to Upholding allegations complaint demurrer, survive a we characterized the economic tort as one relations relative, invoked” but a “more “infrequently inclusive than its wrong” intentional interference (Id. 822-823.) with contract. at pp. Buckaloo,

Our opinion 14 Cal.3d reviewed a number of Court of decisions Appeal the of the tort to real upholding applicability (id. 823-826) at and concluded by estate situations brokerage identifying estate the elements the cause of action. “In a real following brokerage an broker (1) context these are: economic between and vendor relationship broker and vendee the future benefit containing probability broker, (2) the the defendant of existence of to the the knowledge by (3) acts on of the intentional the defendant relationship, part designed (4) the actual disrupt relationship, disruption relationship, damages (Id. caused acts of the defendant.” plaintiff proximately by 827.) California,” observe,

“In went we on to or justification is an “privilege defense, and the lack need not be affirmative thereof shown by original caution, (14 however, 827-828.) Cal.3d A note of into pleader." crept our formulation of at this most principles point. “Perhaps significant for interference with a justification business advan- privilege wrote, is free we “Ours is a tage competition,” competitive economy sense, which business entities vie for economic In a all advantage. vendees line, are potential and services of all in a buyers products given sellers and success to him who is able goes to induce customers not to deal potential (14 Cal.3d at competitor.” Service,

In Seaman’s Direct Inc. Buying v. Standard Oil Co. Cal.3d 752 Cal.Rptr. (Seaman’s), P.2d overruled in part 1158] Mills, Freeman & Inc. v. Oil Belcher Co. 11 Cal.4th 85 [44 669], 900 P.2d on Cal.Rptr.2d Restatement and without relying theirs? or even reviewing the tort mentioning intervening revaluations of Second, Restatement other state courts and our Court of high own Appeal, format, we again endorsed the facie prima tort and burden pleading proof that noting if and when “[o]nly establishes an ‘intent to interfere’ plaintiff ‘[Wjhile does issue of come into ‘justification’ play. defend- [Citation.] ant’s is intent an element the cause of to culpable action be pleaded and proved defendant’s is by plaintiff, an affirmative defense justification 766, .”’(36 . . . Cal.3d at italics in We on to observe original.) went that when it mistaken that an ‘motive’ is an “[defendant] implies improper element of cause of rather in plaintiff’s action than a factor defendant’s affirmative (Id. defense. It not.” at p. Seaman’s, 752,

Although our 36 Cal.3d to the opinions following all, extent they addressed continued to enumerate the same question tort, facie prima elements economic relations the cases consistently denied the plaintiff on the for that the recovery, cause of ground, example, action did not from encompass resulting injury government licensing pro- (Blank ceedings 718, v. (1985) Kirwan Cal.3d 39 311 703 Cal.Rptr. [216 390 (Youst 58]), (1987)

P.2d did not contests 43 Longo apply sporting 728, 1025]), P.2d 85 A.L.R.4th Cal.3d 64 to a Cal.Rptr. [233 of a advertisers constitutionally boycott protected political newspaper’s (Environmental an environmental & Council v. group Planning Information (1984) 1086]), 36 Cal.3d 188 P.2d Court Superior Cal.Rptr. [203 & meritorious lawsuit Gas Electric Co. filing potentially (Pacific v. Bear Stearns & Co. 50 Cal.3d 1118 P.2d Cal.Rptr. [270 587] Indeed, Stearns). (Bear that the the eco- concluding policies supporting nomic relations tort were insufficient to interests in trump competing courts, access to the our in Bear insuring litigants unhampered opinion Stearns renewed and on the caveat we had earlier in expanded expressed Buckaloo, 14 Cal.3d at 828. page

“The torts of breach of contract and interference with inducing pro- criticized,” wrote, have been we “as spective advantage protecting secure of contractual and economic relations at the enjoyment expense our interest in a We have been economy. freely competitive [Citation.] torts, cautious in the interference to avoid defining promoting speculative claims. . . . Given the criticism of these causes of action and the dangers inherent in tort we business imposing liability competitive practices, have no motivation to these torts so that to threaten the expand they begin Stearns, (Bear of free access to the courts.” 50 Cal.3d at right 1136-1137, omitted.)

Meanwhile, in the Court of and in the developments Appeal practical had, administration of such claims in the if outdis- trial courts anything, tanced our own formulations of the elements of the tort and the allocation of First, the burden of in at least two several Court of proof respects. Appeal onto the elements of the cause of opinions engraft plaintiffs appeared or, action allegations defendant’s conduct was proof “wrongful” as the Court said Tri-Growth Centre Ltd. v. Appeal City, Silldorf Burdman, & Duignan Eisenberg Cal.App.3d 330], was “based on take the defendant’s actions facts that Cal.Rptr. [265 out of (See the realm of business transactions.” also Rickel v. legitimate Schwinn Co. Bicycle Cal.App.3d Cal.Rptr. 732] common denominator shared cases of interference with [by prospec- [“The tive economic is an of Without this allegation wrongfulness. relations] in of we fear that actors requirement wrongfulness, perfectly legitimate economic transactions would to the conduct of be ‘put justifying [their] ”]; business at the whim of a rival.’ v. A.F. Arnold & Co. Pacific Professional Ins., Inc., [“Thus, lan- while no particular Cal.App.3d should be the must show an guage facts required, pleaded by plaintiff those acts beyond the defendant’s which takes something intent to do G. Gianelli Bert himself.”]; business securing of a mere competitor 1020, 1053 Co. Beck & [219 172 Cal.App.3d Co. v. Distributing must action cause of plaintiffs to their order prove Cal.Rptr. 203] [“In were wrongful defendants of the acts or conduct . . . ‘that the show Portman Companies Center Associates Design Francisco San .”’]; cf. . . . defeat order to 29, 42 Cal.Rptr.2d [“In 716] 41 Cal.App.4th be unlawful conduct must the defendant’s the competition] privilege [of illegitimate.”].) 1990, BAJI, widely Instructions

Second, Jury in the Book Approved cases, Second of Restatement on the relying in civil used trial judges tort, the included an instruction providing account of Torts and Mr. Witkin’s liability by could defeat relations tort case defendant in an economic that a (Cf. BAJI No. “wrongful.” its conduct was not independently showing Com.) 1994) & (8th ed. Use Note 7.86.1 course, concurrent change reflect a nearly closely

These developments, and in other jurisdictions. the American Law Institute in views both within with we are thus presented the face of those twin lines development, In the formal reconstruct consider whether the expressly opportunity to achieve relations tort with economic elements of the interference courts, views within emerging the of the trial closer with alignment practice courts, other state high of many the Court of rulings Appeal, s we believe that We commentators. of leading critique should.4 pleading and governing plaintiff’s any change in the rules 4Respondent contends that only be context should requirements in an economic relations tort proof burden of tried, law was case was argument that at the time this application. He relies on the defendant’s conduct pleading proving that the plaintiff that a had no such burden of settled course, rule,” supreme of a court of wrongful. “general is that “a decision was The (Peterson v. operation.” overruling retrospective in its

jurisdiction a former decision is omitted.) 1305], Cal.Rptr. 642 P.2d Superior Court 31 Cal.3d 151 [181 rule general public policy, although exceptions, And there are founded on fairness 152-154), (see, the circumstances application judicial e.g., decisions id. at of retroactive clear, makes opinion text of our support application not their here. As the main of this case do regulating pleading change in rules litigants have foreseen that a and counsel could wind well before litigation relations was in the proof requirements and burden of in economic Torts Second of The of the Restatement the time this case was tried in modifications 1992. 1965; jurisdictions high of other American opinions of the courts occurred most 1992; ante, cited, 386-387, in the and the evolution pages were decided well before traced, ante, began Rickel v. Schwinn pages Appeal, decisions of the Court of Co., prospect of a modification Bicycle Cal.App.3d 648 decided in 1983. time legal profession at the by plaintiffs and the fairly the rule thus could have been foreseen IV In for a means to recast elements searching relations tort and we allocate associated burdens of are proof, guided by an concern articulated courts of other overmastering by high jurisdictions the need draw and enforce a commentators: distinc legal sharpened tion between claims for tortious of an contract and disruption existing claims that a contractual or economic has been prospective relationship interfered with in defendant. cases do fact Many acknowledge a defenses claims of interference with greater array justificatory against Still, in relations. our view and that of several other courts and commentators, the notion that the two torts are analytically unitary derive from a common sacrifices wisdom to theoretical principle practical the idea that the interests invaded are of insight, promoting nearly equal are not. dignity. They

The courts a third conduct intended provide damage remedy against party an contract because the disrupt existing exchange precisely promises in such a cemented economic is deemed resulting formally relationship from interference a to the worthy protection stranger agreement. contractual, however, Economic short of should stand on a relationships different as far as the for tort is reckoned. legal footing potential liability Because ours is a culture of commercial wedded social rewards firmly contests, the law in a takes care to draw lines of usually legal liability way that maximizes areas of free of legal competition penalties.

A doctrine that blurs the line between interference with an analytical business contract and interference with commercial relations less existing than contractual one that in invites both conduct and uncertainty unpre- of its effect. The the breach of an dictability notion that legal inducing contract is a subevent of the “more inclusive” class of acts existing simply relations, that interfere with economic while theoretically unobjec- perhaps tionable, should, has been mischievous as a matter. Our courts practical short, contexts, the two kinds of business firmly distinguish bringing solicitude to those have that into greater agreements, relationships ripened while that short of that in a zone where the recognizing subsist relationships rewards and risks of are dominant. competition

' that, Beyond we need not tread It is sufficient to today. dispose issue before us in this to recover for case by holding plaintiff seeking retroactivity. applying this case was tried. We discern no unfairness the usual rule of full Magana, Olney, Levy, (Cf. Neel & Cathcart Cal.Rptr. Cal.3d 193 [98 Gelfand 421].) P.2d has the burden economic relations with interference prospective alleged was wrongful “by interference the defendant’s that proving pleading Service, itself.”5 (Top of the interference the fact measure beyond some did not commit the trial court 1371.) It follows that 582 P.2d to find that the jury No. 7.82 to require BAJI it modified error when defin the instruction And because was “wrongful.” interference defendant’s offered by trial court was conduct” given jury “wrongful ing in this case. himself, review its sufficiency no occasion to we have plaintiff to the plaintiff’s pleading refinements of whether additional The question embracing California courts—questions merit adoption by burdens proof malevo whether a “disinterested “wrongfulness,” scope the precise Bank Co. v. Federal lence,” (Amer. Bank & Trust Holmes’s words in Justice 983, 990, 971]), 25 A.L.R. 41 S.Ct. U.S. L.Ed. itself, underlying policy or whether the is an actionable interference resources, tort, justifies of social the efficient allocation justification under that is as recognized anticompetitive actionable conduct including Perlman, (see, law e.g., state and federal established positive Tort and A Clash Economic Expectancies; Contract and Other With await Doctrine, 61)—are matters that can Chi. L.Rev. 49 U. Contract and a more case. another day appropriate

Conclusion an interference alleged to recover for seeking We hold that plaintiff as part must and prove contractual or economic relations plead with the interfered knowingly that the defendant not only of its case-in-chief some was wrongful but in conduct that engaged plaintiff’s expectancy, itself. The judgment measure other than the fact of interference legal with directions Court of reversed and the cause is remanded Appeal affirm the of the trial court. judgment J., Baxter, J., J.,

Lucas, J., Kennard, J., and Werdegar, George, C. concurred.

MOSK, J. concur in the judgment. I Penna) Della (hereafter John Della Penna

In his complaint, plaintiff U.S.A., Sales, Inc. Motor Toyota various claims defendant against brought of its with dealers business (hereafter relationship his Toyota), concerning Seaman's, Buckaloo, supra, supra, 14 Cal.3d language 5To the extent relations tort in the economic addressing pleading proof requirements Cal.3d case, disapproved. adopt in this it is inconsistent with the formulation we law, action for Lexus automobiles. Under the common he asserted a cause of economic the tort of intentional interference with advantage. prospective the tort. a verdict of Trial was The court instructed on superior By by jury. three, nine and Della Penna found in favor of jury Toyota against in that thereon. The Court of reversed ensuing judgment part, Appeal instructions were erroneous. that the concluding given prejudicially of in this Like the I would reverse the Court judgment majority, Appeal’s error was not As I shall I believe that instructional explain, any regard. prejudicial.

I “malice,” With the dissonance caused such terms as “justification,” note, 37, Torts, 4-6), the (see, Rest.2d ch. introductory pp. “privilege” e.g., interference with eco- prospective common law on the tort of intentional in in American and California jurisdictions generally nomic both advantage, (See, incoherence. e.g., Myers, Differing is fast specifically, approaching Tortious Treatment in Antitrust and Efficiency Competition Interference of 1097, (1993) “tortious interference Law Minn. L.Rev. that [stating 77 1099 confusion”]; id. at law suffers from considerable doctrinal economic the tort of intentional interference with [analyzing prospective Perlman, Ex- Contract and Other Economic With advantage]; (1982) U. Chi. L.Rev. A Clash Contract and Tort Doctrine 49 pectancies: of Note, 61, doctrine”]; see also 61 the “absence of a coherent [noting Interest in Commercial With Contract: A Reassertion Society’s 1491, (1981) L.Rev. 1506 and Contractual 81 Colum. Stability Integrity 24 (1979) v. Cal.3d 799 Gregory with a citation to J’Aire [arguing, Corp. 407, 60], tort P.2d California protection Cal.Rptr. “[i]n [157 all ‘foresee- relations has been into advantageous merged protection against ”].)1 able harm’ case of Zimmerman v.

Before the Court of decided seminal Appeal 319], Witkin Bank America 191 Cal.App.2d Cal.Rptr. [12 proximate 1The historical source of the tort of intentional inference with Temperton v. Russell advantage Appeal is the decision of the Court of 715, Lumley Gye (Q.B. 1853) 2 El. & Bl. 216 progeny which is one of the [118 Q.B. Eng.Rep. proximate intentional interference historical source of the related tort of post). (see with contract however, Temperton, origin, goes The tort’s ultimate further than 715. back Q.B. early and 16th developed very date”—specifically, It “seems have at a between the 14th to. it, violence, having to drive physical centuries—“in cases to do with the use of or threats church; market, away might plaintiff’s customers from the or those who make donations to his improper During definitely but it seems to have been limited to the use of such means. rather eighteenth involving threats and violence seventeenth and centuries there were decisions customers, frighten gave others which away prospective workmen or and later there were interference with of intentional prospec law” on the tort that “the reported rate,” rules but that its at a rapid was “developing economic advantage tive (2 “difficult to classify.” its “admittedly vague” applications were Torts, 1332-1333.) Witkin, (7th 1960) ed. Cal. Law Summary § rationalize later, s effort to of Zimmerman' decade spite More than a the same exactly to make Witkin was compelled principles, the governing Torts, 1974) Witkin, (8th ed. of Cal. Law (4 Summary report. Johnson in Buckaloo v. our decision

2643.) We then handed down Bucka (hereafter sometimes 537 P.2d Cal.3d 815 Cal.Rptr. 865] after the authority. Today, became the loo), leading which straightway decades, further effort Buckaloo'% notwithstanding two of passage rationalization, unchanged. remains substantially the situation

A inten- common on the tort of law’s near incoherence One reason for the be discovered economic advantage may interference with prospective tional doctrinal basis. in its 20th, half of the and the first half of the 19th century the second

During courts, law first in common hard on both law and society, the times pressed States, become known as what has and then in the United developed England (1952) Doctrine (Note, Prima Facie Tort tort doctrine.” The facie “prima 503, 503; Brown, Demise Rise and Threatened L.Rev. The 52 Colum. of 563, 563-566.) The (1959) 54 Nw. U. L.Rev. Prima Facie Tort Principle Facie (Note, The Prima the old action on the case. traditional source was Brown, 508; Doctrine, The Rise and 52 Colum. L.Rev. at supra, p. Tort U. 54 Nw. supra, Prima Facie Tort Principle, Threatened Demise of of framework was a object “capable L.Rev. at The analytical p. development an internal systematic assisting guiding comprehension Prima Demise (Brown, The Rise and Threatened matter” subject 563), end that 54 Nw. U. L.Rev. at p. Facie Tort Principle, supra, Tort (Note, The Prima Facie rather than might govern “principle precedent” accord, Brown, 503; The Rise and Doctrine, 52 Colum. L.Rev. at Nw. U. Principle, supra, Tort Threatened Demise the Prima Facie 563). L.Rev. at p. case in game. There was even a shooting plaintiff’s spiteful an action for to scare off the had against defendant who England in in which an actor was allowed to recover obtain he was unable to of which having stage, succeeded in him hissed off the as a result 1984) (Prosser Keeton, (5th With ed. employment.” of Torts further & The Law Note, 130, cases; omitted, Advantage, citing see Prospective fns. § Interfer- Property, Century: The ence With Contractual Relations in the Nineteenth Transformation Torts, c, Contract, 1510,1516-1517; com. and Tort Rest.2d 93 Harv. L.Rev. 8-10.) (1889) Q.B.D. & Co. McGregor,

In Co. v. Gow Mogul Steamship 613, affirmed in the House of Lords sub nomine Mogul Steamship Company Justice Bowen in the Court Gow & Co. A.C. Lord McGregor, facie tort doctrine: made the famous statement prima Appeal “ in the to do that which is calculated course of ordinary [Intentionally does, fact, and which another in that damage events to damage, person’s trade, if cause or excuse.” is actionable done without just property 154, 159, In v. Wisconsin 195 U.S. L.Ed. Athens Holmes, 3], who “was in measure for the S.Ct. Justice large responsible (Note, doctrine in this The country” introduction of the facie [prima tort] accord, Doctrine, 504; 52 Colum. L.Rev. at p. Prima Facie Tort Brown, Rise and Threatened Demise the Prima Facie Tort Principle, 564), “It 54 Nw. U. L.Rev. at made the famous statement: equally that, the intentional infliction of prima facie, temporal has been considered action, which, law, whatever is a cause of as a matter of substantive damage if is to be the form of the defendant justification pleading, requires escape.” this Dean Pound made the restatement: following

In middle of century, “One who does which on its face is injurious intentionally anything unless he can establish a another is liable to repair resulting damage some or his claim to act as he did with by identifying liberty privilege Pound, 9.) (3 or social interest.” p. recognized Jurisprudence public of the facie tort” have been said to be three The “elements” “prima number. view, harm. Under one The first intent and the likelihood comprises of,” which in turn must be

there must be “intent to do the act complained to cause” the of a sort as is “calculated in the course of events ordinary Doctrine, (Note, 52 supra, harm of.” The Prima Facie Tort “complained 505, 508.) an intent to cause harm. Colum. L.Rev. at There need not be pp. 505; (Id. (1928) 41 at see With Contract Relations p. Carpenter, Interference motive Harv. L.Rev. in the sense of bad [stating “[m]alice view, however, intent to cause harm is not a Under another requisite”].) Doctrine, (Note, supra, is indeed The Prima Facie Tort necessary. 506-507.) Colum. L.Rev. at pp. of the

The second is harm. “Since facie tort law is an outgrowth prima case, (Note, .” The Prima action on the its is remedial. . . primary purpose Doctrine, result, 508.) harm is Facie Tort 52 Colum. L.Rev. at As supra, p. (Id. it embraces loss as well. at other necessary: pecuniary loss perhaps Brown, the Prima 508-509; accord, Threatened Demise The Rise and pp. that harm “is at 570 [stating 54 Nw. U. L.Rev. Principle, supra, Facie Tort ‘action,’ cannot be sought”].) wherefore nominal damages the essence and that of the parties “The interests or justification privilege. The third whether the defend the decision” form the matrix out of which of society Facie (Note, The Prima “is rendered.” ant’s conduct justified privileged 509; Doctrine, at see 52 Colum. L.Rev. Carpenter, Tort supra, Interference Relations, 745-762 41 Harv. L.Rev. supra, pp. [speaking Contract With intentional interference prospective of the tort of expressly can of situations others].) “an infinite Generally, variety among advantage, (Note, The Prima facts.” and each case must turn on its special develop, Doctrine, So far as 52 Colum. L.Rev. pleading Facie Tort concerned, has tradition are the issue of justification privilege and proof defendant, as interfering as an affirmative defense for party ally operated of action for the interfered-with party and not as a of the cause part With Contractual (Dobbs, Relationships plaintiff. Johnson, 335, 338, 19; Buckaloo v. 34 Ark. L.Rev. cf. interference with Cal.3d at as to the tort of intentional pp. [same economic advantage].) prospective of the tort of intentional

It is the facie tort doctrine that is the basis prima Dobbs, Tortious interference with economic advantage. (E.g., Ark. L.Rev. at With Contractual Relationships, supra, 337-338; Note, Doctrine, 52 Colum. L.Rev. at The Prima Facie Tort 504-505, the tort of intentional interference [speaking impliedly With Con- with prospective advantage]; Carpenter, Interference Relations, tract 732-762 expressly 41 Harv. L.Rev. [speaking see, others]; this Ranch Kay-Dix tort e.g., among Diaz recognizing Cal.App.3d Cal.Rptr. [expressly [88 443] tort]; (1944) 23 facie tort the basis of this Buxbom v. Smith doctrine as prima much].) Cal.2d P.2d recognizing [impliedly [145 305] It That fact is in section 766 of the first Restatement of Torts. apparent that, who, so, “one without a to do induces generally, provides privilege otherwise or continue a causes a third not to” “enter into purposely person business relation with another” “is liable to the other for the harm caused thereby.” doctrine, however, The

The facie tort much so. prima Very problematic. than to has been asked whether it other “has served question any purpose a sonorous better to than decision suited provide apothegm opinion writing (Brown, The Rise Demise Prima Facie and Threatened Tort making.” 564.) 54 Nw. U. L.Rev. at The answer is no. Principle, supra, p. The facie tort doctrine exhibits a it has prima general deficiency. Perhaps resulted in a kind of “internal matter.” systematic subject development (Brown, The Rise and Threatened Demise the Prima Facie Tort Principle, has, 563.) 54 Nw. U. L.Rev. at But if it it has done so by sacrificing p. an external connection to “The idea is that ‘intentional infliction of society. facie, is, harm’ a tort. The is that almost act prima problem any legitimate (Dobbs, can cause ‘intentional’ harm . . . .” Tortious With 337-338, 18.) Contractual 34 Ark. L.Rev. at Relationships, supra, Therefore, must be understood that intentional infliction of harm . . . “[i]t (Id. covers a multitude desirable acts as well as a multitude of sins.” at p. 345; see Serv. Inc. v. Allstate Ins. Co. 283 Or. Top Body Shop, 1365, 1368]; (Utah P.2d Leigh Furniture Co. v. Isom Carpet 1982) 657 P.2d “The Body Serv. facie [following Top Shop].) prima rule, then, tort is not a rule about at all. It seems to be a wrongdoing effort to state all”—or at least much—of “tort law in a single philosophical (Dobbs, sentence rather than an effort to state a meaningful principle.” With Contractual 34 Ark. L.Rev. Relationships, supra, 345.) (Note, rather than indeed The “[Principle precedent” may govern. Doctrine, 503.) Prima Facie Tort L.Rev. at But it is a Colum. that is principle peculiarly empty. facie tort doctrine regard exhibits prima specific deficiency tort intentional interference with economic advantage. actionable,

“Since not all interference or even it cannot morally wrong, [is] be said that there some there is no interference. Since principle against [is] hint in such abstract statements of as to constitute a what liability might defense it difficult to believe that there is involved actually any principle at all. It rather the has faded ambience of a ‘universal truth’ once thought event, be discoverable in law. In in an this the defendant any [leaves] defense, interference case he entitled to some but not knowing knowing [is] (Dobbs, what defenses would be accounted sufficient.” Tortious Interference With Contractual 34 Ark. L.Rev. at Relationships, supra, B A second reason for the common law’s near incoherence on the tort of intentional interference with be dis- advantage may covered within the law itself. America, To borrow words from Brennan v. Local United Hatters North of 165, 171], (44 Vroom)

No. 17 73 N.J.L. A. the premise the which that, recognizes community a civilized to be the tort seems “[i]n of institutions, is intolerable the notion its among of property right private it is once property law in the enjoyment the by should be a man protected it.” in his efforts acquire the law but left unprotected acquired, however, itself. For the at war with tort’s premise, The “protectionist” the is not only of property in the acquisition deserves protection who person then should Why also the interfering party. but interfered-with party disfavored, favor, interfering party while the receive interfered-with party interfered-with should the party’s statuses? Why of their respective virtue interest, against kind of good be elevated to a property efforts acquisitive It is deemed world, illegitimate? are those of the interfering party while because liability . . should produce . that interference . “often assumed . . however, it is is, the same as saying much very to interfere. This it is wrong With Contractual (Dobbs, Tortious because it is wrong.” wrong Interference of inter- L.Rev. at expressly 34 Ark. [speaking Relationships, supra, in the House of Bramwell contract].) In the words Lord spoke ference 25, 47, Co., A.C. supra, Gow & McGregor, Co. v. Mogul Lords Steamship Co., Q.B.D. & Gow supra, Co. v. McGregor, affirming Mogul Steamship enforce “[ijt strange—“that more than does seem strange”—and trade, action, interfering party the law should punish” freedom that they “with a belief’ . . honest” arrangements “who . perfectly make[s] the interfered- whereas it rewards protection,” are “fairly required [his] (Italics in Reason supports who does likewise. original.) with party contract, that, a breach of interfered-with conclusion even when there is the breach bemay over the interfering should not be preferred party: party (See, Efficiency Treatment Differing “efficient.” e.g., Myers, Law, in Antitrust and Tortious Competition Interference 1119-1120; Perlman, With Contract Minn. L.Rev. at pp. Interference Doctrine, supra, A Clash Contract and Tort Other Economic Expectancies: 78-91; Dobbs, With Contrac- U. Chi. L.Rev. at 360-361.) Reason practically tual 34 Ark. L.Rev. at Relationships, no because there is when there is no breach same conclusion compels contract. Perlman, Economic (See With Contract and Other Doctrine, 49 U. Chi. A Clash Contract and Tort Expectancies: 90-91.) L.Rev. at pp. Further, breadth and values of greater under the tort threaten liability the tort itself. than those of higher dignity “ ‘The policy law’s of freedom of competition.

One is the common policy which law been in favor of free competition, of the common has always 400 is of the life trade. So as the

proverbially contractual long plaintiff’s relations are or isit considered to be merely contemplated potential, in interest of the be free that should to divert them to public any competitor short, himself all fair and reasonable means. it by ... In is no tort to beat Thus, business rival to customers. the absence in of prospective prohibition statute, means, element, or some by illegitimate other unlawful a defendant to increase his own business or seeking cut rates allow discounts prices, rebates, back, enter into secret to negotiations behind the refuse plaintiff’s do, deal with him or to threaten who or even to discharge refuse employees deal with third unless cease with the parties they all without dealing plaintiff, ” Mills, (A-Mark (1983) Coin Co. v. Inc. 148 incurring liability.’ General 312, Prosser, 859], fns., 323-324 without Cal.App.3d Cal.Rptr. [195 quoting, 1971) The Law of (4th Torts ed. Interference With Prospective Advantage, 130, 954-955; see, e.g., Treatment Myers, Differing Efficiency of Law, Competition Antitrust Minn. supra, 77 Interference 1107.) L.Rev. Another of these of values itself in the of freedom expresses guaranty Amendment the First to the United States Constitution.2 speech “[S]ociety (Perlman, value on free places high speech.” With Contract Interference Doctrine, and Other Economic A Clash Contract and Tort Expectancies: of “ U. Chi. supra, 49 L.Rev. ‘The First that Amendment presupposes the freedom to one’s mind is not of speak liberty— an individual only aspect and thus a good unto itself—but also is essential to the common quest ” truth and the as a whole.’ v. New Co. vitality society (Blatty York Times 542, (1986) 1177], 42 Cal.3d 728 P.2d Cal.Rptr. quoting [232 U.S., Bose v. Union Corp. Consumers Inc. 466 U.S. 502, 518-519, however, L.Ed.2d 1949].) S.Ct. [80 The interfering party, that, often interferes means words. It said tort has been “so far as facts, is liability for the communication of imposed opinions arguments, inconsistent with liability the law’s commitment to free simply long (Dobbs, Tortious su speech.” With Contractual Relationships, 361; 34 Ark. 361-363.)3 L.Rev. at see pra, id. at At the generally, very least, the (Perlman, “need for limits is acute . . . .” With Contract and Other Economic A Clash Contract and Tort Expectancies: course, Amendment, 2The First is made applicable through process states the due (New clause of the Fourteenth Amendment. York v. Sullivan Times Co. 376 U.S. 686, 704-705, 1412].) L.Ed.2d S.Ct. A.L.R.2d 3Compare McKay S.L. Retail Auto. Union No. 16 Cal.2d P.2d 319 [106 (implying that advantage 373] intentional interference a labor through peaceful union picketing right engage and truthful nontortious: in such picketing organized “is one advertising grievances labor’s lawful public, means of its guaranteed and as such is by the Constitution speech”). as an incident of freedom of

401 in Doctrine, 74.) It not that the words at matters U. Chi. L.Rev. supra, 49 (See Paradise to so-called “commercial only speech.” amount may question 1528, 1544-1545 (1991) 235 [1 Associates v. Procel Cal.App.3d Hills is ‘wholly not 514].) is “commercial speech That because Cal.Rptr.2d ” Associates, (Linmark Inc. of the First protection Amendment[.]’ outside 155, 161, 1614], 85, 97 S.Ct. U.S. L.Ed.2d (1977) 431 91 v. Willingboro [52 748, (1976) v. 425 U.S. Bd. Va. Consumer Council Pharmacy Va. quoting 358, 1817].) L.Ed.2d 96 S.Ct. 761 [48 of freedom guaranty found in the First Amendment’s

A related value is is the of individ- right of the foundations of our society association. “[0]ne lawful goal in of a common to combine with other persons pursuit uals U.S. (NAACP Co. 458 933 [73 means.” v. Claiborne Hardware 1215, 1249, each 3409].) S.Ct. But individuals with join L.Ed.2d 102 when in the economic sphere, to achieve an and undertake act objective other be an interfering party. run the that will deemed they collectively risk they unionists, turn before and after the Thus it to labor the decades happened terms conditions century, of the as over the they engaged struggle Note, Contractual Rela- (See, With employment. e.g., Contract, in the The Century: Property, tions Nineteenth Transformation of Tort, with torts Harv. L.Rev. at 1529-1537 pp. [dealing 93 advan- that of intentional economic including interference prospective Harv. Breach Contract 36 L.Rev. tage]; Sayre, Inducing it members [same].)4 day And thus has in the as 690-696 happened present their have to secure and exercise minority sought groups political Co., (See, U.S. civil NAACP v. Claiborne rights. Hardware e.g., 1220-1232].) L.Ed.2d It follows associational [73 freedom, too, the tort. calls for the limitation of under liability

Still inheres another value in the First Amendment’s guaranty This right grievances. redress people’s petition government freedoms,” of our . democratic “great, one . . protection indispensable (Thomas in our v. Collins occupies place ... scheme.” “preferred 430, 440, 315].) (1945) 323 interfer- U.S. L.Ed. 65 S.Ct. [89 however, his voice and interfere his ing party, by raising expressing 4Indeed, Russell, 715, which, noted, Temperton proximate as Q.B. (see advantage historical source of the tort of intentional inference with 1, ante), struggle decided to their arose out of a of labor unionists and was adverse (See Cal.App. interests. Cooks etc. P. 417] Moore v. Union No. 402 [affirming judgment enjoining picketing! There picketing unions from a business: “Peaceful be, is, thing is no such .... We are in full with the . . that ‘there and can accord doctrine . thing vulgarity, peaceful no such there chaste peaceful picketing, any more than can be ”].) mobbing, lynching.’ or lawful (See (1980)

views to authorities. Matossian v. Fahmie 101 governmental 128, 532]; 135-137 see also Gas Cal.App.3d & Cal.Rptr. [161 Pacific 1118, 1133, (1990) Electric Co. v. Bear Stearns & Co. 50 Cal.3d 1135 [270 1, sure, 587].) P.2d To be 791 for redress of which Cal.Rptr. “grievances of was insured” include right ones” and petition “religious political [and] Collins, (Thomas others of that stature. 323 U.S. at 531 L.Ed. supra, p. [89 441].) at But embrace as well even such as relate p. they may merely Thus, (Ibid.) “business or economic of activity.” right also calls petition for the limitation of under the tort. With liability (Carpenter, Interference Relations, 751-752.)5 Contract 41 Harv. L.Rev. at supra, pp.

C A third reason for the common law’s near incoherence on the tort of intentional interference with be dis- advantage motive, is, covered its focus on the he seeks interfering why party’s interference, whatever it is that he seeks his and on his moral through character as revealed thereby.

That there is on the be a focus motive cannot doubted. interfering party’s (See, (1988) Co. v. E.I. Du Pont de Nemours & Co. 202 e.g., Hofmann 390, 384]; 401-402 Rickel v. Schwinn Co. Bicycle Cal.App.3d Cal.Rptr. [248 648, 732]; (1983) 144 Lowell v. Mother’s Cal.App.3d Cal.Rptr. [192 664]; Cake & Cookie Co. A.F. 79 Cal.App.3d Cal.Rptr. [144 Ins., Arnold & Co. v. Inc. 27 Cal.App.3d Pacific Professional 96].) 714-717 Sometimes motive is associated with the Cal.Rptr. [104 Contract, term “malice” Breach 36 Harv. Inducing supra, “empty” (Sayre, of 675; Perlman, L.Rev. at Other Eco see With Contract and p. Interference Doctrine, nomic A Clash Contract and Tort 49 U. Expectancies: supra, 94; Dobbs, Chi. L.Rev. at With Contractual Relation p. Nevertheless, 342); 34 Ark. L.Rev. at sometimes it is not. ships, supra, focus on motive To of understate remains. state the thus runs the risk point ment. For motive is not it has been said to be “crucial.” merely important: Co., Co. v. E.I. Du Pont & at (Hofmann de Nemours Cal.App.3d 402; Torts, similar, 766B, d, if see Rest.2d com. 22-23 qualified, pp. [to § Co., Gas & Electric Co. v. Bear Stearns & page 5In we 50 Cal.3d at Pacific expressed asserting might, permit a concern that “to ... cause of action” the tort [a] contexts, “impair protected, certain is insofar as free access to the courts . . . .” Such access concerned, (see guaranty process the states are the Fourteenth Amendment’s of due of law Logan v. Zimmerman Brush Co. 265, 272-276, 455 U.S. 428-433 L.Ed.2d [71 id. 1148]) (see guaranty equal protection pp. S.Ct. its the laws 438-442 also Blackmun, id. (conc. J.); opn. pp. L.Ed.2d at L.Ed.2d at 279-282] [71 (conc. Powell, J.)). opn. of 282-284] Torts, With Keeton, The Law effect]; Prosser & 1009-1010, [same].) Advantage, Prospective on the the focus devoted to topic, words many In spite because, That inappropriate. motive simply interfering party’s immaterial. altogether motive is purposes, present (hereafter P. Cal. Thorn 492] v. Boyson In interfer- tort of intentional the related Boyson), which deals with sometimes Johnson, 823),6 we Cal.3d at (Buckaloo v. with contract ence to a legal which does not amount the law that an act “It is a truism of stated: intent; that what with a bad because it is done cannot be actionable injury conceded that one may of. It is to do another cannot complain one has a right a third his contract with another to break or procure lawfully persuade has no We think the from motives.’ qualification ‘if it be done good person, the and the means used to procure in the If it is right, proposition. place than a good more any cannot make it a wrong are the motive right, breach deceit, slander, the same fraud, to effect or violence would motive justify him A, B to sell induces fraudulent representations, Suppose by purpose. credit, B of the entire to defraud intending large quantity goods upon false, C, and not are that the knowing representations value of goods. not, malice and of unmixed B but goods whether shall lose his caring A, truthfully the goods by B to refuse to deliver ill-will toward procures A, said will it be made by B of the falsity representations informing contract is interference with of the tort of intentional proximate 6The historical source (See ante.) Lumley Gye, supra, 2 & 216. v. El. Bl. however, be back to “One form . . . can traced origin, The tort’s ultimate is much older. of a contract early it was not the existence very ancient times”—under Roman law—“when law, status, by parties in which the recognized important, which was but the or relation another, By the thirteenth interfered. ... toward and with which the defendant stood one law, but had been somewhat century by taken over the common this Roman law idea had been transition, damage by any master for sustained altered in the so that it became an action him. In upon inflicted because of violence through actual loss of the services of a servant England with a Death had left remedy by was created statute. The Black 1349 an additional labor, famous Ordinance shortage resulting agricultural crisis the great and to meet the enacted, penalty A introduced. by system compulsory labor was Labourers was which a employer remedy given was provided keep running away, the laborer from and a was enticing statutory action for against anyone him in his service. The who received and retained against for violence harboring well as the older one developed, the servant which thus confused, they him, intermingled and so was in In time the two became trespass. enforced on the case.” longer distinguished, absorbed into the action were no and at last both were Relations, Keeton, Torts, (Prosser With Contractual & The Law of § authorities; Note, 979-980, omitted, see pp. citing fns. cases and other Property, Con- Century: Contractual in the Nineteenth With tract, Relations Transformation of Torts, 766B, b, 1511-1521; Tort, pp. com. Rest.2d Harv. L.Rev. at Contract, 663-666.) 21-22; Sayre, Inducing supra, 36 Harv. L.Rev. at Breach of motive, itself, then, A? . . . ‘Bad that C is liable an action brought by worse, make a bad act but cannot make is no tort. Malicious motives they that a which in its own essence is lawful. When in legal wrong pleadings of, defendant is done the act charged having wrongfully complained words of and amount to unless a cause words are only vituperation, nothing “ (Italics action is otherwise alleged.’ original.) In v. Hall In we followed Lord Chief Justice Bowen Boyson, Coleridge. (1881) Q.B.D. (hereafter Bowen), which decided sometimes was dissentiente, the Court of he that “the Appeal, rejected proposition, same the same under the same circumstances with the doing thing person not to whether his inward same result is actionable or actionable according motive was selfish or for what he did.” unselfish A.C.

In we also Lord Watson. In Allen Flood Boyson, anticipated 1, 92, Lords, that “the which was handed down the House of he declared element law . . . does not. . . take into account motive as an constituting the civil of another is in itself a of civil invasion of wrong.[7] Any rights or natural with it its necessary legal wrong, carrying liability repair whose is in so far as these are injurious person right consequences, bad, it be or indiffer whether motive which infringed, prompted good, motive, not in ent. But the existence of a bad in the case of an act which is itself will not convert that act into a civil for which wrong reparation illegal, 8 is due.” Doctrine, supra, 508, Note, The Prima Facie Tort pages at 507 to 7See 52 Colum. L.Rev. bearing (stating England any upon it has footnote 33 that is doubtful whether motive “[i]n act, Perlman, legality except participant”); of a harmful where one there is more than Expectancies: and A Clash Contract and Tort With Contract Other Economic of Interference Doctrine, 95, supra, (to effect). page U. Chi. L.Rev. at footnote 145 similar 49 33, Imperial 631], Ice Co. v. Rossier we disapproved 8In 18 Cal.2d 38 P.2d Boyson in the immateriality interfering party’s on the motive. For the reasons stated text, in thereby. recognize place I believe that we erred I that the “literature on the of motive Contrac (Dobbs, Tortious With liability great civil is larded with names . . . .” Interference May 53, Ames, Relationships, supra, Act tual How Far an citing p. 34 Ark. L.Rev. at fn. Wrongful Be a Tort Because Motive the Actor and 18 Harv. L.Rev. Malice, Holmes, Privilege, and Intent 8 Harv. L.Rev. But the discussion therein question “often not aimed be or how it fits in the at the whether motive should considered (Dobbs, With Contractual Relation structure or method of decision.” Interference Efficiency 53; ships, supra, Differing The Treatment of p. Myers, 34 Ark. L.Rev. at see Law, Competition supra, in 11 Minn. L.Rev. at Antitrust and Tortious Interference [impliedly affirming not become unlawful “principle that a lawful act should supra, Keeton, Torts, motive”]; wrongful because of Law of see also Prosser & The “although Prospective Advantage, p. [stating Interference that courts have With 1011 traditionally subjective purposes motives and such felt free to consider the defendant’s ill-will, spite in communicative tort Supreme states mind as decisions of the Court other

405 on the interfering party’s the focus if it were not inappropriate, Even Perlman, (See results. untoward has a tendency yield motive surely A Clash and Other Economic Expectancies: With Contract Interference Doctrine, that [stating U. Chi. L.Rev. 95 p. Tort 49 supra, Contract and costs”].) . . carries social of motivation . “[p]roof in the motive inquiry inherent To understate the “ambiguities point, [are] and Competition Treatment Efficiency (Myers, Differing . . . .” 1132; Law, Minn. L.Rev. p. and Tortious 77 supra, Antitrust Isom, accord, 657 P.2d at 307 supra, p. Co. v. Carpet Furniture Leigh Perlman, motivation”]; “inherent in that are proving [noting “[problems” A Clash With Contract and Other Economic Expectancies: Doctrine, [stating U. Chi. L.Rev. at supra, Contract and Tort Note, The Prima Facie Tort of motivation ... see error-prone”]; “[p]roof Doctrine, inherent the “ambiguity 52 Colum. L.Rev. at [noting ”].) . . ‘malice . . .’ in the . word[] Bowen, we declared in Lord Chief Justice Boyson, Coleridge As quoting “ ... for courts of an of this sort is ‘dangerous inexpedient inquiry ” [it], (Boyson are unfit.’ very are not fit for

justice; judges very juries Hall, Thorn, Q.B.D. at p. Cal. at Bowen v. quoting J., dissentiente).) L. C. (Coleridge, motive It be hard for a trier of fact to discern the interfering party’s (See, The Differing because factors latter. e.g., Myers, peculiar and Treatment and in Antitrust Tortious Efficiency Competition Interference Law, 1142.) when the interfering 11 Minn. L.Rev. at That is true supra, reveal themselves is an individual: a mind and heart party typically person’s It is truer still when and conceal themselves at one and the same time. and hearts are then is a of individuals: minds interfering many party group course, involved, And, it is truest and cannot be added they simply up. the “mind” and when the is a or similar interfering entity: party corporation “heart” of such a one is Active. purely

It also be hard for a trier of fact to discern the may interfering party’s Dobbs, Inter- (See motive because of factors to itself. Tortious peculiar 348.) With 34 Ark. L.Rev. at p. Contractual Relationships, supra, ference rich variety motive be of as a fact. But it Certainly, may spoken implicates result, trier fact to of values. As a it allows and even invites the perhaps a kind of moral on the as such—a pass interfering judgment judgment party Sullivan, cases,” “now including progeny, New York 376 U.S. and its Times Co. potential objections approach”].) raise Constitutional to this that, side, whether fair and on the one or scrupulously strictly impartial, other, on the of no blindly passionately sympathetic prejudiced, simply here. For the “law has no commission to root out bad consequence roving (Id. whose minds harbor bad 347- people people may thoughts.” 348.) Neither does it undertake to select for reward of the people opposite Indeed, sort. it has . . . shared” “the belief that it is “generally impermissi “ (Id. 347.) ble for” it one’s rather than one’s judge person conduct.” Thus, bar, it treats all as before its whether some seem to be equal may (United “small dealers and men” States v. worthy Freight Association 1007, 1021, 540]) 166 U.S. L.Ed. 17 S.Ct. and others “rapa [41 (Charles cious River v. Warren Bridge 36 U.S. monopolists” Bridge (11 Pet.) 812]). L.Ed.

The untoward results of the focus on the motive interfering party’s may themselves in individual in the cases form present arbitrary capricious Dobbs, (See outcomes. With Contractual Relationships, 34 Ark. L.Rev. at In matters in the trier which of fact believes has, it discerned has motive or at least itself it an good persuades interfering who in has both bad conduct and party engaged objectively produced contrast, bad evade for in objectively consequences may liability injury. By view, matters in which it an who has adopts contrary interfering party neither in such conduct nor such be engaged produced consequencés may word, made to injuria. what damnum In a much pay simply absque on mere and on more. depend appearances nothing perceptions results, however, Such untoward will individual not confine themselves to (see, cases but will to deter what should be spread generally encouraged e.g., Treatment Myers, Differing Antitrust Efficiency Competition Law, 1142-1143) and Tortious 11 Minn. L.Rev. at also to what should be deterred. The encourage interfering example who has both bad conduct and party engaged objectively produced bad objectively but has nevertheless evaded consequences, liability, may lure others to follow in his and cause detriment to as a thereby society steps, whole. the who has neither Conversely, example interfering party in such conduct nor engaged such but has still been produced consequences, others, made to serve to turn aside and the commu- pay, may thereby deny the benefit of nity acts and effects or at least the freedom to do as good good Moreover, one chooses when he does no the of both injury. example costs, lead to further social as motivated actors” take “properly “precautions ... to avoid (Perlman, that should not be to Inter- liability” they exposed With Contract and Other A Contract Economic Clash Expectancies: ference Doctrine, 97), and Tort 49 U. Chi. L.Rev. at and actors otherwise supra, p. motivated fabricate schemes to that deserve. escape responsibility they

II said, what are about With all this we are we to do the put question: economic advantage? tort of intentional interference stated, choose to As this nothing. It would be unreasonable to do regard law It the common is incoherence. is not about turn to approaching of its own accord. consistency

It would be unreasonable to choose Such a com- also abolition. course mands little courts commentators. That is support among unsurprising. Most that should not be immu- interfering granted agree party general but should be at least nity, under some circumstances. exposed liability Isom, (See, Furniture P.2d e.g., Leigh Carpet Co. v. supra, pp. 302-304; Co., Serv. Inc. v. Body Allstate Ins. 283 Ore. at Top Shop, supra, pp. 1368-1371]; Torts, 20-23; 766B, P.2d at Rest.2d pp. pp. § Keeton, Torts, Prosser & The Law of Interference With supra, Prospective 1005-1031; Advantage, Myers, The Treatment pp. Differing of Effi- Law, ciency Competition Antitrust Tortious supra, Interference 1149; Perlman, Minn. L.Rev. at With Contract and Other Interference Doctrine, Economic A Tort Expectancies: Clash Contract and 49 U. 97-99; Dobbs, Chi. L.Rev. pp. Tortious With Contractual Interference 363-376; Note, supra, 34 L.Rev. at Relationships, Ark. but see Tortious With Contract: A Reassertion Society’s Interest in Commercial 1515; and Contractual Stability Integrity, 81 Colum. L.Rev. at Contract, Sayre, Inducing Breach Harv. supra, 36 L.Rev. at 22, 673, & For cannot just justice be ... theorem of that “[i]t liability always (Dobbs, just” With Contractual 337), Ark. L.Rev. at neither it Relationships, can be principle of law that immunity invariably proper.

In view of the choice foregoing, reasonable is reformulation. only Indeed, an of this sort is undertaking almost unanimous compelled by above, agreement, referred to should not be allowed party interfering to interfere with at all times and all impunity under circumstances. end, tort,

To we this should define the clearly it on stable and basing doctrine, circumscribed ground, and facie tort eschewing prima “protectionist” and the premise, motive. Our focus should interfering party’s be Further, on objective conduct our consequences. concern should be with such conduct and as are consequences unlawful.

General considerations of a formal nature counsel us to take this As path. noted, the tort’s rules are their “admittedly and “difficult vague” applications unlawfulness, An classify.” definition based on objective cast in under- terms,

standable and usable would reduce or remove such weaknesses. concerns of a substantive Specific kind as well. It is from the operate plain above discussion that the tort is based on the facie problematic tort prima addition, doctrine. In it implicates “protectionist” which carries premise, internal and also inconsistency threatens the common law’s of free- policy dom of and the First competition Amendment’s of freedom of guaranty association, freedom of speech, and of right it petition. has a ten- Lastly, results, untoward dency yield both in individual cases and generally, its focus on the through interfering motive. An party’s objective definition unlawfulness, facts, based on of such would developed light cure or doctrine, of the mitigate deficiency lessen or eliminate the flaw attribut- able to the and premise, decrease or neutralize the to the danger and policy the guaranty. reformulated,

Thus unlawful, the tort requires objective, and conduct or consequences.9

It follows that the tort be satisfied intentional interference with (Accord, tortious advantage by independently means. e.g., Co., Serv. Top Body Shop, Inc. v. Allstate Ins. 283 Or. at supra, pp. 1371]; Keeton, Torts, 209-210 P.2d at Prosser & p. The Law of supra, 1014-1015; Interference With Prospective Advantage, pp. Myers, The Differing Treatment and Efficiency Competition in Antitrust and Tor Law, 1149; tious Perlman, supra, 77 Minn. L.Rev. at Inter Interference With Contract and Other Economic A Expectancies: Clash Contract ference Doctrine, and 97-99; Dobbs, Tort supra, 49 U. Chi. L.Rev. at Tortious question 9A juncture raises itself at this is whether the related tort of intentional (see 1, ante) interference with contract should require objective, be reformulated to unlawful, consequences. conduct or It need not be addressed here. That tort is simply not implicated in this I in passing action. note negative that either an affirmative or a answer might given be question might reformulation. An affirmative answer supported by be reasoning contrast, such presented as that in the negative text. In might answer be sustained on a question view that the tort in “protects society’s preserving interest the formal integrity fundamental, of contract and on implicit appreciation rests an structure-giving significance (Note, economy.” contracts in a market With Contract: A Interference Society’s Reassertion Stability Interest in Integrity, Commercial Contractual 1523; accord, Rossier, Colum. Imperial 36; L.Rev. at Ice Co. v. 18 Cal.2d at Myers, Differing Efficiency Treatment Competition in Antitrust and Tortious Law, 1150; 77 Minn. L.Rev. at Dowling, but see A Contract Theory Complex Limiting Tort: Beyond With Contract Means Unlawful Test 40 U. [arguing Miami L.Rev. that the action for “intentional interference with business relations” is historically economically “more sound” than that and, such, for “interference with contract” stronger protection”].) “deserves

409 With Relationships, Contractual supra, Ark. L.Rev. at pp. Interference Isom, 365-366; see, Furniture and Co. v. Leigh Carpet supra, 657 P.2d e.g., Torts, 766B, e, Serv. [following Top Body Shop]; Rest.2d com. p. p. § The liable to the interfered-with in such interfering party properly party a situation. That is most true when the tortious means plainly independently uses are tortious as to the party interfering party interfered-with himself. nature, the tort’s By very (or interfered-with is an intended at least party Ramona Manor known) Convalescent (See victim of the interfering party. v. Care Hospital Enterprises 1132-1134 Cal.App.3d [225 120].) But it is true as well Cal.Rptr. when the tortious means independently as to a third are only uses tortious party. interfering party independently circumstances, Even under these the interfered-with remains an in party (or known) tended victim least one that is interfering party—albeit Torts, c, indirect rather (See 29-30.) than direct. Rest.2d com. In pp. situation, this means are question tortious as to the third independently “if those elements party to” the pertain “are interfering party present” if instance, even those that to the third “For pertain are not: fraudulent party made” misrepresentations to a “third are interfering party party means of interference . . . improper whether or not the third can show party Co., Serv. reliance (Top Body Inc. v. Allstate Ins. injurious himself.” Shop, supra, 283 Or. at 1371].)10 fn. 11 P.2d at p. [582 It also follows that the tort be satisfied may intentional interference trade, restraint economic advantage through prospective including monopolization. (Accord, Treatment Differing Efficiency Myers, Law, in Antitrust Competition and Tortious 77 Minn. Interference 1149; Perlman, L.Rev. at p. With Contract and Other Economic Doctrine, Expectancies: A Clash Contract and Tort supra, U. Chi. 97-99; Dobbs, L.Rev. at pp. With Contractual Relation- ships, 367-368; 34 Ark. Serv. Inc. L.Rev. at Top Body see Shop, v. Co., Allstate Ins. 1371]; 283 Or. at P.2d at Leigh [582 Isom, Furniture and Carpet Co. supra, 657 P.2d at [following Top Serv. Body Shop].) means, 10When the interfering party intentionally by independently interferes tortious course, party, interfered-with is entitled compensatory damages pursuant to section 3281 seq. et of the Civil Code if he suffers In harm. view of the fact protected that what is is his

prospective advantage (see Blank v. Kirwan 39 Cal.3d 330 [216 Cal.Rptr. 58]), 703 P.2d such harm economic loss should be defined as his Longo (see Youstv. 64, 71, 294,729 728]). Cal.3d fn. 6 Cal.Rptr. P.2d He also be exemplary entitled to damages pursuant under certain circumstances to section 3294 et seq. of the same code. 410

As the common law’s of freedom of explained, in policy competition forms that here. To use in the principles govern written related language antitrust, context of that seeks “to maximize consumer . . . policy welfare resources, in the use and allocation of through efficiency scarce and via in the of new and progressiveness development new productive techniques Turner, (1 that those resources to better products use.” Areeda & put 103, 7; (1978) Antitrust Law (1985) see Cianci v. Court p. Superior 40 1 903, 575, Cal.3d 375].) 918-919 710 P.2d To use more of Cal.Rptr. [221 such ‘on the that the unrestrained language, policy premise “rest[s] interaction of will forces the best allocation of our competitive yield eco resources, nomic the lowest and the prices, highest quality greatest material while at the same time an progress, environment condu providing ” cive to the of our democratic and social institutions.’ preservation political Realtors, (Marin 920, (1976) Bd. Inc. v. County Palsson 16 Cal.3d 935 1, 833], P.2d Cal.Rptr. 549 Northern Pac. R. Co. v. United quoting [130 1, 545, 549, 514].) States 356 U.S. 4 L.Ed.2d 78 S.Ct. Restraint of [2 trade, however, affects consumer welfare. “Price is adversely higher be, lower than would otherwise and both are output they unresponsive (NCAA consumer Board preference.” Regents Univ. of Okla. 85, 70, 87, 468 U.S. 2948].) 107 L.Ed.2d 104 S.Ct. [82 The interfering liable to the interfered-with when party properly party nature, above, he restrains trade. theBy tort’s as stated the interfered- very with is the (or known) intended at least party victim the interfering party. trade, When the interfering restrains he causes to the interfered- party injury at least adverse effect on party through consumer welfare.11 reformulated, So the tort can be stated and distinctly consistently applied. context, tortious means that in this independently commonly appear defamation, including assault and and fraud and deceit Serv. battery, (Top Co., 210, Inc. v. Body Shop Allstate Ins. 283 Or. at fn. P.2d p. [582 1371]; Isom, at p. Leigh Furniture and Co. v. 657 P.2d at Carpet Torts, 767, c, 30; Ser. see [following Top Body Shop]; Rest.2d com. § trade, interfering party intentionally When the through interferes restraint of inter party’s fered-with compensatory entitlement and exemplary damages generally as stated 10, ante.) (See Act, above. by analogy fn. But Clayton to section 4 of the construed Bowl-O-Mat, Corp. Brunswick v. Pueblo Inc. U.S. L.Ed.2d 489 712-713, 690], that, situation, may argued damages 97 S.Ct. it be compensatory such a ante) (see should be type was limited to intended loss prevented by, to be of, policy violation the common law’s flows from of freedom of competition. however, point Such a is not acceptance rejection, insubstantial. Its be day. left to another Torts, Keeton, Interference With & The Law Prospective Prosser (see, settled 1009), are well defined and long e.g., Advantage, Torts, 346-377, Witkin, (9th 1988) 436-463 of Cal. Law ed. Summary pp. §§ id., id., 471-566, [defamation]; 557-661 674- battery]; [assault §§ §§ deceit].) one would not be left to Surely, [fraud “ ‘business ethics’ standard” The (Myers, scant of the so-called “guidance” in Antitrust and and Tortious Efficiency Competition Treatment Differing of Law, 1136), Minn. L.Rev. at which 77 supra, presupposes Interference . . . today may nature of the conduct which is acceptable prove that “[t]he Ins., Inc., Arnold & (A.F. tomorrow” Co. v. unacceptable Pacific Professional 716-717). 27 at supra, Cal.App.3d pp. Also, restraints of trade be “measured economic crite- objective by ria.” The Treatment and in Anti- (Myers, Competition Differing Efficiency of Law, and trust Tortious Minn. L.Rev. at supra, 77 T.V., Decisions under federal antitrust statutes since Continental Inc. v. GTE Inc. 36 L.Ed.2d S.Ct. Sylvania U.S. prove [53 2549] beyond (See The Treatment point question. Myers, Differing Efficiency of Law, Competition in Antitrust 1101-1106.) Minn. L.Rev. at pp. Moreover, the internally tort’s inconsistent is now premise “protectionist” The removed. interfered-with is not over the favored party interfering party virtue of their status: the former is by merely respective protected against latter’s use of tortious means and restraints of trade. independently

Furthermore, the tort itself does not now the common law’s impair policy terms, of freedom of its freedom in competition. By very does question not extend to the use of tortious or restraints of means trade. independently

Neither does the tort now undermine the First Amendment’s guaranty association, freedom speech, freedom right or That petition. because, involved, to the extent association or speech petitioning the federal (See, constitutional itself limits NAACP provision liability. e.g., Co., v. Claiborne Hardware supra, 458 U.S. at 907-920 L.Ed.2d pp. association]; pp. with [dealing speech 1232-1241] v. New York Blatty Co., Times Cal.3d at 1045-1048 with [dealing Ma- speech]; Fahmie, tossian v. Cal.App.3d [dealing petitioning].)12

Finally, tort, action based on any it is the as interfered-with party who should bear the burden of plaintiff the burden pleading proof 12Whether the tort may other by be satisfied than intentional by independently interference tortious means through question restraint trade is a open. that should remain I note

to whether there has been intentional interference with either tortious advantage means or restraint of independently through trade as defendant. The rule is that a interfering party general party Witkin, (1 (3d 1986) has the burden to Cal. Evidence ed. Burden of plead Code, 117) (Evid. Proof and and the burden to Presumptions, prove § 500) “each fact the existence or which nonexistence of is essential to the (ibid,.). claim for relief . . . that he is existence of asserting” indicated intentional interference is essential to the interfered-with obviously cause of action. There is no reason that would the creation of party’s justify an rule in order to shift either exception general burden to the interfering party.13

Ill Let us turn now to the case at bar.

In the court instructed the that the elements of pertinent part, superior jury the tort of intentional interference with economic prospective advantage (1) were these: an “economic existed between” Della Penna relationship dealers, “and various Lexus a future economic benefit or containing probable passing suggested solely that it has been that the tort should be recast in terms of the common (See policy competition. Myers, Differing Efficiency law’s of freedom of The Treatment Law, Competition supra, in Antitrust and Tortious 77 Minn. L.Rev. at Interference 1137-1152; p. [recognizing designed but see id. at that “tortious interference law is also done, protect security integrity to the of business relationships”].) If such were to be Moreover, simplicity might certain only be obtained—but competi- at a cost to other values. Rather, thing tion is not a “operates by general unto itself. it within a framework defined the (1 Turner, Law, 16.) law and supra, social conventions.” Areeda p. & Antitrust f Thus, not, fact, simplicity the simple. obtained would be Another question open that should remain precise requires. is the intent that the tort The (Perlman, “definition of disputed.” ‘intent’ continues to be With Contract and Doctrine, Expectancies: Other Economic A Clash Contract and Tort 49 U. Chi. 65; Torts, 766B, d, p. compare, e.g., L.Rev. at Rest.2d com. to act with actual [intent Johnson, or knowledge resulting constructive with Buckaloo v. interference] (9th 1980) Cal.3d at to and DeVoto v. [intent interfere] Fid. Ins. Co. Cir. Pacific Life J., law) 618 F.2d (per Kennedy, applying through Cal. to harm [intent (semble)].) however, interference analysis, Substantial is needed before an answer be given. argued impose 13Ithas been party that to on the interfered-with proving the burden of the interfering party’s advantage by indepen intentional interference with dently tanto, tort[],” tortious effectively means “would pro abolish the interference at least anyone because “who could meet proceed independent this burden could under the action and would have no need for the (Dowling, Theory Complex interference tort.” A Contract Limiting Test, Tort: Beyond With Contract Means 40 U. Unlawful Miami L.Rev. at That is not party may the case. An interfered-with be unable proceed to under “independent such an action” when question independently the means in are only party. tortious as to a third Penna; (2) to” Della “knew of the existence of the advantage Toyota acts or conduct Toyota engaged wrongful relationship”; “intentionally to interfere with or “economic designed disrupt relationship”; was interfered with “acts of’ relationship actually disrupted”; element, “caused to” Della Penna. As to the third it further Toyota damage instructed: “Conduct is if it is outside the realm wrongful legitimate business . . . lie used or transactions. in the method Wrongfulness may success, virtue of an motive.” had Della Penna without objected, improper He had then “wrongfulness.” requirement successfully requested definition most favorable his subse- quoted position. jury returned an adverse verdict. The court rendered quently superior judgment accordingly. contended, alia,

On Della Penna inter that the instructions were appeal, because erroneous The Court of prejudicially they required “wrongfulness.” and reversed. Appeal agreed, reformulated,

Under the tort as it that the Court of erred. plain Appeal sure, To be the instructions erroneous. did appear They expressly not require unlawful, Neither, seems, objective, and conduct it did consequences. error, however, do so they was not The reason impliedly. Any prejudicial. manifest. To the extent that were satisfied they “wrongfulness”— mere by “ which, at Della Penna’s defined request, was under a kind ‘business ethics’ standard” as behavior “outside realm of business legitimate transactions” because “method” or were satisfied far “motive”—they too little. For to that extent did not demand the use of they independently tortious means or restraints of trade. It is true that their on focus motive— “[wjrongfulness lie . . . may virtue of an improper motive”—might threaten an arbitrary outcome in capricious case. same is given true of their use of the term and its inher- “wrongful” which are cognates, Note, ently (see Doctrine, ambiguous The Prima Facie Tort 52 Colum. But, 503). L.Rev. at in spite there is no basis to foregoing, simply conclude that the outcome here was either arbitrary capricious.

IV It that, is evident in the above analysis on I presented points, agree many with the discussion of majority’s the tort of with intentional interference prospective economic and Della advantage Penna’s claim against Toyota such asserting a cause of action.

On however, two major I am points, state compelled my disagreement.

First, I would not the “standard” of adopt As I have “wrongfulness.” noted, the term and its are cognates should inherently ambiguous. They be avoided. should not be probably They embraced. That is the course surely we followed in Buckaloo. It should be followed here as well.

Second, “standard,” if I were to such I would not adopt allow it to Otherwise, remain undefined. our effort Buckaloo to rationalize the governing would be undermined. principles Formerly, interfering party defense, as defendant was left he was entitled to some “knowing but not what defenses would knowing (Dobbs, be accounted sufficient.” Tortious With Contractual 34 Ark. Relationships, supra, L.Rev. at p. Now, 345.) it the interfered-with appears, will find himself party plaintiff claim, a similar he assert a but not position, knowing may knowing substance of a crucial element. This is an defini- hardly improvement. Any “standard,” course, tion of the should avoid that the suggesting interfering motive be party’s might material As I have present purposes. explained, ante, (See, focus on this issue is 402-406.) at A inappropriate. sort, of this one must position would in the acknowledge, result imposition of no acts, on a liability who is but person purely, merely, “malicious”—who Holmes, Justice quote (Amer. “disinterested malevolence” Bank & 983, 990, Trust Co. v. Federal Bank 256 U.S. L.Ed. 971]). S.Ct. 25 A.L.R. such a Although be held person might respon- conscience, sible in he should not be made answerable in tort. To reiterate: “The law has no commission to root out roving bad whose people people minds harbor (Dobbs, bad thoughts.” With Con- tractual did, 34 Ark. L.Rev. Relationships, supra, 347-348.) Even if it inherent in “problems motivation . . . proving [are] .” Furniture and (Leigh Isom, Co. v. Carpet 657 P.2d In view of such “problems,” it has been that it opined would be for commercial conduct to be “prudent regulated most part” a consideration of bad conduct objectively (Ibid.., mind, added.) consequences. italics To it my would be even more to omit the prudent italicized qualification.14

V conclude, Because I above, for the reasons stated that we should reverse judgment the Court of insofar as it Appeal reverses the judgment course, 14Of to hold that the interfering party’s motive is not for present purposes material does evidence, is, not mean that “evidence, such motive cannot amount to relevant including declarant, credibility evidence relevant to the hearsay of a having any witness or tendency in prove reason to disprove any disputed fact consequence that is of (Evid. Code, determination of the action.” court in favor of superior Toyota and Della against Penna on his claim of the tort of intentional interference with I advantage, concur in the judgment.

Case Details

Case Name: Della Penna v. Toyota Motor Sales, USA, Inc.

Court Name: California Supreme Court

Date Published: Oct 12, 1995

Citation: 902 P.2d 740

Docket Number: S044053

Court Abbreviation: Cal.