Breaching A Contract May Be Wrong But It Isn't Independently Wrongful

• Published date: 16 November 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Trials & Appeals & Compensation
• Law Firm: Allen Matkins Leck Gamble Mallory & Natsis LLP
• Author: Mr Keith P. Bishop

In 1995, the California Supreme Court held that a plaintiff pursuing a claim for interference with a prospective contractual or economic relationship had to plead that the defendant's conduct was wrongful. Della Penna v. Toyota Motor Sales U.S.A., Inc., 11 Cal. 4th 376 (1995). In an opinion issued yesterday, the California Court of Appeal held that a claim for intentional interference with a prospective economic advantage cannot be premised solely on the theory that the defendant had engaged in independently wrongful conduct by breaching a non-disclosure agreement. Drink Tank Ventures LLC v. Real Soda in Real Bottles, 2021 Cal. App. LEXIS 948.

The Court of Appeal explained that to prevail on a claim for intentional interference with a prospective economic advantage, a plaintiff must prove the following:

• An economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff;
• The defendant's knowledge of the relationship;
• The defendant engaged in conduct that interfered with that relationship and the defendant's conduct was "independently wrongful" - that is...