Popescu v. Apple Inc. , 1 Cal. App. 5th 39 ( 2016 )

Filed 7/1/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
DAN POPESCU, H040508
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. CV249279)
v.
APPLE INC.,
Defendant and Respondent.
Plaintiff Dan Popescu sued Apple Inc. (Apple) for damages after he was fired by
his employer, Constellium Rolled Products Ravenswood, LLC (Constellium). He alleged
that between August and October of 2011, Apple took affirmative steps to convince
Constellium to terminate him in retaliation for his resistance to Apple’s alleged illegal
anti-competitive conduct. The court sustained Apple’s demurrer to Poposecu’s first
amended complaint (Complaint) without leave to amend.
This appeal involves Popescu’s claim for intentional interference with contractual
relations (contract interference) and his claim for intentional interference with
prospective economic advantage (business interference). Claims for contract interference
and business interference are separate but related torts. The elements of the two claims
are substantially the same, but a plaintiff alleging business interference must also show
that the defendant’s action “was wrongful ‘by some measure beyond the fact of the
interference itself.’ [Citation.]” (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995)
11 Cal. 4th 376, 392 (Della Penna).) As a general rule, this wrongfulness element is not
required in a contract interference claim because contracts are entitled to greater
protection from interference.
Among the issues we will address in this appeal are whether (1) an employee
(Popescu) whose at-will employment contract is terminated as a result of a third party’s
(Apple’s) interference must allege that the defendant’s conduct was independently
wrongful to state a contract interference claim; and (2) a third party’s alleged
anticompetitive conduct may constitute independently wrongful acts to support a business
interference claim, even if the plaintiff is not directly harmed by the wrongful acts.
In our review of the sustaining of a demurrer, we must accept as true all material
allegations of fact that are well-pleaded in the complaint (Blickman Turkus, LP v. MF
Downtown Sunnyvale, LLC (2008) 162 Cal. App. 4th 858, 866-867), regardless of how
“improbable they may be. [Citation.]” (Del E. Webb Corp. v. Structural Materials Co.
(1981) 123 Cal. App. 3d 593, 604 (Del E. Webb Corp.) Based upon this standard and the
law applicable to contract and business interference claims, we conclude the trial court
erred.
In sustaining the demurrer to the contract interference claim, the trial court
concluded that Popescu had alleged an at-will employment agreement with Constellium,
and that under Reeves v. Hanlon (2004) 33 Cal. 4th 1140 (Reeves), Popescu could not
state a contract interference claim as a matter of law. As to the business interference
claim, the court held that Apple’s alleged anticompetitive conduct did not constitute an
independently wrongful act supporting Popescu’s claim because it was not “designed to,
and [did not] actually cause interference with the economic relationship” between
Popescu and Constellium.
We will conclude that the trial court correctly found that Popescu had alleged an
at-will employment agreement. But the court then erroneously interpreted and applied
Reeves as compelling the conclusion that Popescu “cannot state a claim for intentional
interference with contract.” Reeves, however, concerned a type of claim that is not at
2
issue here––a claim by a former employer whose at-will employee was hired away by a
new employer. Because of the dual policy concerns of employee mobility and the
promotion of legitimate competition, the California Supreme Court held in Reeves that
the former employer had to show that the new employer’s conduct in recruiting and
hiring its at-will employee was independently wrongful. (Reeves, supra, 33 Cal.4th at
pp. 1149-1153.) Those same policy considerations do not exist here. This case involves
an employee––not his former employer––suing a third party for interfering with his
employment agreement. We thus hold that Reeves does not require Popescu to allege or
prove as part of his contract interference claim that Apple’s conduct in interfering with
his at-will employment contract was independently wrongful.
We also hold that Popescu alleged the required elements of a business interference
claim. As part of that claim, Popescu was not required to allege that he was directly
harmed by an independently wrongful act so long as he alleged (as he did) that Apple’s
wrongful act interfered with his economic relationship with Constellium.
Because the demurrer to both causes of action should have been overruled, we
need not address Popescu’s contention that the trial court abused its discretion by denying
leave to amend. We will reverse the judgment with directions that the court vacate its
prior order and enter a new order overruling the demurrer to both causes of action.
PROCEDURAL BACKGROUND
I. Complaint
On July 9, 2013, Popescu initiated this action against Apple, alleging contract
interference and business interference claims. Apple filed a demurrer to the initial
pleading. Apple’s demurrer was not heard by the court because, in response to the
demurrer, Popescu filed an amended pleading, the Complaint, that is at issue in this
appeal.
3
Popescu, an Arizona resident, alleged1 that he is “an aluminum engineering
manager who developed cutting edge alloys for high-tech customers.” The gist of his
action is that he “objected to Apple’s unlawful trade practices,” and that Apple therefore
“convinced [his] employer to terminate him for cause on a trumped up basis,” thereby
“blackball[ing] Popescu from his profession.”
In 2000, Popescu was working for Alcoa, Inc. (Alcoa). He was hired that year by
Algroup Alusuisse (Algroup), an aluminum supplier that is Alcoa’s largest competitor.
Algroup hired Popescu because he had expertise “in marketing value-added aluminum
substrates directly to end users in high-tech industries.” Algroup and Popescu entered
into an employment agreement, which included the following provision for Popescu’s
benefit: “ ‘An extended separation support package (as an exception to current policy)
which would provide you with up to twelve months of base salary and medical/dental
coverage through paid COBRA, as well as outplacement services, should your
employment terminate for any reason other than misconduct or resignation.’ ” Algroup
was acquired by Alcan Corporation (Alcan) in 2001.
Popescu alleged that he was “a stellar and highly valued employee [who] survived
a series of corporate transactions” that resulted in his employment by Constellium. In a
June 2009 written employment agreement, Constellium reaffirmed Popescu’s severance
provision in his prior agreement with Algroup: “ ‘Algroup Severance Plan: Provisions
of the Algroup severance, offered to you at the time of your employment with Algroup,
will continue to be honored, up to one year’s severance pay while unemployed, COBRA
benefits (if not eligible elsewhere), outplacement services and unused earned vacation.’ ”
1
A demurrer admits the truth of all facts properly pleaded. (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal. 4th 962, 966-967.) Accordingly, we will sometimes refer to
the allegations in the Complaint without using the prefatory phrase “Popescu alleged” to
avoid undue repetition of that phrase.
4
Popescu alleged that he received performance reviews from Alcan and
Constellium that were “exemplary.” His employer used a scoring system that rated him
as “ ‘Very Successful’ or ‘Exceptional.’ ” During his last review in February 2011,
Constellium designated Popescu as being in “the very highest ‘Critical Resource’
category.” The next month, it designated him as the lead employee in pursuing a
relationship with Apple in which it was looking “to expand the aluminum look and
design of the MacBook and iPad to its iPhone. Popescu performed superbly.”
By early 2011, Apple had determined it would “replace the stainless steel iPhone
body with a thinner and lighter extruded, anodized aluminum alloy.” Apple approached
Constellium to develop an alloy with “specifications [that] were very demanding and
required state of the art expertise and technology.” In March 2011, the business unit
president of Constellium Global ATI (of which Constellium is a subdivision) designated
Popescu to lead in the pursuit of a relationship with Apple in the latter’s goal of using an
aluminum alloy for its iPhone products. Popescu was designated the project lead because
of his “expertise and performance.”
Popescu and a team of engineers from Constellium commenced work on the Apple
custom alloy project. Between April and August 2011, Popescu oversaw the project,
which involved Apple engineers and managers in California, Constellium’s research and
development center in France, and Constellium’s Swiss-based manufacturing unit. Apple
sought and obtained a large degree of information from Constellium, including its trade
secrets regarding aluminum alloy manufacturing formulas and processes. Constellium,
through Popescu, also gave Apple samples of its extruded custom alloy and other non-
custom alloys.
While development was progressing, Apple insisted that Constellium sign a
“ ‘Development Agreement’ ” containing “restrictive terms,” including provisions that
(a) Apple was not obligated to purchase any developed products or to use Constellium as
its supplier, and (b) Constellium, for an effective period of five years, “would [be]
5
precluded . . . from supplying alloy to any manufacturer of consumer electronics.” Apple
advised Constellium that Constellium’s competitors (other elite aluminum alloy
suppliers) had already signed such an agreement. Popescu objected to the agreement and
refused to sign it on Constellium’s behalf.
Popescu alleged that he subsequently attended a meeting with Apple in Cupertino
on August 30, 2011. The Apple engineers with whom Popescu had worked for months
were silent, while their superiors, who were new to the project, led the meeting and “were
visibly upset that the nearly complete custom alloy had outpaced the execution of the
Development Agreement.” Apple representatives insisted that Constellium sign the
Development Agreement, which included an additional restrictive term that required
Constellium to transfer its intellectual property interests in the custom aluminum alloy to
Apple. Popescu again refused to sign the agreement on behalf of Constellium.
Popescu alleged that Apple wanted to use the executed Development Agreement
to restrict competition in the smartphone market. He alleged that by “lock[ing] up [the
elite aluminum] suppliers with the [R]estrictive Development Agreement, Apple would
be free to develop . . . its own extruded alloy body for the iPhone 5,” and to prevent its
competitors from developing a smartphone with a comparable aluminum alloy body.
“Apple saw Popescu as an obstacle to the Development Agreement, so he was an
obstacle to the larger scheme to restrict competition in smartphones.”
Popescu also alleged that, during the August 30 meeting, he had inadvertently
activated the recording feature of his Livescribe Smartpen (the recording incident).
Apple’s attorney noticed that the meeting was being recorded, confiscated the Smartpen,
and the meeting continued. After the meeting, Apple insisted that Constellium
commence an investigation into the recording incident. Apple also requested that
Constellium terminate Popescu, but his supervisors resisted. Apple then appealed to the
executive management of the private equity firm that owned Constellium, after which
Popescu was terminated for cause. Popescu alleged that Apple “used the recording
6
incident to leverage both [his] termination and Constellium’s execution of the
Development Agreement.” Apple’s action allegedly prevented Popescu from obtaining
other employment in the aluminum alloy industry. At the time he was terminated on
October 28, 2011, Popescu earned more than $200,000 per year, and he intended to work
at Constellium for at least 10 more years, until he retired.
After Popescu was terminated, Constellium signed the Development Agreement.
Constellium was “the last of the elite aluminum suppliers to sign the Development
Agreement and, thus, the last supplier capable of producing an extruded alloy case equal
or superior to Apple’s extruded . . . iPhone 5 case.” Popescu alleged that as a result of his
termination and Constellium’s execution of the Development Agreement, Apple was able
to misappropriate Constellium’s aluminum alloy trade secrets. He alleged that the
Development Agreements signed by Constellium and other elite aluminum suppliers—
which agreements were “naked output contracts . . . in which a firm bargains for
another’s entire output on the condition that the seller does not deal with the firm’s
rivals”—had anticompetitive effects in the global marketplace because “Apple’s
competitors [were] denied a potentially efficiency-increasing resource while the public
[was] denied a better, more durable smartphone.” He also alleged that Apple’s
anticompetitive actions negatively impacted elite aluminum suppliers, consumer
electronics companies (including smartphone manufacturers), and smartphone
consumers.
In the first cause of action, Popescu alleged a claim for contract interference. He
claimed he had an employment contract with Constellium that restricted its ability to
terminate him and therefore he was not an at-will employee when he was terminated. He
also alleged that (1) Apple was aware of his contract; (2) it intentionally induced
Constellium to terminate his employment; (3) as a result of Apple’s actions, Constellium
terminated him, purportedly for cause, on October 28, 2011; and (4) he was damaged as a
result of Apple’s conduct.
7
In the second cause of action, Popescu alleged a purported claim for business
interference. He claimed (1) he had an employment relationship with Constellium under
which there was a probability he would receive future economic benefits; (2) he had
intended to work for at least 10 more years at the time his employment was terminated;
and (3) had it not been for Apple’s actions, it was extremely likely he would have stayed
employed with Constellium as he had planned. He also alleged that (1) Apple was aware
of his employment relationship with Constellium, (2) Apple intentionally induced
Constellium to terminate his employment, and (3) Constellium terminated him,
purportedly for cause, on October 28, 2011, as a result of Apple’s actions.
Popescu claimed in the second cause of action that Apple’s actions were
independently wrongful because (1) the Development Agreement was a contract in
restraint of trade in violation of the Sherman Act (15 U.S.C. § 1) and Business and
Professions Code section 16600; (2) Apple engaged in a trust to restrict trade and prevent
competition in violation of the Cartwright Act (Bus. & Prof. Code, § 16720 et seq.);
(3) Apple’s conduct was a scheme to misappropriate Constellium’s trade secrets in
violation of Civil Code section 3426; (4) Apple’s conduct constituted intentional
interference with Popescu’s contract with Constellium; and (5) Apple’s conduct violated
Business and Professions Code section 17200 et seq., in that it (a) threatened an incipient
violation of antitrust laws or a violation of the policy and spirit of the laws, (b) violated
Business and Professions Code section 16600, (c) was an unfair business practice,
(d) was a deceptive business practice, (e) was an unlawful business practice, and
(f) included implementation of the Development Agreement which contained
unconscionable terms.
8
II. The Demurrer
Apple filed a demurrer to the Complaint under Code of Civil Procedure section
430.10,2 asserting that the first and second claims failed to state facts sufficient to
constitute causes of action (§ 430.10, subd. (e)) and were uncertain (§ 430.10, subd. (f)).
Apple urged that the court sustain the demurrer without leave to amend.
The court sustained the demurrer without leave to amend. In a lengthy order filed
October 15, 2013, the court reasoned, among other things, that Popescu failed to state a
cause of action (1) for contract interference because his allegations demonstrated he was
an at-will employee, and (2) for business interference because he had not alleged that
Apple, in allegedly taking action to encourage Constellium to launch an investigation into
the recording incident that resulted in Popescu’s termination, had committed an
independently unlawful act. Judgment was entered in favor of Apple.
DISCUSSION
I. Applicable Law and Standard of Review
We perform an independent review of a ruling on a demurrer and decide de novo
whether the challenged pleading states facts sufficient to constitute a cause of action.
(Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010)
48 Cal. 4th 32, 42; McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal. 4th 412, 415.) “In
reviewing the sufficiency of a complaint against a general demurrer, we are guided by
long-settled rules. ‘We treat the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We
also consider matters which may be judicially noticed.’ [Citation.] Further, we give the
complaint a reasonable interpretation, reading it as a whole and its parts in their context.
[Citation.] When a demurrer is sustained, we determine whether the complaint states
2
Further statutory references are to the Code of Civil Procedure unless otherwise
stated.
9
facts sufficient to constitute a cause of action. [Citation.]” (Blank v. Kirwan (1985)
39 Cal. 3d 311, 318; see also Randi W. v. Muroc Joint Unified School Dist. (1997)
14 Cal. 4th 1066, 1075; Moore v. Regents of University of California (1990)
51 Cal. 3d 120, 125.)
“It is not the ordinary function of a demurrer to test the truth of the plaintiff’s
allegations or the accuracy with which he [or she] describes the defendant’s conduct. A
demurrer tests only the legal sufficiency of the pleading.” (Committee on Children’s
Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 213.) “[T]he facts alleged
in the pleading are deemed to be true, however improbable they may be. [Citation.]”
(Del E. Webb Corp., supra, 123 Cal.App.3d at p. 604; see also Alcorn v. Anbro
Engineering, Inc. (1970) 2 Cal. 3d 493, 496 (Alcorn) [court reviewing propriety of ruling
on demurrer is not concerned with the “plaintiff’s ability to prove . . . allegations, or the
possible difficulty in making such proof”].)
On appeal, we will affirm a “trial court’s decision to sustain the demurrer [if it]
was correct on any theory. [Citation.]” (Kennedy v. Baxter Healthcare Corp. (1996)
43 Cal. App. 4th 799, 808, fn. omitted.) Thus, “we do not review the validity of the trial
court’s reasoning but only the propriety of the ruling itself. [Citations.]” (Orange
Unified School Dist. v. Rancho Santiago Community College Dist. (1997)
54 Cal. App. 4th 750, 757.)
II. Order Sustaining Demurrer To Contract Interference Claim
A. Background
Five elements must be alleged to support a claim for intentional interference with
contractual relations (contract interference). They are “(1) a valid contract between
plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s
intentional acts designed to induce a breach or disruption of the contractual relationship;
(4) actual breach or disruption of the contractual relationship; and (5) resulting damage.”
(Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal. 3d 1118, 1126
10
(PG&E).) It is not a requirement that “the defendant’s conduct be wrongful apart from
the interference with the contract itself. [Citation.]” (Quelimane Co. v. Stewart Title
Guaranty Co. (1998) 19 Cal. 4th 26, 55 (Quelimane).) Furthermore, a plaintiff need not
establish that the primary purpose of the defendant’s actions was to disrupt the contract.
The tort is shown even where “ ‘the actor does not act for the purpose of interfering with
the contract or desire it but knows that the interference is certain or substantially certain
to occur as a result of his [or her] action.’ ” (Ibid., quoting Rest.2d Torts, § 766, com. j,
p. 12.)
On its face, the Complaint alleges facts demonstrating each of the five elements of
a contract interference claim. But the trial court held that (1) the allegations of the
Complaint demonstrated that Popescu had an at-will employment relationship with
Constellium, and (2) because Popescu was an at-will employee, he “cannot state a claim
for intentional interference with contract.” In reaching this conclusion, the court cited
Reeves, supra, 33 Cal. 4th 1140.
Popescu claims on appeal that he was not an at-will employee, and that in any
event, an at-will employee is not barred under Reeves, supra, 33 Cal. 4th 1140 from
asserting a contract interference claim. Apple responds that the allegations of the
Complaint demonstrated that Popescu had an at-will employment relationship with
Constellium, and that the trial court correctly held that Popescu’s contract interference
claim was barred under Reeves. Apple argues in the alternative—relying on Applied
Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal. 4th 503 (Applied
Equipment)—that because it “was not a stranger to [Popescu’s] employment relationship
with Constellium,” it was immune from suit for intentional interference with that
contractual relationship.
B. Apple’s Claim It Was “Not a Stranger” to the Contract
In Applied Equipment, our high court addressed whether a contracting party may
be held liable in tort for conspiracy to interfere with its own contract. (Applied
11
Equipment, supra, 7 Cal.4th at p. 507.) The court said it could not. It concluded that the
imposition of tort liability upon a contracting party would “[(1)] illogically expand[] the
doctrine of civil conspiracy by imposing tort liability for an alleged wrong—interference
with a contract—that the purported tortfeasor is legally incapable of committing; and
(2) . . . obliterate[] vital and established distinctions between contract and tort theories of
liability by effectively allowing the recovery of tort damages for an ordinary breach of
contract.” (Id. at p. 510.) The court noted that “California recognizes a cause of action
against noncontracting parties who interfere with the performance of a contract.” (Id. at
p. 513, original italics.) But in rejecting the imposition of tort liability upon a breaching
party to the contract, the court held: “ ‘While the imposition of liability in tort upon the
non-party interferer may be justified in all cases for his [or her] intentional disruption of
the contractual relation, the party who merely breaches his [or her] contract should in all
cases be exposed only to contractual liability as he [or she] has not assumed the role of an
intentional interferer. To impose tort liability upon the contract breaker because of the
involvement of a third person (when liability is limited to contract damages when the
contract breaker is acting alone) undermines the policies which have developed limited
contractual liability.’ [Citation.]” (Id. at p. 517.)
Apple relies on Applied Equipment to argue it has no liability for contract
interference because, “while [it] was not [Popescu’s] employer, [Apple nevertheless]
[‘]
was not a stranger[’] to his ‘at-will’ employment” arrangement with Constellium. Apple
contends that Popescu alleged that Apple “contracted with Constellium to develop a
proprietary aluminum extruding process. [Citation.] This research and development
[process] would represent a significant investment of time and resources by Apple.
Apple therefore had a legitimate economic interest in making sure the individuals
Constellium staffed the project with would not cause Apple any harm.” Apple relies on
the following language in Applied Equipment: “ ‘It has long been held that a stranger to
a contract may be liable in tort for intentionally interfering with the performance of the
12
contract.’ [Citation. ¶] However, consistent with its underlying policy of protecting the
expectations of contracting parties against frustration by outsiders who have no legitimate
social or economic interest in the contractual relationship, the tort cause of action for
interference with contract does not lie against a party to the contract. [Citations. ¶]
Applied’s conspiracy theory is fundamentally irreconcilable with the law of conspiracy
and the tort of interference with contract . . . . One contracting party owes no general tort
duty to another not to interfere with performance of the contract; its duty is simply to
perform the contract according to its terms. The tort duty not to interfere with the
contract falls only on strangers—interlopers who have no legitimate interest in the scope
or course of the contract’s performance.” (Applied Equipment, supra, 7 Cal.4th at
pp. 513-514, fn. omitted, original italics.)
We do not read the foregoing language from Applied Equipment (as asserted by
Apple) to immunize a noncontracting party from tort liability because the noncontracting
party has a “legitimate interest in the scope or course of the contract’s performance.” The
plaintiff there, Applied Equipment (Applied), alleged that the codefendants (Litton Saudi
Arabia Limited [Litton] and Varian Associates Inc. [Varian]) were both liable for
conspiracy to interfere with two Applied contracts—a subcontract with Litton and a
purchase order with Varian. (Applied Equipment, supra, 7 Cal.4th at p. 508.) The issue
was whether a contracting party could be found liable for conspiring with a third party to
deprive the plaintiff of the benefits of its contract—namely, whether (1) Litton could be
liable in tort for conspiracy with Varian in connection with the breach of the
Applied/Litton subcontract, and (2) Varian could be liable in tort for conspiracy with
Litton in connection with the breach of the Applied/Varian purchase order. The court did
not address whether a tort claim for contract interference or conspiracy could be made
against a noncontracting party who had a “legitimate interest” in the contract, let alone
hold that such a claim could never be asserted as a matter of law. Cases are not authority
for propositions not considered. (Kinsman v. Unocal Corp. (2005) 37 Cal. 4th 659, 680.)
13
Dictum in Applied Equipment suggests a conclusion adverse to Apple’s position.
In the opinion’s penultimate paragraph, the court noted that, since the plaintiff alleged the
disruption of two contracts with two different contracting parties, “[n]othing we have said
suggests that Litton may not be held liable for direct interference with the Applied
Equipment/Varian purchase order (to which it was not a party) or that Varian may not be
held liable for direct interference with the Applied Equipment/Litton subcontract (to
which it was not a party), provided that each of the elements of the tort of interference
with contract is satisfied.” (Applied Equipment, supra, 7 Cal.4th at p. 521, fn. omitted.)
We thus conclude that the “stranger to a contract” language (id. at p. 513)—which
immediately follows the high court’s statement that noncontracting parties may be held
liable for interference with a contract—is used as a synonym for “noncontracting party.”
An extension of Applied Equipment’s holding to immunize a third party from
tortious interference claims simply because the third party asserts some economic or
other interest in a contract would significantly undercut the tort itself and the public
policy underlying it. As noted recently by the Ninth Circuit Court of Appeals: “To
shield parties with an economic interest in the contract from potential liability would
create an undesirable lacuna in the law between the respective domains of tort and
contract. A party with an economic interest in a contractual relationship could interfere
without risk of facing either tort or contract liability. This result is particularly perverse
as it is those parties with some type of economic interest in a contract whom [sic] would
have the greatest incentive to interfere with it. Such a result would hardly serve the
established goal of protecting ‘a formally cemented economic relationship . . . from
interference by a stranger to the agreement.’ [Citation.]” (United Nat. Maintenance, Inc.
v. San Diego Convention Center, Inc. (9th Cir. 2014) 766 F.3d 1002, 1007, quoting Della
Penna, supra, 11 Cal.4th at p. 392.)
In support of Apple’s position that under Applied Equipment, supra, 7 Cal. 4th 503,
it cannot be liable for contract interference, Apple quotes from Marin Tug Barge, Inc. v.
14
Westport Petroleum, Inc. (9th Cir. 2001) 271 F.3d 825 (Marin Tug): “California law has
long recognized that ‘an entity with a direct interest or involvement in that relationship is
not usually liable for harm caused by pursuit of its interests.’ [Citation.]” (Quoting from
Marin Tug, at p. 832.) This reliance is misplaced. Marin Tug was concerned with a
business interference claim, not a contract interference claim. Moreover, the Marin Tug
court did not cite Applied Equipment in its opinion.
We find Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal. App. 4th 344
(Woods) to be instructive. In Woods, the plaintiffs, employees of Fox Family who held
stock option rights by contract, sued their employer’s majority shareholder (a nonparty to
the stock option contracts) for interference with contractual relations. (Id. at pp. 347-
348.) The trial court sustained the defendant’s demurrer to the contract interference
claim because the defendant “was not a stranger to the contracts.” (Id. at p. 349.) But the
appellate court reversed, rejecting the defendant’s contention—similar to Apple’s here—
that under Applied Equipment, supra, 7 Cal. 4th 503, a noncontracting party that is not a
stranger to the contract and that has some interest in the contract is immune from a
contract interference claim. (Woods, supra, 129 Cal.App.4th at pp. 352-353.) The
Woods court noted: “When Applied Equipment did use the term ‘stranger to a contract,’
it did so interchangeably with the terms ‘noncontracting parties’ [citation] and ‘third
parties.’ [Citation.]” (Id. at p. 353.) Accordingly, the appellate court held that Applied
Equipment should not be read “as holding[] that persons or entities with an ownership
interest in a corporation are automatically immune from liability for interfering with their
corporation’s contractual obligations. [Citations.]” (Woods, at p. 353; see also Asahi
Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal. App. 4th 945, 963-964 [corporate
defendant that acquired entity with existing license agreement not immune from suit for
interference with that agreement under theory it was not a stranger to it; “ ‘a stranger,’ as
used in Applied Equipment, means one who is not a party to the contract or an agent of a
party to the contract”].)
15
Apple also cites Mintz v. Blue Cross of California (2009) 172 Cal. App. 4th 1594
(Mintz) in support of its position. There, the plaintiff, an insured under a health insurance
plan (PERS Plus) which was issued and funded by CalPERS, sued Blue Cross of
California (Blue Cross), the administrator of the plan. The claims arose out of the denial
of insurance coverage for a requested treatment Blue Cross deemed “investigational.”
Blue Cross advised the plaintiff of his right to appeal the decision by asking for another
review, but it did not advise him that he had a right under his policy “to request an
independent external review” of the decision. (Id. at p. 1600.) In his suit, the plaintiff
alleged, among other things, interference with contractual relations. (Ibid.) The plaintiff
appealed from a dismissal entered after a demurrer was sustained. (Id. at p. 1602.) On
appeal, the court, citing Applied Equipment, supra, 7 Cal.4th at page 513, noted that
“only ‘a stranger to [the] contract’ may be liable for interfering with it. [Citation.]”
(Mintz, at p. 1603.) The court held that Blue Cross could not be sued for interference
with the insurance contract for which it acted as administrator because (1) the insurance
contract expressly identified Blue Cross as the agent for CalPERS in administering the
contract (ibid.); and (2) “it is settled that ‘corporate agents and employees acting for and
on behalf of a corporation cannot be held liable for inducing a breach of the corporation’s
contract.’ [Citations.]” (Id. at p. 1604, quoting Shoemaker v. Myers (1990) 52 Cal. 3d 1,
24.)
Mintz is distinguishable. Apple was not mentioned—as a named agent or
otherwise—in Popsecu’s employment contract. Nor did Apple act on behalf of
Constellium in connection with the employment agreement. Thus, Apple’s relationship
to the agreement was wholly tangential. Apple nonetheless describes itself as having “a
legitimate economic interest in making sure that individuals Constellium staffed the
project with [i.e., Popescu] would not cause Apple any harm.” While we do not question
the result in Mintz—that a defendant is immune from a contract interference claim
because it was serving as an agent/administrator of a contracting party—it cannot be
16
read to support Apple’s view that any noncontracting defendant that can articulate an
interest in an interfered-with contract is immune from tort liability. (See Powerhouse
Motorsports Group, Inc. v. Yamaha Motor corp., U.S.A. (2013) 221 Cal. App. 4th 867,
883-884 [motorcycle manufacturer/franchisor could not claim “not a stranger” immunity
to claim for interference with contract for sale of dealership by franchisee to third party].)
Apple also relies on Warwick v. University of the Pacific (N.D. Cal. 2010), 2010
WL 2680817 [2010 U.S. Dist. LEXIS 67107] (Warwick). In Warwick, the plaintiff was
an independent contractor panel attorney with a California Parole Advocacy Program
(CalPAP) operated by the University of the Pacific (UOP). (Id. at p. ** [*2].) The
program arose out of a court-ordered injunction requiring the state to establish a program
providing attorneys for parole revocation proceedings. (Id. at p. ** [*2].) The contract
provided it was terminable at will by either party upon notice, and CalPAP retained sole
discretion as to the assignment of any parolee clients to the plaintiff. (Id. at p. ** [*29].)
After approximately six months—during which time various issues arose––the plaintiff’s
contract was terminated. (Id. at pp. ** [*3-13].) After the plaintiff sued UOP, defendants
California Department of Corrections and Rehabilitation (CDRC) and various individuals
moved for summary judgment. The district court granted the motion of the CDCR as to
the contract interference claim because the plaintiff admitted she had an at-will contract
with CalPAP. The district court observed that “[u]nder California law, a party who
interferes with an at-will contract cannot be sued for interference with contract.
[Citation.]” (Id. at p. ** [*32].) Citing Reeves, supra, 33 Cal.4th at page 1152, the court
concluded that “[a]ny such claim is more properly viewed as an interference with
prospective economic advantage claim. [Citation.]” (Ibid.)
Warwick does not support Apple’s position here. First, in the context of a contract
interference claim, Warwick did not hold that a noncontracting party having an economic
interest in a contract is immune from tort liability for alleged disruption of a contractual
relationship. Indeed, the district court did not cite Applied Equipment. Further, we
17
disagree with the Warwick court’s recitation of California law as it concerns contract
interference claims based upon at-will contracts. As we will discuss (see pt. II.D., post),
we conclude that under Reeves, supra, 33 Cal. 4th 1140, where an employee’s at-will
contract is terminated as a result of interference by a third party, the employee may assert
a contract interference claim against the third party without showing that the third party
committed an independently wrongful act. And, more generally, to the extent Warwick
suggests that under California law a third party may not be held liable for interfering with
a business relationship (whether or not based upon an existing contract) because the third
party is not a “stranger” to that relationship and has “a substantial interest” in it, we
disagree. The Warwick court, in support of this position, cited no California cases,
instead relying on Marin Tug, supra, 271 F.3d 825. No California case has made such a
sweeping pronouncement that would immunize third parties from liability for contract
interference and business interference claims.
We conclude that Apple, even as a third party having some interest in the manner
in which Popescu performed his employment agreement with Constellium, is not immune
from tort liability for interfering with his contract. We next address whether the trial
court correctly found that Popescu alleged an at-will employment relationship with
Constellium, and, if so, whether his contract interference claim was precluded as a matter
of law.
C. Popescu’s At-Will Employment Relationship
Under California law, it is presumed that employment with no specified term is at-
will and may be terminated at any time for any lawful reason by the employer or
employee. (Lab. Code, § 2922.)3 “While the statutory presumption of at-will
employment is strong . . . [Labor Code section 2922] does not prevent the parties from
3
“An employment, having no specified term, may be terminated at the will of
either party on notice to the other. Employment for a specified term means an
employment for a period greater than one month.” (Lab. Code, § 2922.)
18
agreeing to any limitation, otherwise lawful, on the employer’s termination rights.
[Citation.]” (Guz v. Bechtel National Inc. (2000) 24 Cal. 4th 317, 335-336 (Guz), original
italics; see also Foley v. Interactive Data Corp. (1988) 47 Cal. 3d 654, 677 (Foley) [at-
will presumption may be rebutted “by evidence that despite the absence of a specified
term, the parties agreed that the employer’s power to terminate would be limited in some
way, e.g., by a requirement that termination be based only on ‘good cause’ ”].) “The
contractual understanding need not be express, but may be implied in fact, arising from
the parties’ conduct evidencing their actual mutual intent to create such enforceable
limitations. [Citation.]” (Guz, at p. 336, italics omitted.) Factors that may bear upon a
determination of the existence of an implied-in-fact contract and its contents include
“ ‘the personnel policies or practices of the employer, the employee’s longevity of
service, actions or communications by the employer reflecting assurances of continued
employment, and the practices of the industry in which the employee is engaged.’
[Citation.]” (Foley, at p. 680, quoting Pugh v. See’s Candies, Inc. (1981) 116 Cal. App. 3d
311, 327.) The existence or nonexistence of an implied-in-fact contract under which the
employee may be terminated only for good cause is generally a question of fact. (Foley,
at p. 682; see also Stillwell v. The Salvation Army (2008) 167 Cal. App. 4th 360, 380.)
It is the statutory presumption in Arizona—the state of Popescu’s domicile—that
the relationship between employer and employee is at will. (See Ariz. Rev. Stat. § 23-
1501.) Under Arizona law, an employee (except a public employee) may bring suit for
wrongful discharge under only three circumstances: “(1) termination in breach of a
written contract (signed by both the employer and employee or expressly included in an
employment handbook) setting forth that the employment relationship shall remain in
effect for a specified duration of time or otherwise expressly restricting the right of either
party to terminate the employment relationship; (2) termination in violation of an Arizona
statute . . . ; [or] (3) termination in retaliation for the refusal to violate the Arizona
19
Constitution or an Arizona statute.” (Bodett v. CoxCom, Inc. (9th Cir. 2004) 366 F.3d
736, 746.)
Popescu argues that the trial court erred by failing to apply Arizona law to the
issue of whether he had an at-will employment relationship with Constellium. He
contends there were sufficient facts alleged in the Complaint that he was not an at-will
employee under Arizona law because he alleged that his contract “restricted
Constellium’s ability to terminate him” and he “was not an ‘at will’ employee at the time
of his termination on October 28, 2011.”
Popescu did not make the assertion below that Arizona law applied to the
determination of whether he was an at-will employee. Rather, he argued—citing Guz,
supra, 24 Cal. 4th 317 and CRST Van Expedited, Inc. v. Werner Enterprises (9th Cir.
2007) 479 F.3d 1099 (CRST)—that under California law, because his agreement
restricted Constellium’s ability to terminate him, he was not an at-will employee.
Further, although he alleged that he was at all times a resident of Phoenix, Arizona, he
did not allege the location of the execution, performance, or termination of his
employment agreement with Constellium. And in his appellate briefs, Popescu fails to
provide a substantive legal argument in support of his contention that Arizona law applies
to the issue of whether he was an at-will employee. We conclude that since Popescu has
not shown that Arizona law differs from California law on whether he was an at-will
employee, there is no choice of law issue presented here. (See Hurtado v. Superior Court
(1974) 11 Cal. 3d 574, 580 [no choice of law issue presented “where the laws of the two
states are identical”]; see also Smith v. Cimmet (2011) 199 Cal. App. 4th 1381, 1397.)
Renewing its argument below, Apple argues on appeal that Popescu was an at-will
employee, relying in part on DeHorney v. Bank of America Nat. Trust & Sav. Assn. (9th
Cir. 1989) 879 F.2d 459 (DeHorney). The trial court likewise relied on DeHorney in
concluding Popescu was an at-will employee.
20
In DeHorney, a terminated bank teller alleged, among other things, a cause of
action for wrongful discharge. (DeHorney, supra, 879 F.2d at p. 460.) Under her written
agreement with the bank, DeHorney acknowledged that she would not be a permanent
employee “ ‘until a conclusion of a trial period, which shall not exceed three months
(90 days), and that during such trial period, I may be released with or without cause and
shall be entitled only to my salary at the agreed upon rate to the date of release.’ ” (Id. at
p. 465.) The agreement also provided (in section 8) that after DeHorney became a
permanent employee, she would “ ‘be entitled to two weeks’ notice or one-half month’s
salary in lieu thereof in case of dismissal unless such dismissal results from [her]
dishonesty, disloyalty, insubordination or other good cause.’ ” (Ibid.) The Ninth Circuit
Court of Appeals agreed with the district court that the agreement demonstrated that
DeHorney was an at-will employee, reasoning: “Section 8 is unmistakably clear that
‘permanent employees’ are not in fact permanent, but are only entitled to certain benefits
upon termination, depending on whether they are dismissed for cause or without
cause . . . . [W]hen DeHorney signed the contract, she agreed that Bank of America could
terminate her with or without cause, so long as the bank complied with the notice and
severance provisions set forth in Section 8 of the contract.” (Ibid.; see also Siddoway v.
Bank of America (N.D. Cal. 1990) 748 F. Supp. 1456, 1460 [following DeHorney in
concluding that identical provisions created at-will employment contract].)
We find the reasoning in DeHorney persuasive. The agreement between Popescu
and Constellium as pleaded here was subject to the presumption under Labor Code
section 2922 that it was terminable at will. As pleaded, Constellium retained the right to
terminate Popescu for any lawful reason. Thus, as was true in DeHorney, the fact that
Constellium was obligated to pay compensation if it terminated Popescu for reasons other
than his misconduct did not convert an otherwise at-will agreement into a for-cause
agreement. (DeHorney, supra, 879 F.2d at p. 465; see also Kelly v. Stamps.com Inc.
(2005) 135 Cal. App. 4th 1088, 1102-1103 [rejecting contention that employer’s two-
21
installment bonus program created implied contract that the plaintiff’s employment
would continue until date second installment was due].)
Popescu nonetheless contends he adequately pleaded that he was not an at-will
employee by so averring, and by alleging that his “employment contract . . . ‘restricted
Constellium’s ability to terminate him.’ ” These conclusory allegations were insufficient
to support a claim based upon an alleged employment contract under which the plaintiff
may be terminated only for good cause. Although a demurrer admits pleaded facts, it
does not admit pleaded matters, such as Popescu’s legal status as an at-will employee,
that are “ ‘ “contentions, deductions or conclusions of fact or law” ’ ” (Zelig v. County of
Los Angeles (2002) 27 Cal. 4th 1112, 1126 [demurrer admits pleaded facts]; see also
Building Industry Assn. v. Marin Mun. Water Dist. (1991) 235 Cal. App. 3d 1641, 1645
[“demurrer does not admit the truth of argumentative allegations about the legal
construction, operation, and effect of statutory provisions”].)
Accordingly, the trial court correctly concluded that Popescu had an at-will
employment relationship with Constellium, not a for-cause agreement.4
D.. Application of Reeves v. Hanlon
The trial court held that since Popescu had alleged facts demonstrating he was an
at-will employee, under Reeves, supra, 33 Cal. 4th 1140, he could not state a contract
interference claim. It therefore sustained the demurrer to the first cause of action without
leave to amend. Popescu argues that the court erred because it erroneously interpreted
Reeves as holding that an at-will employee cannot maintain a contract interference claim.
In Reeves, the plaintiffs, a law firm and one of its partners, alleged that the
defendants, attorneys who left the firm, unlawfully lured the plaintiffs’ employees to join
4
Popescu below relied on CRST, supra, 479 F.3d 1099 in support of his position
that he was not an at-will employee of Constellium. He does not rely on CRST in this
appeal and, accordingly, has abandoned that argument. (Tiernan v. Trustees of Cal. State
University & Colleges (1982) 33 Cal. 3d 211, 216, fn. 4.)
22
the defendants’ new firm. (Reeves, supra, 33 Cal.4th at pp. 1145-1146.) The plaintiffs
prevailed at trial. (Id. at pp. 1146-1147.) The Supreme Court addressed (1) a contract
interference theory as it pertained to the workers who were induced to leave plaintiffs’
law firm, and (2) a claim for violation of the Uniform Trade Secrets Act (Civ. Code,
§ 3426 et seq.). (Reeves, at pp. 1145-1146.) It was undisputed that the nine employees
who left the law firm, including six who went to work for the defendants, were the
plaintiffs’ at-will employees. (Id. at p. 1147.) The Reeves court considered the
correctness of “the Court of Appeal’s legal conclusion that ‘an employer may recover for
interference with the employment contracts of its at-will employees by a third party when
the third party does not show that its conduct in hiring the employees was justifiable or
legitimate.’ ” (Id. at p. 1148.)
The Supreme Court noted initially that it has been recognized historically that a
contract interference claim may be based upon disruption of an at-will contract under the
theory that “[a] third party’s ‘interference with an at-will contract is actionable
interference with the contractual relationship’ because the contractual relationship is at
the will of the parties, not at the will of outsiders. [Citations.]” (Reeves, supra,
33 Cal.4th at p. 1148, quoting PG&E, supra, 50 Cal.3d at p. 1127.) The court also noted
that this principle had been applied historically to at-will employment contracts. (Reeves,
at p. 1149.) But it observed that this state’s public policy has long been “that ‘[a] former
employee has the right to engage in a competitive business for himself and to enter into
competition with his former employer, even for the business of . . . his former employer,
provided such competition is fairly and legally conducted.’ [Citations.]” (Ibid., quoting
Continental Car–Na–Var Corp. v. Moseley (1944) 24 Cal. 2d 104, 110.) Further, the
court noted that “ ‘it is not ordinarily a tort to hire the employees of another for use in the
hirer’s business,’ ” subject to the exception that liability will be imposed “ ‘if unfair
methods are used in interfering in such advantageous relations.’ [Citation.]” (Reeves, at
p. 1149, quoting Buxbom v. Smith (1944) 23 Cal. 2d 535, 547.)
23
Based upon these policy considerations, the court concluded that “[w]here no
unlawful methods are used, public policy generally supports a competitor’s right to offer
more pay or better terms to another’s employee, so long as the employee is free to leave.”
(Reeves, supra, 33 Cal.4th at p. 1151.) Accordingly, the court held: “[A] plaintiff may
recover damages for intentional interference with an at-will employment relation under
the same California standard applicable to claims for intentional interference with
prospective economic advantage. That is, to recover for a defendant’s interference with
an at-will employment relation, a plaintiff must plead and prove that the defendant
engaged in an independently wrongful act—i.e., an act ‘proscribed by some
constitutional, statutory, regulatory, common law, or other determinable legal standard’
[citation]—that induced an at-will employee to leave the plaintiff.” (Id. at pp. 1152-
1153, fn. omitted.)
The trial court here interpreted Reeves, as applied to Popescu’s at-will
employment relationship, as barring his contract interference claim. Apple reiterates on
appeal its view that under Reeves, Popescu cannot assert a contract interference claim.
Apple contends he can only assert “a cause of action for intentional interference with
prospective economic advantage.”
Even if we were to construe Reeves as requiring in all circumstances involving a
claim for intentional interference with an at-will employment contract that a plaintiff
must show that a defendant’s conduct was independently wrongful, it would be incorrect
to say that a plaintiff as a matter of law cannot state a contract interference claim. Our
high court clearly held that a contract interference claim involving an at-will contract is
viable under California law. (Reeves, supra, 33 Cal.4th at pp. 1152-1153.) But it held
that a plaintiff, to establish such a contract interference claim, must plead and prove the
defendant’s action in inducing the at-will employee to terminate his or her employment
involved the defendant’s commission of “an independently wrongful act.” (Id. at
p. 1152.) The court did not hold that a contract interference claim involving an at-will
24
employment contract is not actionable under any circumstance. Rather, it concluded that
a plaintiff could recover under such a claim “under the same California standard
applicable to claims for intentional interference with prospective economic advantage.”
(Ibid.) In other words, our high court did not negate the contract interference claim
involving an at-will employment agreement entirely; it merely subjected it to an
additional “independent wrongful act” requirement. (See Quelimane, supra,
19 Cal.4th at p. 56 [noting that contract interference and business interference claims are
separate and distinct torts].)
The trial court appears to have concluded that Reeves held that a plaintiff, in all
circumstances, may only pursue a contract interference claim based upon an at-will
employment relationship if “the defendant engaged in an independently wrongful act.”
(Reeves, supra, 33 Cal.4th at p. 1152.) As noted above, however, the Supreme Court
based its conclusion that interference with an at-will employment relationship was not
actionable without an independent wrongful act upon the dual public policy
considerations of employee freedom of movement and a business’s right to legitimately
compete in the marketplace. (Id. at pp. 1149-1151.) Those underlying policy
considerations are specific to the typical employment contract interference claim at issue
in Reeves: where the defendant company (current employer) has induced an employee to
breach an at-will employment contract he or she had with the plaintiff company (former
employer and competitor of the defendant). By contrast, the claim here is an atypical one
in which the defendant company (not a prospective employer) allegedly induced an
employer (Apple’s business partner, not its competitor) to breach an at-will employment
agreement with the plaintiff employee. Under these circumstances, neither policy
consideration that animated our high court’s holding in Reeves is present.
Furthermore, the dispositive language in Reeves shows that our high court
intended the “independently wrongful act” requirement to apply to the specific
circumstances of that case: “[T]o recover for a defendant’s interference with an at-will
25
employment relation, a plaintiff must plead and prove that the defendant engaged in an
independently wrongful act . . . that induced an at-will employee to leave the plaintiff.
Under this standard, a defendant is not subject to liability for intentional interference if
the interference consists merely of extending a job offer that induces an employee to
terminate his or her at-will employment.” (Reeves, supra, 33 Cal.4th at pp. 1152-1153,
fn. omitted, italics added.)
We hold that Reeves’s additional requirement of pleading and proof of an
independently wrongful act in contract interference claims involving at-will employment
contracts does not apply where, as here, the employee is the alleged victim of a third
party’s conduct in inducing its business partner to terminate his or her employment
contract. (See Chin et al., Cal. Practice Guide Employment Litigation (The Rutter Group
2015) ¶5:525, p. 5(I)-69 [noting that Reeves involved suit by employer against
competitor, and may not apply to employee suits against third parties who induce
termination of his or her employment].) Accordingly, since Popescu alleged each of the
five elements of a contract interference claim (PG&E, supra, 50 Cal.3d at p. 1126), it was
error to sustain the demurrer to the first cause of action.
III. Order Sustaining Demurrer to Business Interference Claim
A. Applicable Law
The elements of the tort of intentional interference with prospective economic
advantage (business interference) are “(1) an economic relationship between the plaintiff
and some third party, with the probability of future economic benefit to the plaintiff;
(2) the defendant’s knowledge of that relationship; (3) intentional acts on the part of the
defendant designed to disrupt the relationship; (4) actual disruption of the relationship;
and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.
[Citation.]” (Youst v. Longo (1987) 43 Cal. 3d 64, 71, fn. 6.) The business interference
tort “is considerably more inclusive than actions based on contract or interference with
contract, and is thus not dependent on the existence of a valid contract.” (Buckaloo v.
26
Johnson (1975) 14 Cal. 3d 815, 826-827, disapproved on other grounds in Della Penna,
supra, 11 Cal.4th at p. 393, fn. 5.)
Although business interference is related to contract interference, our high court
has noted that a distinction must be made between the two, and “a greater solicitude
[must be afforded] to those relationships that have ripened into agreements.” (Della
Penna, supra, 11 Cal.4th at p. 392.) Based upon this distinction, a plaintiff alleging
business interference must also plead and prove “that the defendant’s interference was
wrongful ‘by some measure beyond the fact of the interference itself.’ [Citation.]” (Id. at
p. 393, fn. omitted; see Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th
1134, 1154 (Korea Supply) [noting that Della Penna, rather than overruling authority
identifying five elements of claim, “merely clarified the plaintiff’s burden as to the third
element”].)
The Supreme Court in Della Penna expressly declined to provide more detail as to
the exact definition and scope of the wrongfulness component of a business interference
claim. (Della Penna, supra, 11 Cal.4th at p. 393.) But in Korea Supply, supra, 29
Cal.4th at page 1159, the court explained that wrongful conduct is sufficient to support a
business interference claim if it is proscribed by “some constitutional, statutory,
regulatory, common law, or other determinable legal standard” where it amounts to
“independently actionable conduct.” The court explained that this requirement serves to
“distinguish[] lawful competitive behavior from tortious interference.” (Ibid.) It also
clarified the intent element of the tort, concluding that a plaintiff is not required to plead
and prove a defendant’s specific intent to disrupt the plaintiff’s prospective economic
advantage. Rather, the plaintiff may either plead specific intent, or, alternatively, “plead
that the defendant knew that the interference was certain or substantially certain to occur
as a result of its action.” (Id. at p. 1154.)
27
B. Demurrer Should Have Been Overruled
The trial court concluded that Popescu failed to state facts sufficient to constitute a
cause of action for business interference. It noted that the wrongful acts alleged by
Popescu consisted of Apple’s “misappropriation of trade secrets from Constellium
through the execution of a [Constellium/Apple] Development Agreement . . . , negatively
impacting competition, and [Apple’s] ‘insistence [that] Constellium launch[] an
investigation into the recording incident . . . to get Popescu terminated for cause . . . .’ ”
The trial court reasoned that Popescu lacked standing to assert a trade secrets
misappropriation claim, and that “the alleged misappropriation of trade secrets and
wrongful inducement to enter into the Development Agreement . . . is [sic] not alleged to
have been designed to disrupt the economic relationship between [Popescu] and
Constellium, actually disrupting that economic relationship or proximately causing
economic harm to [Popescu].” The trial court therefore held that Popescu had failed to
state a business interference claim, because neither Apple’s alleged conduct directed
toward Constellium, nor its insistence that Constellium investigate the recording incident,
satisfied the “independent wrongful act” requirement.
Popescu contends he alleged each of the required elements of a business
interference claim. He argues that Apple’s alleged “acts [of] pressuring Constellium to
terminate [him] were . . . independently wrongful because they were necessary elements
in [Apple’s] unlawful scheme to misappropriate trade secrets by fraud and false
pretenses, to induce the execution of a Development Agreement that violates state and
federal antitrust laws, and to violate California’s Unfair Business Practices Act.
[Citations.]”
Initially, we address Apple’s position that Popescu’s claim was not actionable
because “Apple had a protectable legitimate interest in [Popescu’s] employment with
Constellium. [Citations.]” In making this argument, Apple refers to its argument in
connection with the contract interference claim, again citing, among other authorities,
28
Warwick, supra, 2010 U.S. Dist. LEXIS 67107, and Marin Tug, supra, 271 F.3d 825.
For the reasons already stated in part II.B., ante, we conclude that Apple cannot claim
immunity to a tort suit for alleged interference with Popescu’s employment relationship
with Constellium founded upon a theory that Apple is “not a stranger” to that
employment relationship.
Next, Apple argues that Popescu did not allege any conduct that was
independently wrongful because “[t]here is simply no law prohibiting an individual or
entity from reporting an employee’s unlawful conduct to his/her employer.” By itself,
Apple’s conduct as alleged by Popescu of requesting that Constellium investigate the
recording incident was not independently wrongful. And we will assume for purposes of
this discussion that Apple’s alleged exertion of additional pressure upon Constellium by
contacting its majority shareholder to request that it terminate Popescu’s employment for
cause was not independently wrongful to support a business interference claim. But
Popescu alleged in the Complaint that Apple’s conduct in persuading Constellium to
terminate him was interconnected with Apple’s larger goal of requiring Constellium to
sign the Development Agreement and “thereby complete its fraud of Constellium, further
misappropriate its trade secrets, obtain non-trade secret information and materials, and
restrict competition in the smartphone market.” Apple describes these allegations as
Popescu’s having “concoct[ed] a fanciful anticompetitive scheme . . . result[ing] in his
termination.” But in considering a demurrer, the factual allegations of the Complaint are
deemed to be true. (Bader v. Anderson (2009) 179 Cal. App. 4th 775, 787.) Therefore, in
determining whether Popescu alleged an independent wrongful act, we must consider not
only Apple’s actions made directly in conjunction with Popescu’s termination, but also
its interconnected dealings with Constellium in the development of custom aluminum
alloys for Apple’s smartphone products.
Accepting the allegations of the Complaint as true for purposes of demurrer,
Popescu adequately alleged independently wrongful conduct. He alleged that Apple’s
29
conduct in persuading Constellium to terminate Popescu—by removing him as an
obstacle to execution of the Development Agreement—was connected with its effort to
misappropriate Constellium’s trade secrets. This same alleged conduct, combined with
Apple’s successfully obtaining the execution of similar Development Agreements from
other aluminum alloy manufacturers, was alleged to have the anticompetitive purpose and
effect of denying Apple’s smartphone competitors an aluminum alloy resource, and
denying consumers “a better, more durable smartphone.” Popescu therefore alleged
independently wrongful conduct by Apple, including (1) a violation of the Sherman
Antitrust Act (15 U.S.C. § 10); (2) a violation of the Cartwright Act (Bus. & Prof. Code,
§ 16720 et seq.); (3) a Development Agreement that amounts to an unlawful restraint of
trade (Bus. & Prof. Code, § 16600); (4) a violation of the Uniform Trade Secrets Act
(Civ. Code, § 3426 et seq.; and (5) a scheme intending to defraud Constellium.
Apple argues at length that the alleged anticompetitive conduct directed toward
Constellium should not be considered because Popescu was not directly impacted by it.
Apple contends, for example, that Popescu failed to allege (1) “how Constellium’s
executing the Development Agreement has impacted or damaged him” in connection
with the alleged Sherman Act and Cartwright Act violations; (2) “that Apple restrained
[him] from engaging in his profession as required to establish a violation of [Business
and Professions Code § 16600]” (3) “any facts establishing his standing to assert a trade
secret misappropriation claim of himself [sic] or Constellium since he has not alleged he
was the owner of any trade secret”; and (4) “facts establishing Apple made any actionable
intentional or negligent misrepresentations to him.” But Popescu is alleging a claim of
business interference based upon Apple’s disruption of his employment relationship with
Constellium. He is not asserting his own claims of fraud, trade secrets misappropriation,
or antitrust violations.
Apple’s argument that Popescu has not alleged that its conduct directed toward
Constellium was independently wrongful appears to be based upon the assumption that
30
the wrongful conduct must be wrongful toward the plaintiff. But the California Supreme
Court has held to the contrary: “[W]e find no sound reason for requiring that a
defendant’s wrongful actions must be directed toward[] the plaintiff seeking to recover
for this tort. The interfering party is liable to the interfered-with party ‘when the
independently tortious means the interfering party uses are independently tortious only as
to a third party. Even under these circumstances, the interfered-with party remains an
intended (or at least known) victim of the interfering party—albeit one that is indirect
rather than direct.’ (Della Penna, supra, 11 Cal.4th at p. 409 (conc. opn. of Mosk, J.)
[citation].) In fact, ‘the most numerous of the tortious interference cases are those in
which the disruption is caused by an act directed not at the plaintiff, but at a third person.’
[Citation.]” (Korea Supply, supra, 29 Cal.4th at p. 1163, original italics; see also Crown
Imports, LLC v. Superior Court (2014) 223 Cal. App. 4th 1395, 1405 [“interfering act
[need not] be independently wrongful as to the plaintiff”].)
Popescu alleged in the Complaint sufficient facts which, deemed to be true (Del E.
Webb Corp., supra, 123 Cal.App.3d at p. 604), supported a business interference claim.
Accordingly, the trial court erred in sustaining the demurrer to the second cause of action.
Because at this stage of the proceedings we are not concerned with the “plaintiff’s ability
to prove . . . allegations, or the possible difficulty in making such proof” (Alcorn, supra,
2 Cal.3d at p. 496), we express no view as to the likelihood that Popescu will be able to
establish that Apple intentionally interfered with his employment relationship with
Constellium or that Apple’s conduct was independently wrongful.
DISPOSITION
The judgment is reversed with directions to the trial court that it (1) vacate its prior
order sustaining without leave to amend Apple, Inc.’s demurrer to the Complaint, and
(2) enter a new order overruling the demurrer to the first and second causes of action and
granting Apple, Inc. leave to answer the Complaint.
31
___________________________________________
Márquez, J.
WE CONCUR:
__________________________
Rushing, P.J.
__________________________
Mihara, J.
Popescu v. Apple
H040508
Trial Court: Santa Clara County Superior Court
Superior Court No.: CV249279
Trial Judge: The Honorable Mark Pierce
Attorneys for Plaintiff and Appellant Richard D. Schramm
Dan Popescu: Amy Carlson
Attorneys for Defendant and Respondent Todd K. Boyer
Apple Inc.: Benjamin A. Emmert
Robert J. Wilger
LITTLER MENDELSON
Popescu v. Apple Inc.
H040508
33