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Korea Supply Co. v. Lockheed Martin Corp.

Supreme Court of California

March 3, 2003, Decided ; March 3, 2003, Filed

No. S100136.

Opinion

 [**941]  MORENO,  [*1140]  J.

 [***34]  This case addresses what claims and remedies may be pursued by a plaintiff who alleges a lost business opportunity due to the unfair practices of a competitor. The Republic [****4]  of Korea wished to purchase military equipment known as synthetic aperture radar (SAR) systems and solicited competing bids from manufacturers, including Loral Corporation (Loral) and MacDonald, Dettwiler, and Associates Ltd. (MacDonald Dettwiler). Plaintiff Korea Supply Company (KSC) represented MacDonald Dettwiler in the negotiations for the contract and stood to receive a commission of over $ 30 million if MacDonald Dettwiler's bid was accepted. Ultimately, the contract was awarded to Loral (now Lockheed Martin Tactical Systems, Inc.). KSC contends that even though MacDonald Dettwiler's bid was lower and its equipment superior, it was not awarded the contract because Loral and its agent had offered bribes and sexual favors to key Korean officials. KSC instituted the present action asserting claims under both California's unfair competition law ( Bus. & Prof. Code, § 17200 et seq.) and the tort of interference with prospective economic advantage.

 [***35]  We granted review to decide two issues. First, we address whether disgorgement of profits allegedly obtained by means of an unfair business practice is an authorized remedy under the UCL where these [****5]  profits are neither money taken from a plaintiff nor funds in which the plaintiff has an ownership interest. We conclude that disgorgement of such profits is not an authorized remedy in an individual action under the UCL. Accordingly, we reverse the judgment of the Court of Appeal on this issue.

Second, we address whether, to state a claim for interference with prospective economic advantage, a plaintiff must allege that the defendant  [*1141]  specifically intended to interfere with the plaintiff's prospective economic advantage. We conclude that a plaintiff need not plead that the defendant acted with the specific intent to interfere with the plaintiff's business expectancy in order to state a claim for this tort. We affirm the judgment of the Court of Appeal on this issue.

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29 Cal. 4th 1134 *; 63 P.3d 937 **; 131 Cal. Rptr. 2d 29 ***; 2003 Cal. LEXIS 1301 ****; 2003 Daily Journal DAR 2291; 2003 Cal. Daily Op. Service 1825

KOREA SUPPLY COMPANY, Plaintiff and Appellant, v. LOCKHEED MARTIN CORPORATION et al., Defendants and Respondents.

Prior History:  [****1]  Superior Court of Los Angeles County, No. BC 209893. Brett C. Klein Judge.

 Korea Supply Co. v. Lockheed Martin Corp., 90 Cal. App. 4th 902, 109 Cal. Rptr. 2d 417, 2001 Cal. App. LEXIS 550 (2d Dist. 2001).

Disposition: We reverse the judgment of the Court of Appeal with respect to its holding that plaintiff has stated a cause of action under the unfair competition law and we affirm the judgment of the Court of Appeal with respect to its determination that plaintiff has stated a cause of action for the tort of interference with prospective economic advantage. The present case is remanded to the Court of Appeal for proceedings consistent with this opinion.

CORE TERMS

prospective economic advantage, intentional interference, remote, disgorgement, interfere, restitution, indirect, profits, expectancy, specific intent, damages, unfair competition, wrongful act, courts, derivative, economic relations, intent requirement, court of appeals, disruption, alleges, cases, tort of interference, antitrust, customers, injuries, defendant's conduct, interfering, italics, motive, principles

Civil Procedure, Responses, Defenses, Demurrers & Objections, Defects of Form, Appeals, Standards of Review, General Overview, Antitrust & Trade Law, Regulated Practices, Trade Practices & Unfair Competition, Justiciability, Standing, Trademark Law, Federal Unfair Competition Law, Lanham Act, Standing, False Advertising, Criminal Law & Procedure, Bribery, Public Officials, Elements, Business & Corporate Compliance, Recordkeeping & Reporting Requirements, Issuers of Securities, Foreign Corrupt Practices Act, Remedies, Damages, Injunctions, Sentencing, Restitution, Governments, Legislation, Interpretation, Punitive Damages, Estate, Gift & Trust Law, Trusts, Constructive Trusts, Real Property Law, Torts, Business Torts, Unfair Business Practices, Remedies, Banking Law, Criminal Offenses, Bank Fraud, Penalties, Commercial Interference, Prospective Advantage, Intentional Interference, Effect & Operation, Admiralty & Maritime Law, Maritime Forfeitures & Penalties, Acts & Mental States, Mens Rea, General Intent, Contracts