Korea Supply Co. v. Lockheed Martin Corp. - 29 Cal. 4th 1134, 131 Cal. Rptr. 2d 29, 63 P.3d 937 (2003)

Rule:

The tort of intentional interference with prospective economic advantage does not contain a requirement that a plaintiff plead and prove that the defendant acted with the specific intent, purpose, or design to interfere with the plaintiff's prospective advantage. Instead, it is sufficient for the plaintiff to plead that the defendant knew that the interference is certain or substantially certain to occur as a result of his action.

Facts:

The Republic of Korea wished to purchase military equipment known as synthetic aperture radar systems and solicited competing bids from manufacturers. The losing bidder represented one manufacturer in the negotiations for the contract and stood to receive a commission of over $ 30 million, if the manufacturer's bid was accepted. Ultimately, the contract was awarded to the winning bidder. Subsequently, it was revealed that the winning bidder offered bribes and sexual favors to key Korean officials. Plaintiff losing bidder filed an action against defendants, the winning bidder and its agent, asserting claims under California's unfair competition law (UCL), Cal. Bus. & Prof. Code § 17200 et seq., and the tort of interference with prospective economic advantage. The trial court sustained defendants' demurrer without leave to amend, finding that plaintiff’s complaint did not state facts sufficient to constitute a cause of action under California law, and entered a judgment of dismissal. The Court of Appeals reversed, holding that the plaintiff stated a cause of action under the unfair competition law. The Court of Appeals further held that the plaintiff stated a cause of action for the tort of interference with prospective economic advantage.  Defendants appealed. 

Issue:

1. Did the plaintiff state a cause of action under the unfair competition law? 
2. Did the plaintiff state a cause of action for the tort of interference with prospective economic advantage? 

Answer:

1) No. 2) Yes.

Conclusion:

The Supreme Court reversed the judgment of the Court of Appeal with respect to its holding that plaintiff stated a cause of action under the unfair competition law, affirmed the judgment of the Court of Appeal with respect to its determination that plaintiff stated a cause of action for the tort of interference with prospective economic advantage, and remanded to the Court of Appeal for further proceedings. As to plaintiff's claim under the unfair competition law, the court held that disgorgement of profits that was not restitutionary in nature was not an available remedy. Restitution was the only monetary remedy expressly authorized by Bus. & Prof. Code, § 17203; however, nothing in the legislative history indicated that the Legislature intended to authorize a court to order a defendant to disgorge all profits to a plaintiff who did not have an ownership interest in those profits. Anent the second issue, the court held that to state a claim for interference with prospective economic advantage, the plaintiff was not required to plead that defendants acted with the specific intent, or purpose, of interfering with plaintiff’s prospective economic advantage. It was sufficient for plaintiff to plead that defendants knew that the interference was certain or substantially certain to occur as a result of their action. Moreover, plaintiff satisfied the requirement of pleading that defendants engaged in an act that was independently wrongful, alleging that defendants engaged in bribery and offered sexual favors to key officials of the foreign government in order to obtain the contract from that government.