Tortious interference in California

I have to admit, I initially assumed that Patreon was unexpectedly handed an advantage on at least one of the outstanding issues by a ruling from the California Supreme Court this week:

California recognizes two different torts involving interference with economic relations – interference with performance of a contract and interference with prospective economic advantage.  Originally California courts treated these two torts as essentially the same, the the only difference being that interference with contractual relations required the existence of a binding contract.  In 1995, however, the 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).

Contracts that are terminable at-will occupy a sort of middle estate between these two torts, leading to the question of whether a plaintiff pursuing a claim for tortious interference with an at-will contract must plead that the interference was independently wrongful.  Yesterday, the California Supreme Court held that tortious interference with an at-will contract does require independent wrongfulness. Ixchel Pharma, LLC v. Biogen, Inc., 2020 Cal. LEXIS 4876.

Although the Court recognized that in an at-will contract the parties have more of an expectation of continuity of the relationship than when no contract exists, it found that there is no legal basis in either case to expect continuity from the perspective of a third-party.  The Court also found that legitimate business competition could be chilled if independent wrongfulness is not required.

As I commented on SocialGalactic, this particular decision by the California Supreme Court looked unfavorable to Big Bear on first glance, as well as almost comically untimely. However, it did at least serve to demonstrate that his case was very far from frivolous, considering that the court appeared to be addressing, for the first time, one of the primary issues at dispute in his arbitration.

Upon the LLOE’s review of the ruling, however, it quickly became apparent that despite its apparent relevance to his case, the Ixchel decision actually has nothing to do with Big Bear’s claim for tortious interference on the part of Patreon. This is for four reasons:

  1. As defined by the supreme court, an at-will contract requires mutual bargaining by the parties. The Patreon Terms of Use are a contract of adhesion that prevents bargaining and is unilaterally imposed upon one party by the other, so they are not an at-will contract.
  2. An at-will contract is, by definition, terminable at will by either party. The Patreon Terms of Use cannot be terminated by the user. Even if a user deletes his account, he remains bound indefinitely by the terms. So, again, the Patreon Terms of Use are not an at-will contract.
  3. Patreon did not terminate its contract with Big Bear or even delete his account. What they did was delete his creator page, deny his access to the platform, and prevent patrons from paying him.
  4. The Ixchel decision is not analogous to Patreon’s contract with Big Bear, but with Big Bear’s separate contractual relationships with his patrons.
It’s important to avoid confusing the user’s account with the contract between the two parties. They are two very different things. But the CA Supreme Court’s decision did add a little excitement and drama to what is otherwise an incredibly boring process, so that was fun.