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Friday, August 07, 2020

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.

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14 Comments:

Blogger Silent Draco August 07, 2020 8:47 AM  

Odd, must be learning to anticipate these patterns. The earlier discussion about this case had me think about at-will vs adhesion, and if forcing acceptance of ToS made Patreon not an at-will contract. Close, didn't consider that the consumer can't terminate the ToS terms after closing an account.

Like always, we should be waiting three days or weeks for the real story?

Blogger Rick August 07, 2020 9:09 AM  

VD — could the NRA or its members counter-sue the NY AG for tortious interference since the bizarre AG made clear her intent to disband the NRA?

Blogger Scuzzaman August 07, 2020 9:14 AM  

Given what you've said about the unconscionable nature of the contract terms, and the attempts to (A) deprive the user of rights, and (B) alter the terms in the middle of a dispute, in order to prejudice any subsequent proceedings, I assume that you can also independently demonstrate wrongfulness on Patreon's part?

Blogger VD August 07, 2020 9:22 AM  

I assume that you can also independently demonstrate wrongfulness on Patreon's part?

Sure, but that is intrinsically a matter of the arbitrator's opinion, and every arbitrator's opinion will vary. It's easier if you don't even have to take that into account.

Could the NRA or its members counter-sue the NY AG for tortious interference since the bizarre AG made clear her intent to disband the NRA?

Only after the fact if she's successful. And she would have qualified immunity as a state employee. So they'd probably sue the AG's office rather than the individual herself.

Blogger basementhomebrewer August 07, 2020 9:46 AM  

Only after the fact if she's successful. And she would have qualified immunity as a state employee. So they'd probably sue the AG's office rather than the individual herself.

With how nakedly government agents are abusing their power now there needs to be new provisions set forth to be able to "pierce the veil" in the same way you can with corporations. The standard to do so should also be lowered slightly.

Blogger Wazdakka August 07, 2020 9:58 AM  

"did add a little excitement and drama to what is otherwise an incredibly boring process, so that was fun."

With quotes like that I imagine Captain Ahab fuming on a calm sea

Blogger FALPhil August 07, 2020 10:36 AM  

VD said: Only after the fact if she's successful. And she would have qualified immunity as a state employee. So they'd probably sue the AG's office rather than the individual herself.

I have been told that qualified immunity is a legal fiction (by a member of the federal bench, no less). At the time I was told this, I did not have enough interest to pursue what that meant. Can you or one of the LLOE explain what a legal fiction is, and what the effect on a situation is when dealing with an individual who has qualified immunity?

Blogger Dr Caveman August 07, 2020 10:45 AM  

Hi Vox, thanks for all the posts on tort law. I'm in a profession that is high risk for cancel mobs, and tort laws seem to be an underexplored avenue of protection

Blogger Phelps August 07, 2020 10:48 AM  

Can you or one of the LLOE explain what a legal fiction is, and what the effect on a situation is when dealing with an individual who has qualified immunity?

A legal fiction is something that isn't based in reality (in this case, statute, regulation or common law) and is instead something courts have come up with for their own convenience. Another legal fiction is that corporations are people -- they aren't, but it is easier for courts to deal with them if they are treated as if they are people.

No legislative body has ever granted qualified immunity to the police. Courts did, and solidified it in precedent. That means that the only thing that protects it is judges not changing their collective mind (most likely all at once through the SCOTUS.)

Blogger rikjames.313 August 07, 2020 11:41 AM  

In my state instead of 'wrongful', we require the conduct in interfering be 'improper'.

That means (way basically) here the conduct must either be wrongful, or be legitimate but in context was done with malice and thus became wrongful.

Does anyone closely following this case know if this is similar to the wrongful element in California?

Blogger rikjames.313 August 07, 2020 11:49 AM  

Phelps wrote:No legislative body has ever granted qualified immunity to the police. Courts did, and solidified it in precedent. That means that the only thing that protects it is judges not changing their collective mind (most likely all at once through the SCOTUS.)

I know the board doesn't like 'actually' comments. But this is actually not true. Michigan has had immunity by statute for most employees/officers and legislators of the government, not including health care, since the 1960s. It was by statute.

And the statute looks a lot like the federal qualified immunity rule.

(I looked up the statute to confirm it is from 64. I had not known that in my state medics, paramedics, and nurses attached to or volunteering with search and rescue or the police are immune from malpractice. You learn things every day)

Blogger furor kek tonicus ( if you don't want to Racist, you must confess: Islam is right about the Jews ) August 07, 2020 12:07 PM  

9. Phelps August 07, 2020 10:48 AM
A legal fiction is something that isn't based in reality


iow, an Abstract Concept treated as Real for the purposes of Law.


9. Phelps August 07, 2020 10:48 AM
but it is easier for courts to deal with them if they are treated as if they are people.


but it is easier for the courts to avoid holding executives and management to account for their criminal behavior when they can punish the legal fiction of the "Corporation as Person" instead.

this is not to say that the plaintiff cannot also benefit from the Legal Fiction. for instance, you're unlikely to collect anything near the size of a settlement that you can get from a Corporation as compared to what you would be awarded from a small subset of the management structure.

Blogger Artisanal Toad August 08, 2020 9:05 AM  

Another example of a legal fiction.

In Alabama, the State Constitution states that no person shall be incarcerated for debt. So, how do you jail men for not paying child support? The judge orders them to pay and when they don't/can't/won't, they is jailed for contempt of court because they didn't obey the judge and pay.

The jailing of the individual for the underlying issue of debt is clearly unconstitutional, but using contempt of court to do so is a legal fiction to avoid that issue. Using that legal fiction is also proof that the judges know damn good and well that they're violating the constitution.

Blogger Canada78Bear August 08, 2020 7:16 PM  

I don't see how Ixchel has any impact. They specifically cite competition as what they had in mind.
The independent clause there is absolutely applicable as Patreon would not be getting the business from Bears after termination so they are not shielded by the competition clause. Patreon is being malevolent here and this ruling removes cover for them.

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