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Keywords

contractlawsuittortplaintiffdefendantdamagestrialpleawilltrade secretcorporation
contractplaintiffdefendantdamagesappealpleawilltrade secretcommon lawpiracy

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Reeves v. Hanlon, 33 Cal.4th 1140, 95 P.3d 513, 17 Cal.Rptr.3d 289, 150 Lab.Cas. P 59,883, 21 IER Cases 1244, 04 Cal. Daily Op. Serv. 7367, 2004 Daily Journal D.A.R. 9911

Facts

Plaintiffs Robert L. Reeves and Robert L. Reeves & Associates, A Professional Law Corporation, brought a lawsuit against former employees Daniel P. Hanlon and Colin T. Greene, who left the firm to start their own practice. The defendants resigned without notice and actively solicited the plaintiffs' employees and clients, misappropriated trade secrets, and destroyed company property. The plaintiffs alleged multiple causes of action, including intentional interference with contractual relationships and misappropriation of confidential information, leading to significant financial losses.

The complaint asserted 14 causes of action, including intentional interference with contractual relationships, interference with prospective business opportunity, conspiracy to interfere with prospective economic advantage, misappropriation of confidential information in violation of the UTSA, unauthorized use of a corporate car, and destruction of corporate property.

Issue

The primary issue is whether a defendant may be held liable for intentionally interfering with an at-will employment relationship by inducing an employee to quit.

The primary issue presented is whether a defendant may be held liable under an intentional interference theory for having induced an at-will employee to quit working for the plaintiff.

Rule

A plaintiff may recover damages for intentional interference with an at-will employment relation if they plead and prove that the defendant engaged in an independently wrongful act that induced the at-will employee to leave.

Accordingly, 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' (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159, 131 Cal.Rptr.2d 29, 63 P.3d 937 (Korea Supply)).

Analysis

The court applied the rule by determining that the defendants' actions constituted an independently wrongful act, as they engaged in unlawful conduct to disrupt the plaintiffs' business. The evidence showed that the defendants not only solicited employees but also destroyed confidential information and misappropriated trade secrets, which were deemed to be unethical and unlawful methods of competition.

Here, it is undisputed that Hanlon and Greene engaged in unlawful and unethical conduct in mounting a campaign to deliberately disrupt plaintiffs' business.

Conclusion

The court affirmed the trial court's judgment, holding that the defendants were liable for their tortious interference with the plaintiffs' at-will employment relationships and other wrongful acts.

Accordingly, the Court of Appeal properly upheld the award of $20,009.19 for damages attributable to that wrongful conduct.

Who won?

The plaintiffs, Robert L. Reeves and Robert L. Reeves & Associates, prevailed because the court found substantial evidence supporting their claims of tortious interference and misappropriation of trade secrets.

The appellate court concluded that plaintiffs' interference claims were legally sound and substantially supported by the record, and also that their misappropriation of trade secrets claim was substantially supported.

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