Amicus Decries “Tortification” Of Contract Law

In For Executives, This May Have Been The Most Frightening Holding Of 2013, I wrote about the Court of Appeal’s decision in Asahi Kasei Pharma Corp. v. Actelion Ltd., 222 Cal. App. 4th 945 (2013).   Readers may recall that the case involved a lawsuit by a licensee whose license had been terminated after the licensor had been acquired by a competitor.  After a jury trial, the acquiror and several executives were found liable for intentional interference with a contract.

In my post, I made two points.  First, that the case illustrated “an avenue for tort claims in breach of contract suits”.  Second, I pointed out:

By creating the possibility of tort claims, it could in some cases abrogate the possibility of an efficient breach.  If a breach is truly efficient, why should those who induce what is in society’s interest be punished when the non-breaching party can sue to recover its full expectation (i.e., contract damages)?

Not surprisingly, the defendants have filed a petition for review with the California Supreme Court.  They are not alone in seeking review.  Several amici, including the California Chamber of Commerce and Technet, have filed briefs in support.

Post hoc, ergo propter hoc?

Technet, which describes itself as a national network of CEOs and senior executives of technology companies, seemed to be channeling my post, albeit with more creative diction:

The opinion below, if allowed to stand, seriously erodes two bedrock principles of California law: the centuries-old contract law principle of efficient breach of contracts, and California’s strong public policy against “tortification” of contract law.  The opinion below runs contrary to both.

I was surprised to see the “tortification” used repeatedly in Technet’s letter brief.  I shouldn’t have been.  I quick search found variations of “tortify” in several California opinions.  The earliest use that I found was Rowell v. Transpacific Life Insurance Co., 94 Cal. App. 3d 818, 820 (1979) (“Rowell’s complaint includes factual allegations supporting liability on theories of tortified breach of contract for violation of an implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and negligent infliction of emotional distress.”).


Topics:  Breach of Contract, Licenses, Tortious Interference

Published In: Antitrust & Trade Regulation Updates, Business Organization Updates, Business Torts Updates, General Business Updates, Mergers & Acquisitions Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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