Della Penna v. Toyota Motor Sales, U.S.A., Inc.
11 Cal. 4th 376, 902 P.2d 740, 45 Cal. Rptr. 2d 436 (1995)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
To establish a claim for intentional interference with prospective economic advantage, a plaintiff must plead and prove as part of their case-in-chief that the defendant's conduct was wrongful by some legal measure other than the fact of the interference itself.
Facts:
- Toyota Motor Sales, U.S.A., Inc. (Toyota), the American distributor for Lexus automobiles, was concerned that wholesalers would re-export the luxury cars to Japan, where they were not yet sold under the Lexus brand.
- To prevent this, Toyota included a 'no export' clause in its dealership agreements, contractually forbidding dealers from selling Lexus automobiles for resale outside the United States.
- When re-exporting continued, Toyota compiled and distributed an 'offenders list' to its dealers, identifying wholesalers believed to be involved in the export market.
- Toyota warned its dealers that conducting business with individuals on the list could lead to sanctions, including reduced vehicle allocations and a potential reevaluation of their franchise agreements.
- John Della Penna was an automobile wholesaler who profitably purchased Lexus cars from U.S. retail dealers, primarily Lexus of Stevens Creek, and exported them to Japan for resale.
- Following the distribution of the 'offenders list' and associated warnings from Toyota, Della Penna's sources for Lexus cars, including Lexus of Stevens Creek, began to dry up and eventually ceased selling to him.
Procedural Posture:
- John Della Penna sued Toyota Motor Sales, U.S.A., Inc. in state trial court, alleging intentional interference with his economic relations.
- At trial, the judge modified the standard jury instructions over Della Penna's objection, requiring him to prove that Toyota's interfering conduct was 'wrongful.'
- The jury returned a verdict in favor of Toyota.
- Della Penna (as appellant) appealed the judgment to the Court of Appeal.
- The Court of Appeal reversed the trial court's judgment, holding that requiring the plaintiff to prove 'wrongfulness' was prejudicial error, and it remanded the case for a new trial.
- Toyota (as petitioner) successfully petitioned the Supreme Court of California for review of the Court of Appeal's decision.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a plaintiff bringing a claim for intentional interference with prospective economic advantage have the burden of pleading and proving that the defendant's conduct was wrongful by some measure other than the interference itself?
Opinions:
Majority - Arabian, J.
Yes, a plaintiff seeking to recover for alleged interference with prospective economic relations has the burden of pleading and proving that the defendant’s interference was wrongful by some measure beyond the fact of the interference itself. The court realigns California law with the modern trend in other jurisdictions and the Restatement Second of Torts, which require a plaintiff to show the defendant's conduct was wrongful or improper. This approach better balances the protection of economic relationships with the social value of legitimate business competition. The court distinguishes the tort of interference with prospective economic relations from the tort of interference with an existing contract, noting that existing contracts warrant greater legal protection than mere economic expectancies. By shifting the burden of proving wrongfulness to the plaintiff, the court disapproves of the old 'prima facie tort' framework where the defendant had to prove their conduct was justified as an affirmative defense, a framework that could chill legitimate competitive behavior.
Concurrence - Mosk, J.
While concurring in the judgment to reverse, Justice Mosk argues that any instructional error at trial was not prejudicial. He agrees that the tort needs reformulation but criticizes the majority for adopting the vague standard of 'wrongfulness' without providing a clear definition, which he fears will perpetuate doctrinal confusion. Instead, he proposes that liability should be based on objective and unlawful conduct, specifically where the defendant interferes through independently tortious means (like fraud or defamation) or by an illegal restraint of trade. Mosk contends that focusing on the interfering party's motive is inappropriate and immaterial, and that a more circumscribed, objective standard would provide greater clarity and predictability while protecting competition and First Amendment values.
Analysis:
This decision marks a significant shift in California tort law, making claims for interference with prospective economic advantage more difficult for plaintiffs to win. By transferring the burden of proof from the defendant (to justify their conduct) to the plaintiff (to prove wrongfulness), the court provides greater protection for competitive business practices. This holding aligns California with a majority of other states and is intended to prevent lawsuits that could stifle legitimate competition. The court's refusal to precisely define 'wrongful' leaves the scope of the tort open to future litigation, but the core change significantly raises the bar for plaintiffs in this area.
Unlock the full brief for Della Penna v. Toyota Motor Sales, U.S.A., Inc.