- California Supreme Court Holds That Defendant May Be Liable For Inducing An At-Will Employee To Quit Working For His Or Her Employer
- August 27, 2004 | Author: Esra A. Hudson
- Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
The California Supreme Court has held that an employer may pursue a tort claim against someone who induces an at-will employee to terminate the employment relationship, if the interference is accompanied by an "independently wrongful act." Reeves v. Hanlon, S114811, August 12, 2004. The Court explained that the tort claim is actionable under the standard principles applicable to the tort of intentional interference with prospective economic advantage, which requires: (1) an economic relationship containing the probability of future economic benefit; (2) knowledge by the defendant of the existence of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) wrongful interference by some measure beyond the fact of the interference itself; (5) actual disruption of the relationship, caused by the defendant's conduct; and (6) damages to the plaintiff.
The Court, citing to Korea Supply Co. v. Lockheed Martin Corp, 29 Cal. 4th 1134 (2003), defined an "independently wrongful act" as an act "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard" that induces the at-will employee to leave his or her employment.
In Reeves, the Court found that the "independently wrongful act" was the defendants' organized plan to undermine and disrupt the employer's business. The defendants, two disgruntled former attorneys in the Pasadena law firm of Robert L. Reeves & Associates ("Reeves"), abruptly resigned their employment with Reeves without notice and left no status reports or information about the hundreds of matters for which they had been responsible. The defendants deleted and destroyed Reeves' computer files, misappropriated confidential information including Reeves' list of 2,100 clients, improperly solicited Reeves' clients, cultivated employee discontent, and even kept a car leased by Reeves. On the evening of their resignations, the defendants personally solicited Reeves' key employees, resulting in the loss of nine employees in two months.
Even though most of the defendants' actions impacted Reeves' confidential information and clients, the Court agreed with the trial court's finding that the defendants' actions "were designed in part to interfere with and disrupt [Reeves'] relationships with their key at-will employees." Thus, in this case, the defendants did more than simply offer jobs to Reeves' at-will employees. The Court found that the basis of the defendants' liability was that they "purposely engaged in unlawful acts that crippled [Reeves'] business operations and caused [Reeves'] personnel to terminate their at-will employment contracts." This is the type of "independently wrongful act" that will support liability for inducing an at-will employee to terminate his or her employment relationship under the standard articulated by the California Supreme Court.