CACI 2204 Negligent Interference With Prospective Economic Relations

California Civil Jury Instructions CACI

2204 Negligent Interference With Prospective Economic Relations


[Name of plaintiff] claims that [name of defendant] negligently interfered with a relationship between [him/her/nonbinary pronoun/it] and [name of third party] that probably would have resulted in an economic benefit to [name of plaintiff]. To establish this claim, [name of plaintiff] must prove all of the following:

1.That [name of plaintiff] and [name of third party] were in an economic relationship that probably would have resulted in a future economic benefit to [name of plaintiff];

2.That [name of defendant] knew or should have known of this relationship;

3.That [name of defendant] knew or should have known that this relationship would be disrupted if [he/she/nonbinary pronoun/it] failed to act with reasonable care;

4.That [name of defendant] failed to act with reasonable care;

5.That [name of defendant] engaged in wrongful conduct through [insert grounds for wrongfulness, e.g., breach of contract with another, misrepresentation, fraud, violation of statute];

6.That the relationship was disrupted;

7.That [name of plaintiff] was harmed; and

8.That [name of defendant]’s wrongful conduct was a substantial factor in causing [name of plaintiff]’s harm.


Directions for Use

Regarding the fifth element, the judge must specifically state for the jury the conduct that the judge has determined as a matter of law would satisfy the “wrongful conduct” standard. This conduct must fall outside the privilege of fair competition. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393 [45 Cal.Rptr.2d 436, 902 P.2d 740]; Settimo Associates v. Environ Systems, Inc. (1993) 14 Cal.App.4th 842, 845 [17 Cal.Rptr.2d 757].) The jury must then decide whether the defendant engaged in the conduct as defined by the judge. If the conduct is tortious, judge should instruct on the elements of the tort.


Sources and Authority

“The tort of intentional or negligent interference with prospective economic advantage imposes liability for improper methods of disrupting or diverting the business relationship of another which fall outside the boundaries of fair competition.” (Settimo Associates, supra, 14 Cal.App.4th at p. 845, internal citation omitted.)

“The elements of negligent interference with prospective economic advantage are (1) the existence of an economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) the defendant’s knowledge (actual or construed) that the relationship would be disrupted if the defendant failed to act with reasonable care; (4) the defendant’s failure to act with reasonable care; (5) actual disruption of the relationship; (6) and economic harm proximately caused by the defendant’s negligence.” (Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 1005 [230 Cal.Rptr.3d 98].)

“The tort of negligent interference with prospective economic advantage is established where a plaintiff demonstrates that (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship.” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786 [69 Cal.Rptr.2d 466].)

“ ‘The tort of negligent interference with economic relationship arises only when the defendant owes the plaintiff a duty of care.’ ” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 348 [60 Cal.Rptr.2d 539], original italics, internal citation omitted.)

“Where a special relationship exists between the parties, a plaintiff may recover for loss of expected economic advantage through the negligent performance of a contract although the parties were not in contractual privity.” (J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804 [157 Cal.Rptr. 407, 598 P.2d 60].)

The trial court should instruct the jury on the “independently wrongful” element of the tort of negligent interference with prospective economic advantage. (National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 440 [72 Cal.Rptr.2d 720].)

“Commonly included among improper means are actions which are independently actionable, violations of federal or state law or unethical business practices, e.g., violence, misrepresentation, unfounded litigation, defamation, trade libel or trade mark infringement.” (PMC, Inc. v. Saban Entertainment, Inc. (1996) 45 Cal.App.4th 579, 603 [52 Cal.Rptr.2d 877], internal citation omitted, disapproved on other grounds in Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159 fn. 11 [131 Cal.Rptr.2d 29, 63 P.3d 937].)

“While the trial court and [defendant] are correct that a defendant incurs liability for interfering with another’s prospective economic advantage only if the defendant’s conduct was independently wrongful, we have been directed to no California authority, and have found none, for the trial court’s conclusion that the wrongful conduct must be intentional or willful. The defendant’s conduct must ‘fall outside the boundaries of fair competition’… , but negligent misconduct or the violation of a statutory obligation suffice. The approved CACI No. 2204 does not indicate otherwise and, in fact, indicates that either a misrepresentation or ‘violation of statute’ is sufficient.” (Venhaus v. Shultz (2007) 155 Cal.App.4th 1072, 1079–1080 [66 Cal.Rptr.3d 432], internal citations omitted.)

“The fact that the defendant’s conduct was independently wrongful is an element of the interference cause of action itself. In addition, the wrongful interfering act can be independently tortious only as to a third party; it need not be independently wrongful as to the plaintiff. Accordingly, … to state a cause of action for intentional or negligent interference with prospective economic advantage, it is not necessary to also plead a separate, stand-alone tort cause of action.” (Redfearnsupra, 20 Cal.App.5th at p. 1006, internal citations omitted.)

“[A]mong the criteria for establishing [the existence of] a duty of care is the ‘blameworthiness’ of the defendant’s conduct. For negligent interference, a defendant’s conduct is blameworthy only if it was independently wrongful apart from the interference itself.” (Lange v. TIG Ins. Co. (1998) 68 Cal.App.4th 1179, 1187 [81 Cal.Rptr.2d 39], internal citations omitted.)

“Under the privilege of free competition, a competitor is free to divert business to himself as long as he uses fair and reasonable means. Thus, the plaintiff must present facts indicating the defendant’s interference is somehow wrongful—i.e., based on facts that take the defendant’s actions out of the realm of legitimate business transactions.” (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1153–1154 [265 Cal.Rptr. 330], internal citations omitted.)

“Since the crux of the competition privilege is that one can interfere with a competitor’s prospective contractual relationship with a third party as long as the interfering conduct is not independently wrongful (i.e., wrongful apart from the fact of the interference itself), Della Penna’s requirement that a plaintiff plead and prove such wrongful conduct in order to recover for intentional interference with prospective economic advantage has resulted in a shift of burden of proof. It is now the plaintiff’s burden to prove, as an element of the cause of action itself, that the defendant’s conduct was independently wrongful and, therefore, was not privileged rather than the defendant’s burden to prove, as an affirmative defense, that it’s [sic] conduct was not independently wrongful and therefore was privileged.” (Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 881 [60 Cal.Rptr.2d 830].)

“There are three formulations of the manager’s privilege: (1) absolute, (2) mixed motive, and (3) predominant motive.” (Halvorsen v. Aramark Uniform Services, Inc. (1998) 65 Cal.App.4th 1383, 1391 [77 Cal.Rptr.2d 383].)


Secondary Sources

5 Witkin, Summary of California Law (11th ed. 2017) Torts, §§ 867–869
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.104 (Matthew Bender)
10 California Forms of Pleading and Practice, Ch. 103, Brokers, § 103.33 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition, § 565.135 (Matthew Bender)
12 California Points and Authorities, Ch. 122, Interference, § 122.70 (Matthew Bender)