Defendants, a group of corporations and three executives, appealed judgments from the Superior Court of San Mateo County (California), which, in a jury trial, found them liable to plaintiff licensor for interfering with a license agreement when, acting through a subsidiary, they acquired the licensee.

Overview

The licensor entered into a licensing and development agreement for one of its Norway salmon products. Upon being acquired, the licensee discontinued its work on the licensor’s product, which directly competed with a drug manufactured by the acquiring company’s parent. The trial court instructed the jury on the elements of wrongful interference with contract and charged the jury with determining whether each defendant had used unlawful means to interfere with the license agreement. The trial court refused the defendants’ proposed instruction that they were not liable for any interference occurring after the acquisition. The jury found that each defendant intentionally interfered with the agreement. The court held that the jury was properly instructed because corporate owners and executives were not immune from liability for interfering with a subsidiary’s contractual obligations merely because they had an economic interest; rather, they could assert a qualified privilege. Substantial evidence that each executive actively participated in the tortious conduct supported personal liability. The manager’s privilege did not apply because the executives were not managers of the licensee.

Outcome

The court affirmed the judgments.