August 5, 2020

Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130

The California Supreme Court has decided that a claim for tortious interference with an at-will contract requires proof of independent wrongfulness, and that a “rule of reason” is the proper standard to determine the validity of contractual restraints on commercial dealings under Business and Professions Code section 16600.

The Court held that tortious interference with a contract that is terminable at will requires proof of an independently wrongful act even though no such showing is required for tortious interference with a contract for a term. Unlike a contract for a term, where the parties cement their future relationship and act in reliance on it, an at-will contract creates only speculative interests in which neither party has a legal right to a continued relationship.

The Court further held that a rule of reason rather than a per se rule governs the validity of a contract that allegedly restrains business operations and commercial dealings in violation of section 16600. The Court incorporated the rule of reason standard from another California antitrust statute, the Cartwright Act, thereby ensuring the consistency of California’s antitrust laws.