(2004) 33 Cal.4th 1140
Supreme Court of California · Decided August 12, 2004
01. Facts
Robert L. Reeves and his law corporation, Robert L. Reeves & Associates, sued former attorneys Daniel P. Hanlon and Colin T. Greene and their new firm, Hanlon & Greene (33 Cal.4th at p. 1146). The complaint alleged that, for more than five months before leaving, Hanlon and Greene accessed the firm’s password-protected database to extract confidential client information on some 2,200 clients, then left and induced other firm employees to leave and clients to follow — using wrongful means (id. at p. 1146).
02. Procedural posture
The Supreme Court held that interference with an at-will employment relationship requires an independently wrongful act, and affirmed liability on the facts (33 Cal.4th at p. 1146).
03. Issue
What a plaintiff must prove to recover for a third party’s interference with the plaintiff’s at-will employment relationships — in particular, whether mere inducement of at-will employees to leave is enough, or whether an independently wrongful act is required.
Holding
To recover for intentional interference with an at-will employment relationship, a plaintiff must show the defendant engaged in an independently wrongful act — conduct unlawful by some measure beyond the interference itself — that induced the employees to leave or otherwise disrupted the relationship; here, the defendants’ misappropriation of confidential data and other unlawful means satisfied that standard.
05. Reasoning
The court reasoned that because at-will employees may freely leave and competitors may freely hire them, mere solicitation of at-will employees is not actionable; otherwise ordinary competition would be chilled. But where the defendant uses independently wrongful means — such as misappropriating trade secrets or confidential information — to raid a competitor’s workforce or clients, the conduct crosses into actionable interference. The defendants’ unlawful access to the client database supplied the requisite wrongful act.
Practice Pointer
Reeves frames departing-employee and raiding disputes: lawful competition (including hiring at-will employees) is protected, so the case turns on whether the departing parties used independently wrongful means — trade-secret theft, breach of fiduciary duty, fraud. Counsel on either side should focus on the means used, not the mere fact of departure or solicitation.
06. Open questions
Reeves required an independently wrongful act for interference with at-will relationships but left the precise contours of what qualifies (and how it interacts with section 16600’s protection of mobility and with trade-secret law) to be developed case by case.
Cite this entry
Reeves v. Hanlon (2004) 33 Cal.4th 1140.
“Plaintiffs Robert L. Reeves and Robert L. Reeves & Associates … brought the instant lawsuit against defendants Daniel P. Hanlon, Colin T. Greene, and Hanlon & Greene.” — 33 Cal.4th at p. 1146
Source: California Official Reports – [insert durable courts.ca.gov / Official Reports link at verification].