Source: http://herdem.av.tr/2921-2/
Timestamp: 2019-04-18 16:32:18+00:00

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This case addresses what claims and remedies may be pursued by a plaintiff who alleges a lost business opportunity due to the unfair practices of a competitor. The Republic of Korea wished to purchase military equipment known as synthetic aperture radar (SAR) systems and solicited competing bids from manufacturers, including Loral Corporation (Loral) and MacDonald, Dettwiler, and Associates Ltd. (MacDonald Dettwiler). Plaintiff Korea Supply Company (KSC) represented MacDonald Dettwiler in the negotiations for the contract and stood to receive a commission of over $30 million if MacDonald Dettwiler’s bid was accepted. Ultimately, the contract was awarded to Loral (now Lockheed Martin Tactical Systems, Inc.). KSC contends that even though MacDonald Dettwiler’s bid was lower and its equipment superior, it was not awarded the contract because Loral Corporation and its agent had offered bribes and sexual favors to key Korean officials. KSC instituted the present action asserting claims under both California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.) and the tort of interference with prospective economic advantage.
We granted review to decide two issues. First, we address whether disgorgement of profits allegedly obtained by means of an unfair business practice is an authorized remedy under the UCL where these profits are neither money taken from a plaintiff nor funds in which the plaintiff has an ownership interest. We conclude that disgorgement of such profits is not an authorized remedy in an individual action under the UCL. Accordingly, we reverse the judgment of the Court of Appeal on this issue.
Second, we address whether, to state a claim for interference with prospective economic advantage, a plaintiff must allege that the defendant specifically intended to interfere with the plaintiff’s prospective economic advantage. We conclude that a plaintiff need not plead that the defendant acted with the specific intent to interfere with the plaintiff’s business expectancy in order to state a claim for this tort. We affirm the judgment of the Court of Appeal on this issue.
Plaintiff KSC is a corporation engaged in the business of representing manufacturers of military equipment in transactions with the Republic of Korea. In the mid-1990’s, the Republic of Korea solicited bids for a SAR system for use by its military. KSC represented MacDonald Dettwiler, a Canadian company, in its bid to obtain the contract award. KSC expected a commission of 15 percent of the contract price, or over $30 million, if MacDonald Dettwiler were awarded the contract.
In June 1996, the Korean Ministry of Defense announced that Loral,1 an American competitor of the Canadian company MacDonald Dettwiler, was awarded the contract, despite the fact that MacDonald Dettwiler’s bid was about $50 million lower and that the project management office of the Korean Defense Intelligence Command had determined that MacDonald Dettwiler’s equipment was far superior to Loral’s system. The Ministry of Defense explained that the decision to award Loral the contract was based on a suggestion that the United States government would not be favorably disposed to share intelligence information with the Republic of Korea if the latter selected a Canadian supplier.
Beginning in October 1998, major news publications in the Republic of Korea revealed that an internal investigation had established that the SAR contract was awarded to Loral as a result of bribes and sexual favors, rather than pressure from the United States government. Loral’s agent for the procurement of the SAR contract, defendant Linda Kim, had bribed two Korean military officers. In addition, Ms. Kim had extended bribes and sexual favors to the Minister of National Defense, the ultimate decision maker with respect to the award of the SAR contract. Ms. Kim reportedly received approximately $10 million in commission from Loral, an amount that exceeded the maximum established by the Foreign Corrupt Practices Act (15 U.S.C. § 78dd-2) and foreign military sales policies and regulations. As a result of the internal investigation by the Republic of Korea, several persons were imprisoned, including high-ranking Korean military officers. Ms. Kim herself was indicted in absentia; she avoided imprisonment because she resides in the United States and refuses to travel to the Republic of Korea.
The first amended complaint asserts three causes of action: (1) conspiracy to interfere with prospective economic advantage, (2) intentional interference with prospective economic advantage, and (3) unfair competition pursuant to Business and Professions Code section 17200. For its unfair competition claim, KSC sought disgorgement to it of the profits realized by Lockheed Martin on the sale of the SAR to Korea. For the tort claims, KSC sought damages for the loss of its expected compensation from MacDonald Dettwiler.
Lockheed Martin, joined by Ms. Kim, generally demurred to all counts. The trial court sustained the demurrer without leave to amend, finding that plaintiff’s complaint did not state facts sufficient to constitute a cause of action under California law. Judgment was entered dismissing the action on September 7, 1999. After the trial court subsequently denied KSC’s motion for reconsideration, KSC filed its notice of appeal. The Court of Appeal reversed the trial court’s judgment in full, finding that plaintiff had sufficiently stated causes of action for unfair competition and for intentional interference with prospective economic advantage.
Lockheed Martin sought review in this court of two bases of the Court of Appeal’s decision: first, its holding that disgorgement of profits is an available remedy under the UCL even where the disgorgement sought does not represent restitution of money or property in which plaintiff has an ownership interest; and second, its holding that the tort of intentional interference with prospective economic advantage does not require plaintiff to plead that defendant acted with the specific intent to interfere with plaintiff’s business expectancy. We granted review on both issues.
Section 17200 “borrows” violations from other laws by making them independently actionable as unfair competitive practices. (Cel-Tech, supra, 20 Cal.4th at p. 180.) In addition, under section 17200, “a practice may be deemed unfair even if not specifically proscribed by some other law.” (Cel-Tech, at p. 180.) In the present case, KSC’s third cause of action, for unfair competition, “borrowed” from the federal Foreign Corrupt Practices Act, which prohibits, among other things, bribing a foreign government official for the purpose of influencing any act or decision in his or her official capacity and in violation of a lawful duty, or for the purpose of inducing the use of official influence to obtain or retain business. (See 15 U.S.C. § 78dd-2(a)(1)(A), (B).) The Court of Appeal determined that a claim under the UCL may be predicated on a violation of this act.
While the scope of conduct covered by the UCL is broad, its remedies are limited. (Cel-Tech, supra, 20 Cal.4th at p. 180.) A UCL action is equitable in nature; damages cannot be recovered. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266 (Bank of the West).) Civil penalties may be assessed in public unfair competition actions, but the law contains no criminal provisions. (§ 17206.) We have stated that under the UCL, “[p]revailing plaintiffs are generally limited to injunctive relief and restitution.” (Cel-Tech, supra, 20 Cal.4th at p. 179.) The question raised by this case is whether disgorgement of profits that is not restitutionary in nature is an available remedy for an individual private plaintiff under the UCL.
The Court of Appeal in this case held that plaintiff can recover disgorgement of profits earned by defendants as a result of their allegedly unfair practices, even where the money sought to be disgorged was not taken from plaintiff and plaintiff did not have an ownership interest in the money. This holding was based on language taken from our recent decision in Kraus, supra, 23 Cal.4th 116. As we explain, the Court of Appeal’s reliance on this language was mistaken.
In Kraus, we held that disgorgement of unfairly obtained profits into a fluid recovery fund is not an available remedy in a representative action brought under the UCL. (Kraus, supra, 23 Cal.4th at p. 137.) We began by describing the remedies that are clearly available to a plaintiff under the UCL: “Through the UCL a plaintiff may obtain restitution and/or injunctive relief against unfair or unlawful practices.” (Kraus, at p. 126.) We then differentiated between the terms “restitution” and “disgorgement” in order to show why a plaintiff in a representative action under the UCL could recover restitution but could not obtain disgorgement of profits into a fluid recovery fund.
The Court of Appeal in the present case misread our opinion in Kraus. Noting that plaintiff in this case seeks disgorgement of profits unjustly earned by defendants, the Court of Appeal quoted our statement in Kraus that “ ‘[a]n order that a defendant disgorge money obtained through an unfair business practice may include a restitutionary element, but is not so limited. . . . [S]uch orders may compel a defendant to surrender all money obtained through an unfair business practice even though not all is to be restored to the persons from whom it was obtained or those claiming under those persons. It has also been used to refer to surrender of all profits earned as a result of an unfair business practice regardless of whether those profits represent money taken directly from persons who were victims of the unfair practice.’ ” (Quoting Kraus, supra, 23 Cal.4th at p. 127, italics added.) Relying on this language, the Court of Appeal concluded that plaintiff adequately stated a claim under the UCL.
As Lockheed Martin and several amici curiae point out, however, this passage from Kraus, cited by the Court of Appeal as authorization for disgorgement under the UCL, merely defined the term “disgorgement” in order to demonstrate that it was broader in scope than “restitution.” In the above cited quotation, this court was not approving of disgorgement as a remedy under the UCL. To the contrary, we held in Kraus that while restitution was an available remedy under the UCL, disgorgement of money obtained through an unfair business practice is an available remedy in a representative action only to the extent that it constitutes restitution. We reaffirm this holding here in the context of an individual action under the UCL. We therefore reverse the judgment of the Court of Appeal on this issue.
While a remedy of nonrestitutionary disgorgement of profits is not expressly authorized by the statute, KSC argues that the equitable language in section 17203 is sufficiently broad to allow courts to award this monetary remedy for an unfair competition claim. KSC contends that under the UCL a court may, in its discretion, order Lockheed Martin to surrender its profits to KSC because KSC allegedly has been wronged by Lockheed Martin’s unfair conduct.
While express authority to order restitution was added to the UCL, courts were not given similar authorization to order nonrestitutionary disgorgement. Further, plaintiff has not pointed to anything in the legislative history that suggests that the Legislature intended to provide such a remedy in an individual action. Plaintiff contends that this court’s interpretation of the UCL and commentary by leading academic authorities establish that a court’s equitable power under the UCL is broad. Notably absent from this argument, however, is any showing from the language or history of section 17203 that the Legislature intended to authorize a disgorgement remedy that was not restitutionary in nature. Instead, KSC merely asserts, without pointing to any particular statutory language or legislative history, that a court’s equitable powers under section 17203 are broad enough to encompass its requested remedy.
We have previously found that the Legislature did not intend section 17203 to provide courts with unlimited equitable powers. In Kraus, we rejected the argument, revived by plaintiff in this case, that the general grant of equitable authority in section 17203 implicitly permitted a disgorgement remedy—in that case, into a fluid recovery fund in a representative action. We found that since there was nothing in the express language of the statute or its legislative history indicating that the Legislature intended to provide such a remedy, the remedy was not available. (Kraus, supra, 23 Cal.4th at p. 132.) Here, again, we find nothing to indicate that the Legislature intended to authorize a court to order a defendant to disgorge all profits to a plaintiff who does not have an ownership interest in those profits.
In fact, the language of section 17203 is clear that the equitable powers of a court are to be used to “prevent” practices that constitute unfair competition and to “restore to any person in interest” any money or property acquired through unfair practices. (§ 17203.) While the “prevent” prong of section 17203 suggests that the Legislature considered deterrence of unfair practices to be an important goal, the fact that attorney fees and damages, including punitive damages, are not available under the UCL is clear evidence that deterrence by means of monetary penalties is not the act’s sole objective. A court cannot, under the equitable powers of section 17203, award whatever form of monetary relief it believes might deter unfair practices. The fact that the “restore” prong of section 17203 is the only reference to monetary penalties in this section indicates that the Legislature intended to limit the available monetary remedies under the act.
cases discussing the UCL may have characterized some of the relief available as “disgorgement,” we were referring to the restitutionary form of disgorgement, and not to the nonrestitutionary type sought here by plaintiff. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 176 (Cortez) [holding that because section 17203 authorizes an order compelling a defendant to pay back wages as a restitutionary remedy, we “need not consider whether the order might be proper under the UCL under a disgorgement of benefit theory”]; ABC International Traders, Inc. v. Matsushita Electric Corp. (1997) 14 Cal.4th 1247, 1271 [stating that “the defendant’s victims may be entitled to restitution” under section 17203]; Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 452 (Fletcher) [trial court may order restitution under the UCL for bank customers challenging a bank’s computation of per annum interest on the basis of a 360-day year]; People v. Superior Court (Jayhill), supra, 9 Cal.3d at p. 286 [court may order a defendant to pay restitution to victims who have been defrauded as a result of an unfair business practice].) The present case merely confirms what we have previously held: Under the UCL, an individual may recover profits unfairly obtained to the extent that these profits represent monies given to the defendant or benefits in which the plaintiff has an ownership interest.
as an implicit acknowledgement that nonrestitutionary disgorgement is not an available remedy in an individual action under the UCL, plaintiff describes its requested remedy as “restitution.” This term does not accurately describe the relief sought by plaintiff. As defined in Kraus, an order for restitution is one “compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.” (Kraus, supra, 23 Cal.4th at pp. 126-127.) The object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.
The remedy sought by plaintiff in this case is not restitutionary because plaintiff does not have an ownership interest in the money it seeks to recover from defendants. First, it is clear that plaintiff is not seeking the return of money or property that was once in its possession. KSC has not given any money to Lockheed Martin; instead, it was from the Republic of Korea that Lockheed Martin received its profits. Any award that plaintiff would recover from defendants would not be restitutionary as it would not replace any money or property that defendants took directly from plaintiff.
While the plaintiffs in Cortez had a vested interest in their earned but unpaid wages, KSC itself acknowledges that, at most, it had an “expectancy” in the receipt of a commission. KSC’s expected commission is merely a contingent interest since KSC only expected payment if MacDonald Dettwiler was awarded the SAR contract. (See United States v. Rodrigues (9th Cir. 2000) 229 F.3d 842, 846 [finding that under the federal Victim and Witness Protection Act of 1982, restitution was not available for a contingent loss in which the company had only an expectancy interest; restitution could only be recovered for the loss of a vested interest].) Such an attenuated expectancy cannot, as KSC contends, be likened to “property” converted by Lockheed Martin that can now be the subject of a constructive trust. To create a constructive trust, there must be a res, an “identifiable kind of property or entitlement in defendant’s hands.” (1 Dobbs, Law of Remedies (1993) § 4.1(2), pp. 589-590.) As the United States Supreme Court recently said, a constructive trust requires “money or property identified as belonging in good conscience to the plaintiff [which can] clearly be traced to particular funds or property in the defendant’s possession.” (Great-West Life & Annuity Insurance Co. v. Knudson (2002) 534 U.S. 204, __ [112 S.Ct. 708, 714].) The recovery requested in this case cannot be traced to any particular funds in Lockheed Martin’s possession and therefore is not the proper subject of a constructive trust.
KSC’s expectancy in this case is further attenuated since KSC never anticipated payment directly from Lockheed Martin. Instead, it expected the Republic of Korea to pay MacDonald Dettwiler, which would then pay a commission to KSC. In contrast, in Cortez, the defendant was the employer from which the plaintiffs expected payment. (Cortez, supra, 23 Cal.4th at p. 169.) Therefore, the order for restitution served to restore to the plaintiffs funds that were directly owed to them by the defendant. Unlike Cortez, then, the monetary relief requested by KSC does not represent a quantifiable sum owed by defendants to plaintiff. Instead, it is a contingent expectancy of payment from a third party.
For these reasons, we find that plaintiff’s claim is properly characterized as a claim for nonrestitutionary disgorgement of profits.
The nonrestitutionary disgorgement remedy sought by plaintiff closely resembles a claim for damages, something that is not permitted under the UCL. As one court has noted: “Compensation for a lost business opportunity is a measure of damages and not restitution to the alleged victims.” (MAI Systems Corp. v. UIPS (N.D.Cal. 1994) 856 F.Supp. 538, 542.) Plaintiff suggests that its disgorgement remedy need not include all of the profits unfairly obtained by Lockheed Martin; instead, its recovery might be limited to the amount it allegedly would have obtained as a commission had McDonald Dettwiler been awarded the contract. This proposed recovery would be in exactly the same amount that plaintiff is seeking to recover as damages for its traditional tort claim of interference with prospective economic advantage. The only difference between what plaintiff seeks to recover as “disgorgement” and the damages it seeks under its traditional tort claim is that plaintiff would not recover its full expected commission under a “disgorgement” remedy if, for some reason, the profits obtained by Lockheed Martin did not equal the amount of plaintiff’s expected commission.
Allowing the plaintiff in this case to recover nonrestitutionary disgorgement under the UCL would enable it to obtain tort damages while bypassing the burden of proving the elements of liability under its traditional tort claim for intentional interference with prospective economic advantage. As we have stated, any member of the public can bring suit under the UCL. In addition, “to state a claim under the act one need not plead and prove the element of a tort. Instead, one need only show that ‘members of the public are likely to be deceived.’ [Citation.]” (Bank of the West, supra, 2 Cal.4th at p. 1267; see also Fletcher, supra, 23 Cal.3d at p. 453 [individual plaintiff’s knowledge of the unfair practice not needed in order to recover restitution].) Given the UCL’s liberal standing requirements and relaxed liability standards, were we to allow nonrestitutionary disgorgement in an individual action under the UCL, plaintiffs would have an incentive to recast claims under traditional tort theories as UCL violations. They could recover from a competitor without having to meet the more rigorous pleading requirements of a negligence action, or a breach of contract suit. The result could be that the UCL would be used as an all-purpose substitute for a tort or contract action, something the Legislature never intended.
In addition, it is possible that due process concerns would arise if an individual business competitor could recover disgorgement of profits under the UCL. While restitution is limited to restoring money or property to direct victims of an unfair practice, a potentially unlimited number of individual plaintiffs could recover nonrestitutionary disgorgement. Allowing such a remedy would expose defendants to multiple suits and the risk of duplicative liability without the traditional limitations on standing. (See Stop Youth Addiction v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 582 (conc. opn. of Baxter, J.) [disgorgement of profits to a party that has not paid money to the defendant and was not a party to the litigation “raises substantial due process issues implicating the rights of both the defendant and the absent parties”].) The disgorgement remedy requested in this case would not require that the disgorged money or property have come from the prospective plaintiff in the first instance. Nor is there any limit on the number of times the remedy could be sought or any limit on the monetary relief available. There is a risk of unfairness not only to defendants but also to direct victims of the unfair practice. If Lockheed Martin were forced to disgorge its profits to KSC, there might be little left for the Republic of Korea to recover, even though it is the party ostensibly entitled to restitutionary relief.
Plaintiff suggests ways of alleviating these due process concerns, proposing several “options to prevent abuse,” including that this remedy be “limited to instances where the defendant has engaged in egregious practices.” None of plaintiff’s proposals, however, alleviate the possibility that defendants would be subjected to duplicate liability. Further, none of plaintiff’s proposed “options to prevent abuse” are contemplated by the legislative scheme.
We conclude, therefore, that allowing plaintiff to recover monetary relief under the UCL in this case would be at odds with the language and history of the statute, our previous decisions construing the UCL, and public policy. We hold that nonrestitutionary disgorgement of profits is not an available remedy in an individual action under the UCL. We note that the UCL remains a meaningful consumer protection tool. The breadth of standing under this act allows any consumer to combat unfair competition by seeking an injunction against unfair business practices. Actual direct victims of unfair competition may obtain restitution as well. The present decision merely reaffirms the balance struck in this state’s unfair competition law between broad liability and limited relief.
In addition, we note that our decision does not foreclose all relief to plaintiff. While plaintiff may not recover monetary relief under the limited remedies provided by the UCL, plaintiff may pursue a cause of action under traditional tort law. In fact, as we conclude below, plaintiff in this case can state a claim for the tort of intentional interference with prospective economic advantage. While the pleading and proof requirements under this tort are more rigorous than under the UCL, if plaintiff succeeds in meeting its burden of proof, it may recover damages for the injuries it claims to have suffered as a result of unfair competition.
Lockheed Martin argues that KSC fails to state a claim for intentional interference with prospective economic advantage because it has not shown that Lockheed Martin acted with the specific intent to disrupt KSC’s business relationship. KSC counters that a plaintiff need only show that the defendant acted with the knowledge that its wrongful acts were substantially certain to disrupt plaintiff’s business expectancy. We conclude that the tort of intentional interference with prospective economic advantage does not require a plaintiff to plead that the defendant acted with the specific intent, or purpose, of disrupting the plaintiff’s prospective economic advantage. Instead, to satisfy the intent requirement for this tort, it is sufficient to plead that the defendant knew that the interference was certain or substantially certain to occur as a result of its action.
We disagree with the Court of Appeal’s conclusion that the elements we first articulated in Buckaloo, supra, 14 Cal.3d 815, do not still apply to this tort. In Della Penna, we did not abandon these elements. Instead, we specifically stated that “[w]e do not in this case . . . go beyond approving the requirement of a showing of wrongfulness as part of the plaintiff’s case.” (Della Penna, supra, 11 Cal.4th at p. 378.) In fact, we explicitly approved the trial court’s modified version of the standard jury instruction on intentional interference with prospective economic advantage, BAJI No. 7.82. The instruction at issue articulated the traditional elements of the tort, but changed the third element to provide that the defendant “ ‘intentionally engaged in [wrongful] acts or conduct designed to interfere with or disrupt’ the relationship.” (Della Penna, at p. 380, fn. 1, italics and brackets added.) Rather than overrule the established elements of this tort, Della Penna merely clarified the plaintiff’s burden as to the third element, stating that to meet this element, a plaintiff must plead and prove that the defendant’s acts are wrongful apart from the interference itself. (Id. at p. 393.) Thus, as the majority of the Courts of Appeal have understood, after Della Penna the elements of the tort of interference with prospective economic advantage remain the same, except that the third element also requires a plaintiff to plead intentional wrongful acts on the part of the defendant designed to disrupt the relationship.
Having clarified the required elements, we now consider the intent requirement of this tort. The question is whether a plaintiff must plead and prove that the defendant engaged in wrongful acts with the specific intent of interfering with the plaintiff’s business expectancy. We conclude that specific intent is not a required element of the tort of interference with prospective economic advantage. While a plaintiff may satisfy the intent requirement by pleading specific intent, i.e., that the defendant desired to interfere with the plaintiff’s prospective economic advantage, a plaintiff may alternately plead that the defendant knew that the interference was certain or substantially certain to occur as a result of its action.
Lockheed Martin argues that specific intent is an established element of this tort. It contends that to satisfy the tort’s third element—intentional wrongful acts designed to disrupt the plaintiff’s relationship with its benefactor—a plaintiff must allege that the defendant purposely sought the disruption. It asserts that the inclusion of the word “designed” in the typical formulation of the third element is evidence that a plaintiff is required to plead specific intent. We disagree. The elements of the tort of interference with prospective economic advantage do not require a plaintiff to allege that the defendant acted with the specific intent, or purpose, of disrupting the plaintiff’s prospective economic advantage.
We note initially that even though these two torts are distinct, some plaintiffs may be able to state causes of action for both torts. As we stated in Buckaloo, “the tort of interference with contract is merely a species of the broader tort of interference with prospective economic advantage.” (Buckaloo, supra, 14 Cal.3d at p. 823.) In the present case, KSC’s claim was appropriately stated as one for interference with prospective economic advantage. KSC did not allege in its complaint that it had a contractual agreement with MacDonald Dettwiler. KSC merely alleged that it had an economic expectancy in that it was acting as MacDonald Dettwiler’s broker and it expected a commission if the contract was awarded to MacDonald Dettwiler. KSC nowhere pleads that this expectancy amounted to an enforceable contract.
Moreover, the existence of a contract does not mean that a plaintiff’s claim must be brought exclusively as one for interference with contract. In Buckaloo, we concluded that the tort of interference with prospective economic advantage “is considerably more inclusive than actions based on contract or interference with contract, and is thus is not dependent on the existence of a valid contract.” (Buckaloo, supra, 14 Cal.3d at pp 826-827; see id. at p. 823, fn. 6 [“ ‘the basic tort of interference with economic relations can be established by showing, inter alia, an interference with an existing contract or a contract which is certain to be consummated’ ”].) Thus, a plaintiff who believes that he or she has a contract but who recognizes that the trier of fact might conclude otherwise might bring claims for both torts so that in the event of a finding of no contract, the plaintiff might prevail on a claim for interference with prospective economic advantage. In the present case, even if KSC could have alleged a contractual relationship with MacDonald Dettwiler, its claim was properly brought as one for interference with prospective economic advantage. As we explain below, however, a plaintiff that chooses to bring a claim for interference with prospective economic advantage has a more rigorous pleading burden since it must show that the defendant’s conduct was independently wrongful.
Here, KSC has clearly satisfied the independent wrongfulness requirement. In its complaint, KSC alleged that defendant Kim, as an agent for Loral, engaged in bribery and offered sexual favors to key Korean officials in order to obtain the contract from the Republic of Korea. Under the Foreign Corrupt Practices Act, it is unlawful to pay or offer money or anything of value to a foreign official for the purposes of influencing any act or decision of the foreign official, or to induce the foreign official to use his or her influence with a foreign government to affect or influence any act or decision of the government. (15 U.S.C. § 78dd-1(a)(1)(A), (B).) In addition, the complaint alleges that the commissions paid by Loral to Kim exceeded the maximum allowable amounts established by the Foreign Corrupt Practices Act. (15 U.S.C. § 78dd-2(a)(1)(A), (B).) The complaint thus clearly alleges that defendants engaged in unlawful behavior in order to secure the SAR contract. KSC has, therefore, sufficiently alleged that defendants’ acts, in addition to interfering with KSC’s business expectancy, were wrongful in and of themselves.
The independent wrongfulness requirement also differentiates California law from that of other states and the Restatement Second of Torts. Lockheed Martin’s reliance on these authorities is unpersuasive since they require a plaintiff only to plead that the defendant’s interference was improper, and not that the interference was independently unlawful. As we explain, California’s independent wrongfulness requirement more narrowly defines actionable conduct under this tort.
Unlike California, the Restatement Second of Torts does not require a plaintiff to plead that a defendant engaged in an independently wrongful act in order to show “improper” interference. Instead, a general intent plus an actor’s motive or purpose to interfere is enough to subject a defendant to liability under the Restatement. In the absence of an independent wrongfulness requirement, a purpose to interfere with the plaintiff’s business expectancy suffices to distinguish actionable conduct from behavior that is merely competitive, and therefore privileged. The Restatement, however, recognizes that when the defendant’s conduct is innately wrongful, a purpose to interfere may be unnecessary. The Restatement appreciates that the independent wrongfulness of a defendant’s acts may satisfy the “improper” requirement of the tort without the need to look to the motive or purpose behind a defendant’s acts.
Thus, while California does follow the Restatement’s general intent requirement, California law adheres to a narrower interpretation of what conduct is improper under this tort. After Della Penna, supra, 11 Cal.4th 376, California has required plaintiffs to show that a defendant has engaged in an independently, or inherently, wrongful act. Under this requirement, a defendant’s motive or purpose is relevant only to the extent that it renders the defendant’s conduct unlawful. We are therefore unconvinced by Lockheed Martin’s reliance on the Restatement in this regard.
Lockheed Martin’s citation to out-of-state decisions holding that a plaintiff must plead that the defendant acted with a specific intent or purpose to interfere with the plaintiff’s economic relations is similarly unpersuasive. Like the Restatement Second of Torts, the cases cited by Lockheed Martin look to a defendant’s motive or purpose to distinguish tortious conduct from lawful behavior. (See, e.g., Ethyl Corp. v. Balter (Fla.Dist.Ct.App. 1980) 386 So.2d 1220, 1223 [finding no interference because the defendant’s purpose or motive was not directed at the plaintiff]; Bank Computer Network Corp. v. Continental Illinois Nat’l Bank and Trust Co. (Ill.App.Ct. 1982) 442 N.E.2d 586, 593 [same]; K&K Management v. Lee (Md. 1989) 557 A.2d 965, 975 [same]; Anderson v. The Regents of the Univ. of California (Wis.Ct.App. 1996) 554 N.W.2d 509, 519 [same].) Unlike California, however, these states do not require a plaintiff to plead that the defendant has engaged in an independently wrongful act in order to state a claim for interference with prospective economic advantage. Instead of independent wrongfulness, a plaintiff is required to plead a purpose or motive to interfere in order to demonstrate that the defendant’s interference was improper.
The DeVoto court, then, determined that a defendant’s motive or purpose to interfere is a necessary element only when the defendant’s conduct is not independently unlawful. After Della Penna, independent wrongfulness has been recognized as a required element of the tort. Therefore, an additional showing of specific intent to interfere is not necessary.
Lockheed Martin additionally argues that a specific intent requirement is necessary to prevent potential plaintiffs with injuries remotely caused by a defendant’s acts from maintaining standing to sue for this tort. It contends that since KSC is an indirect victim of defendants’ alleged acts of interference, KSC should only be able to state a claim if it can show that Lockheed Martin acted with the purpose of interfering with KSC’s economic expectancy. We disagree. Were we to adopt a specific intent requirement, a plaintiff’s standing would turn on the subjective intent of a defendant who has committed an independently wrongful act. Such a requirement would lead to absurd and unfair results. A defendant who engaged in an unlawful act knowing that it would harm the plaintiff’s business interest could escape liability if the defendant acted with the purpose of furthering its own interest, rather than specifically harming the plaintiff’s interest. Standing for this tort should not be made to turn on such a consideration.
As support for its argument, Lockheed Martin cites section 767 of the Restatement Second of Torts and argues that a defendant must act with the specific intent of interfering with a plaintiff’s business expectancy when the plaintiff is not the direct victim of the interference. We note, however, that section 767 of the Restatement Second of Torts is entitled Factors in Determining Whether Interference is Improper. This section, then, refers to the element of the tort that defines when interference is improper, not to the element that defines the required intent. As stated above, California law does not follow the Restatement’s definition of when interference is improper. Instead, California law defines “improper” more narrowly than the Restatement, allowing recovery only when the defendant’s conduct is independently unlawful.
We further note that even the Restatement, with its broader definition of improper conduct, recognizes that an indirectly injured plaintiff may state a claim under this tort without pleading that the defendant acted with the purpose to interfere with the plaintiff’s business expectancy. Section 767, comment h, of the Restatement, discussing the proximity or remoteness of the defendant’s conduct to the interference, supports our conclusion: “This remoteness [between the defendant’s conduct and the plaintiff’s injury] conduces toward a finding that the interference was not improper. The weight of this factor, however, may be controverted by . . . the factor of the actor’s conduct if that conduct was inherently unlawful or independently tortious.” (Rest.2d Torts, § 767, com. h, p. 36, italics added.)12 If the defendant’s improper conduct constitutes independently wrongful behavior, the fact that the plaintiff is an indirect victim does not preclude recovery.
We do not share the concern of Lockheed Martin and the concurring and dissenting opinion that our ruling today will expose defendants to an unlimited number of potential plaintiffs. The “substantial certainty” test used in the Restatement, coupled with the independent wrongfulness requirement of Della Penna, sufficiently limits this tort. It is important to underscore that the independent wrongfulness requirement of this tort limits the class of potential defendants; only defendants who have engaged in an unlawful act can be held liable for this tort. In addition, as described below, each of the five elements of the tort of interference with prospective economic advantage serves to limit the number of potential plaintiffs that can state a cause of action for this tort.
First, a plaintiff that wishes to state a cause of action for this tort must allege the existence of an economic relationship with some third party that contains the probability of future economic benefit to the plaintiff. This tort therefore “protects the expectation that the relationship eventually will yield the desired benefit, not necessarily the more speculative expectation that a potentially beneficial relationship will arise.” (Westside Center Associates v. Safeway Stores 23, Inc., supra, 42 Cal.App.4th at p. 524.) Here, KSC had an agency relationship with MacDonald Dettwiler under which KSC’s commission was fixed at 15 percent of the contract price. As alleged in the complaint, if MacDonald Dettwiler had been awarded the contract, KSC’s commission would have exceeded $30 million. This business relationship and corresponding expectancy is sufficient to meet this first element. Only plaintiffs that can demonstrate an economic relationship with a probable future economic benefit will be able to state a cause of action for this tort.
Second, a defendant must have knowledge of the plaintiff’s economic relationship. KSC alleges that “Loral acted with full knowledge of the commission relationship between plaintiff and MacDonald Dettwiler.” Again, this element serves to restrict the class of plaintiffs that can state a claim for this tort.
This intent requirement is an appropriate limitation on both the potential number of plaintiffs that may bring a claim under this tort and the remoteness of these plaintiffs to a defendant’s wrongful conduct. At the very least, a defendant must know that its action is substantially certain to interfere with the plaintiff’s business expectancy. This interference becomes less certain as the time frame expands, the identity of potential victims becomes more vague, the causal sequence becomes more attenuated, and the assumption of easy preventability becomes less plausible. If the interference is not certain or substantially certain to occur as a result of the defendant’s acts, then a plaintiff will not be able to state a claim for intentional interference with prospective economic advantage. However, if a defendant knows that its wrongful acts are substantially certain to injure the plaintiff’s business expectancy, the defendant can be held liable, regardless of the motivation behind its actions.
Liability will not be imposed for unforeseeable harm, since the plaintiff must prove that the defendant knew that the consequences were substantially certain to occur. For example, if the president of MacDonald Dettwiler stood to receive a bonus if the company secured the SAR contract, it would be unlikely that Lockheed Martin would have known this with substantial certainty. Here, however, KSC has alleged that defendants had full knowledge of its commission relationship with MacDonald Dettwiler and that KSC would lose its commission if Lockheed Martin secured the contract through anticompetitive means.
Fourth, only plaintiffs that can demonstrate actual disruption of their economic relationship will be able to state a claim for this tort. In this case, KSC sufficiently pleads actual disruption by alleging that it did not receive its expected commission, since MacDonald Dettwiler was not awarded the contract.
Fifth, a plaintiff must establish proximate causation. Specifically, this element requires a plaintiff to show that the economic harm it suffered was proximately caused by the acts of the defendant. Here, KSC claims that MacDonald Dettwiler would have been awarded the contract but for Lockheed Martin’s interference. KSC specifically pleads that MacDonald Dettwiler’s product was superior and that its bid was significantly lower than the bid submitted by Lockheed Martin. KSC also alleges that its own loss of commission from MacDonald Dettwiler was directly caused by Lockheed Martin’s tortious acts. We therefore conclude that KSC has satisfied the proximate cause element. In other cases, however, this proximate cause requirement will prevent a plaintiff from recovering for harm that is more remotely connected to a defendant’s wrongful conduct.
An actor engaging in unlawful conduct with the knowledge that its actions are certain or substantially certain to interfere with a party’s business expectancy should be held accountable. Liability for such actions, which are independently wrongful, should not turn on the subjective intent of the defendant.
We conclude that the Court of Appeal correctly determined that to state a claim for intentional interference with prospective economic advantage, a plaintiff need not plead that the defendant acted with the specific intent to interfere with the plaintiff’s business expectancy. Further, we agree that plaintiff in this case has sufficiently pled that defendants acted with the required intent, that is, the knowledge that its actions were certain or substantially certain to interfere with plaintiff’s business expectancy.
We reverse the judgment of the Court of Appeal with respect to its holding that plaintiff has stated a cause of action under the unfair competition law and we affirm the judgment of the Court of Appeal with respect to its determination that plaintiff has stated a cause of action for the tort of interference with prospective economic advantage. The present case is remanded to the Court of Appeal for proceedings consistent with this opinion.

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