Title: Ixchel Pharma, LLC v. Biogen, Inc.
Citation: N/A
Docket Number: S256927
State: California
Issuer: California Supreme Court
Date: August 3, 2020

IN THE SUPREME COURT OF 
CALIFORNIA 
 
IXCHEL PHARMA, LLC, 
Plaintiff and Appellant, 
v. 
BIOGEN, INC., 
Defendant and Respondent. 
 
S256927 
 
Ninth Circuit 
18-15258 
 
Eastern District of California 
2:17-cv-00715-WBS-EFB 
 
 
August 3, 2020 
 
Justice Liu authored the opinion of the Court, in which Chief 
Justice Cantil-Sakauye and Justices Chin, Corrigan, Cuéllar, 
Kruger, and Groban concurred. 
 
 
1 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
S256927 
 
Opinion of the Court by Liu, J. 
  
 
This case presents two questions about the bounds of 
legitimate business competition under California tort and 
antitrust law.  Plaintiff Ixchel Pharma, LLC (Ixchel), a 
biotechnology company, entered into an agreement with 
Forward Pharma (Forward) to jointly develop a drug for the 
treatment of a disorder called Friedreich’s ataxia.  The drug 
development went according to plan until Forward decided to 
withdraw from the agreement, as was allowed by its terms.  
Pursuant to a settlement with another biotechnology company, 
defendant Biogen, Inc. (Biogen), Forward had agreed to 
terminate its contract with Ixchel. 
 
Ixchel sued Biogen in federal court for tortiously 
interfering with Ixchel’s contractual and prospective economic 
relationship with Forward and claimed that Biogen did so in 
violation of Business and Professions Code section 16600.  On 
appeal, the United States Court of Appeals for the Ninth Circuit 
asked us to decide (1) whether Biogen’s interference in Ixchel’s 
at-will contract with Forward must be independently wrongful 
and (2) how Business and Professions Code section 16600 
applies to the settlement provision requiring Forward to 
terminate its agreement with Ixchel.   
 
We hold that tortious interference with at-will contracts 
requires independent wrongfulness and that a rule of reason 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
2 
applies to determine the validity of the settlement provision 
under Business and Professions Code section 16600. 
I.  
 
Because this case comes to us from the Ninth Circuit at 
the motion to dismiss stage, we assume the truth of the facts as 
alleged in Ixchel’s operative complaint.  (Grisham v. Philip 
Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 629.)  Ixchel is a 
biotechnology 
company 
that 
develops 
drugs 
to 
treat 
mitochondrial disease.  Since 2012, it has been developing a 
drug containing the active ingredient dimethyl fumarate (DMF) 
to treat Friedreich’s ataxia, a neurodegenerative disorder 
affecting one in 50,000 Americans.   
 
Because Ixchel did not have the resources to develop the 
drug by itself, in 2016 it entered into a Collaboration Agreement 
with Forward, a biotechnology company that also develops 
drugs containing DMF for the treatment of neurological 
diseases.  Under the terms of the Collaboration Agreement, 
Ixchel agreed to assign certain patent rights it possessed to 
Forward.  In return, Forward agreed to work with Ixchel to 
develop a new drug containing DMF to treat Friedreich’s ataxia.  
Forward would investigate the feasibility of conducting clinical 
trials for the drug and, if feasible, would conduct those trials and 
pay for them.  Ixchel would provide assistance with the clinical 
trials as necessary.  If the clinical trials were successful, 
Forward agreed to manage and pay for the manufacturing and 
commercialization of the drug with the assistance of Ixchel.  
Ixchel was entitled to a percentage of royalties on sales of the 
drug and retained certain rights to engage in its own 
commercialization of the drug independent of Forward.   
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
3 
 
The Collaboration Agreement authorized Forward to 
terminate the agreement “at any time” so long as it provided 
notice to Ixchel 60 days in advance.  Ixchel was authorized to 
terminate the agreement if Forward informed Ixchel that it 
would not conduct clinical trials of the new drug or if it would 
not or did not timely submit a new drug application for the 
developed drug to the Food and Drug Administration.  In 
October 2016, Forward informed Ixchel that it had confirmed 
the feasibility of conducting clinical trials and would proceed to 
conduct those trials.  Thereafter, Ixchel and Forward began to 
develop a plan for a trial study.   
 
At the same time that Forward and Ixchel were working 
together, Forward was negotiating with Biogen, another 
biotechnology company, to settle a patent dispute related to the 
use of DMF for the treatment of multiple sclerosis.  One of 
Biogen’s drugs, Tecfidera, is used to treat multiple sclerosis and 
contains DMF as an active ingredient.  Ixchel alleges that 
because physicians can prescribe a drug containing DMF to 
treat conditions that the drug was not approved to treat, Ixchel’s 
drug development poses a competitive threat to Biogen’s 
Tecfidera drug.   
 
As a result of negotiations, Forward and Biogen entered 
into a settlement and license agreement (Forward-Biogen 
Agreement) in which Biogen agreed to pay Forward $1.25 billion 
in exchange for a license to certain Forward patents and other 
intellectual property.  In addition, section 2.13 of the Forward-
Biogen Agreement required Forward to “terminate any and all 
existing, and not enter into any new, Contracts or obligations to 
Ixchel Pharma LLC . . . and/or any other Person, to the extent 
related to the development [by Forward and its affiliate 
companies] of any pharmaceutical product having dimethyl 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
4 
fumarate as an [active ingredient] for the treatment of a human 
for any indication, including Friedreich’s ataxia.”  Because 
Forward’s only business is the development of drugs containing 
DMF as an active ingredient to treat humans, Ixchel alleges that 
the Forward-Biogen Agreement effectively prohibited Forward 
from engaging in its entire business or a substantial part of it.   
 
Forward notified Ixchel that because it had entered into 
the Forward-Biogen Agreement, it would be terminating the 
Collaboration Agreement with Ixchel in 60 days.  After Forward 
terminated the agreement, Ixchel lost its ability to develop its 
Friedreich’s ataxia treatment and has been unable to find 
another development partner to do so.   
 
Ixchel filed suit against Biogen in federal district court, 
asserting (1) violations of the federal and state antitrust laws 
(15 U.S.C. § 1; Bus. & Prof. Code, § 16700 et seq.), (2) tortious 
interference with contractual relations, (3) intentional and 
negligent interference with prospective economic advantage, 
and (4) violations of the unfair competition law (UCL) (Bus. & 
Prof. Code, § 17200 et seq.).  (All undesignated references are to 
the Business and Professions Code.)   
 
The district court granted Biogen’s motion to dismiss with 
respect to each of Ixchel’s claims.  (Ixchel Pharma, LLC v. Biogen 
Inc. (E.D.Cal., Sept. 12, 2017, No. 2:17-cv-00715-WBS-EFB) 
2017 WL 4012337.)  It determined that Ixchel had failed to state 
a claim for interference with prospective economic advantage or 
interference with contractual relations because Ixchel did not 
plead that Biogen engaged in an independently wrongful act.  
(Id. at p. *5.)  The district court acknowledged that tortious 
interference with contract claims do not generally require 
independent wrongfulness, but it held that because the contract 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
5 
at issue was one terminable at will, independent wrongfulness 
was required.  (Id. at p. *4.)  The district court also dismissed 
Ixchel’s federal and state antitrust claims for lack of antitrust 
standing.  (Id. at p. *3.)  Finally, because Ixchel’s other claims 
had been dismissed, the district court dismissed Ixchel’s UCL 
claim for failing to allege an actionable unlawful practice.  (Id. 
at pp. *5–*6.) 
 
Ixchel then filed a second amended complaint, the 
operative complaint in this case, to allege that Biogen had 
committed the wrongful act of violating section 16600’s 
prohibition against restraints of trade.  Ixchel claimed that by 
agreeing to section 2.13 of the Forward-Biogen Agreement, 
Biogen restrained Forward from engaging in lawful business 
with Ixchel and any other entity to develop neurological 
treatments containing DMF. 
 
The district court disagreed and again dismissed the 
complaint, this time on the grounds that the Forward-Biogen 
Agreement must be analyzed under the antitrust rule of reason 
and that section 16600 does not apply outside the employment 
context.  (Ixchel Pharma, LLC v. Biogen Inc. (E.D.Cal., Jan. 25, 
2018, No. 2:17-cv-00715-WBS-EFB) 2018 WL 558781, p. *4.)   
 
Ixchel sought review of its tort and UCL claims.  After oral 
argument, the Ninth Circuit certified two questions to this 
court:  (1) “Does section 16600 of the California Business and 
Professions Code void a contract by which a business is 
restrained from engaging in a lawful trade or business with 
another business?”  (2) “Is a plaintiff required to plead an 
independently wrongful act in order to state a claim for 
intentional interference with a contract that can be terminated 
by a party at any time, or does that requirement apply only to 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
6 
at-will employment contracts?”  (Ixchel Pharma, LLC v. Biogen, 
Inc. (9th Cir. 2019) 930 F.3d 1031, 1033 (Ixchel).) 
 
We rephrase and reorder the questions as follows (see Cal. 
Rules of Court, rule 8.548(f)(5)):  (1) Is a plaintiff required to 
plead an independently wrongful act in order to state a claim for 
tortious interference with a contract that is terminable at will?  
(2) What is the proper standard to determine whether section 
16600 voids a contract by which a business is restrained from 
engaging in a lawful trade or business with another business?  
The questions are related; the alleged violation of section 16600 
is the independently wrongful act in Ixchel’s contractual 
interference claim. 
II. 
 
We first address Ixchel’s claim that Biogen tortiously 
interfered in Ixchel’s contract with Forward.  Before this court, 
neither party contests that the Cooperation Agreement is a valid 
contract that Forward was entitled to terminate at will.  Nor is 
it at issue whether Forward terminated the agreement 
according to its terms by giving Ixchel notice 60 days prior to 
termination.  The only question before us is whether Ixchel must 
allege that Biogen committed an independently wrongful act in 
order to state a claim for tortious interference with contract in 
light of the fact that the Cooperation Agreement is an at-will 
contract. 
A. 
 
California has traditionally recognized two economic 
relations torts:  interference with the performance of a contract 
(Imperial Ice Co. v. Rossier (1941) 18 Cal.2d 33, 35 (Imperial 
Ice)) and interference with a prospective economic relationship 
(Buckaloo v. Johnson (1975) 14 Cal.3d 815, 822 (Buckaloo)).  
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
7 
“[B]oth of these torts protect the public interest in stable 
economic relationships . . . .”  (Reeves v. Hanlon (2004) 33 
Cal.4th 1140, 1152 (Reeves).) 
 
The two torts are related but distinct.  Tortious 
interference with contractual relations requires “(1) the 
existence of a valid contract between the plaintiff and a third 
party; (2) the defendant’s knowledge of that contract; (3) the 
defendant’s intentional acts designed to induce a breach or 
disruption of the contractual relationship; (4) actual breach or 
disruption of the contractual relationship; and (5) resulting 
damage.”  (Reeves, supra, 33 Cal.4th at p. 1148; see Pacific Gas 
& Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126 
(Pacific Gas).)  It is generally not necessary that the defendant’s 
conduct be wrongful apart from the interference with the 
contract itself.  (Quelimane Co. v. Stewart Title Guaranty Co. 
(1998) 19 Cal.4th 26, 55 (Quelimane).)  This general rule is 
subject to certain exceptions discussed below. 
 
Tortious 
interference 
with 
prospective 
economic 
advantage, on the other hand, does not depend on the existence 
of a legally binding contract.  A plaintiff asserting this tort must 
show that the defendant knowingly interfered with an 
“ ‘ “economic relationship between the plaintiff and some third 
party, [which carries] the probability of future economic benefit 
to the plaintiff.” ’ ”  (Korea Supply Co. v. Lockheed Martin Corp. 
(2003) 29 Cal.4th 1134, 1153 (Korea Supply).) 
 
Before our decision in Della Penna v. Toyota Motor Sales, 
U.S.A., Inc. (1995) 11 Cal.4th 376 (Della Penna), we treated 
interference with contractual relations and interference with 
prospective economic advantage as two species of the same tort.  
(See Buckaloo, supra, 14 Cal.3d at p. 823.)  Each tort contained 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
8 
the same elements with the exception that interference with 
contractual relations required the existence of a binding 
contract.  (Compare id. at p. 827 [elements of interference with 
prospective economic advantage] with Pacific Gas, supra, 50 
Cal.3d at p. 1126 [elements of interference with contractual 
relations].)  The primary difference between the two torts was 
that the range of acceptable justifications — that is, affirmative 
defenses — was broader when a defendant interfered with an 
unconsummated prospective economic relationship.  (Pacific 
Gas, at p. 1126; Environmental Planning & Information Council 
v. Superior Court (1984) 36 Cal.3d 188, 194 (EPIC); Buckaloo, at 
p. 828.)  “[A] competitor’s stake in advancing his own economic 
interest will not justify the intentional inducement of a contract 
breach [citation], whereas such interests will suffice where 
contractual relations are merely contemplated or potential.”  
(EPIC, at p. 194.) 
 
That changed in Della Penna, when we “dr[e]w and 
enforce[d] a sharpened distinction between claims for the 
tortious disruption of an existing contract and claims that a 
prospective contractual or economic relationship has been 
interfered with.”  (Della Penna, supra, 11 Cal.4th at p. 392.)  We 
held that a plaintiff seeking to recover damages for interference 
with prospective economic advantage must plead as an element 
of the claim that the defendant’s conduct was “wrongful by some 
legal measure other than the fact of interference itself.”  (Id. at 
p. 393.)  We reasoned that “courts provide a damage remedy 
against third party conduct intended to disrupt an existing 
contract precisely because the exchange of promises resulting in 
such a formally cemented economic relationship is deemed 
worthy of protection from interference by a stranger to the 
agreement.  Economic relationships short of contractual, 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
9 
however, should stand on a different legal footing as far as the 
potential for tort liability is reckoned.  Because ours is a culture 
firmly wedded to the social rewards of commercial contests, the 
law usually takes care to draw lines of legal liability in a way 
that maximizes areas of competition free of legal penalties.”  (Id. 
at p. 392.)  Concerned that the old rule led “to time consuming 
and expensive lawsuits . . . by a rival, based on conduct that was 
regarded by the commercial world as both commonplace and 
appropriate” (id. at p. 384), we found it important to afford 
“greater solicitude to those relationships that have ripened into 
agreements, while recognizing that relationships short of that 
subsist in a zone where the rewards and risks of competition are 
dominant” (id. at p. 392).  Imposing an independent 
wrongfulness requirement at the pleading stage thus struck a 
“balance between providing a remedy for predatory economic 
behavior and keeping legitimate business competition outside 
litigative bounds.”  (Id. at p. 378.) 
 
Our decisions since Della Penna have reaffirmed the 
distinction between the two torts.  (See Quelimane, supra, 19 
Cal.4th at pp. 55–56; Korea Supply, supra, 29 Cal.4th at 
p. 1158.)  So, while intentionally interfering with an existing 
contract is generally “a wrong in and of itself” (Quelimane, at 
p. 56), intentionally interfering with prospective economic 
advantage requires pleading that the defendant committed an 
independently wrongful act (Korea Supply, at p. 1158).  “[A]n act 
is independently wrongful if it is unlawful, that is, if it is 
proscribed by some constitutional, statutory, regulatory, 
common law, or other determinable legal standard.”  (Id. at 
p. 1159.) 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
10 
B. 
 
With that framework in mind, we consider whether 
stating a claim for interference with an at-will contract requires 
pleading an independently wrongful act.  We have long 
recognized that interference with at-will contracts is actionable 
as an economic tort.  (Pacific Gas, supra, 50 Cal.3d at p. 1127 
[citing cases]; accord, Truax v. Raich (1915) 239 U.S. 33, 38 
[recognizing that the weight of authority considers a third 
party’s unjustified interference with an employment-at-will 
contract actionable].)  “[T]he fact that a contract is ‘at the will of 
the parties, respectively does not make it one at the will of 
others . . . .’ ”  (Speegle v. Board of Fire Underwriters of the 
Pacific (1946) 29 Cal.2d 34, 39 (Speegle).) 
 
But we have not decided whether interference with an at-
will contract more closely resembles interference with 
contractual relations or interference with prospective economic 
advantage.  That is because the distinction was not important 
for the many decades when the two interference torts contained 
basically the same elements.  Ixchel argues that we settled the 
question in Pacific Gas, supra, 50 Cal.3d 1118, a case decided 
five years before Della Penna distinguished the two torts.  
According to Ixchel, Pacific Gas set “the default rule that, for an 
intentional interference with contract claim, there is no 
requirement of an independently wrongful act, even where the 
alleged misconduct is inducing a party to terminate an at-will 
contract.”  We disagree. 
 
In that case, the Pacific Gas and Electric Company sued 
Bear Stearns for interfering in the utility’s contract to purchase 
hydroelectric power from a water resource agency and for 
interfering with the utility’s prospective economic relations.  
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
11 
(Pacific Gas, supra, 50 Cal.3d at pp. 1123–1124.)  The contract 
at issue allowed the water resource agency to terminate the 
agreement at the end of the year in which the agency retired all 
of its project bonds.  Bear Stearns convinced the agency to seek 
a determination in state court that it could terminate the 
contract by retiring its project bonds early.  (Ibid.)  We held that 
merely inducing a contracting party to seek a judicial 
determination whether it can terminate a contract according to 
its terms is not sufficient to state a claim under either economic 
tort.  (Id. at p. 1137.)  We outlined the elements of a contract 
interference claim for the first time and did not require that the 
interference be independently wrongful.  (Id. at p. 1126.)  
Separately, we explained that interference with an at-will 
contract has long been actionable.  (Id. at p. 1127.)   
 
Critically, we acknowledged that “[m]any cases have 
treated claims of interference with voidable and terminable 
contracts as coming within the cause of action for interference 
with prospective advantage.  [Citations.] . . . [I]t may be 
preferable not to distinguish the two as separate torts [citation] 
but we need not resolve that point here, in view of our conclusion 
that the activity complained of is not included within either 
tort.”  (Pacific Gas, supra, 50 Cal.3d at p. 1128, fn. 4.)  Thus, 
contrary to Ixchel’s argument, Pacific Gas expressly reserved 
the question of whether interference with an at-will contract 
should be treated as a claim of interference with contractual 
relations or as a claim of interference with prospective economic 
advantage.  Because the alleged misconduct in that case did not 
constitute interference with any economic relationship, 
contractual or otherwise, it was unnecessary to resolve the 
question. 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
12 
 
It was also unnecessary to resolve the question because, 
as explained, the elements of both torts were largely the same 
at that time.  We had yet to differentiate the two torts in Della 
Penna by requiring an independent wrongfulness element for 
interference with prospective economic advantage.  There was 
thus no occasion to address whether interference with an at-will 
contract required pleading an independently wrongful act since 
it was not then a requirement for either tort.  (Cf. Bed, Bath & 
Beyond of La Jolla, Inc. v. La Jolla Village Square Venture 
Partners (1997) 52 Cal.App.4th 867, 880, fn. 9 [cases decided 
before Della Penna are not relevant to determining whether 
interference with an unenforceable contract constitutes 
interference with contractual relations or interference with 
prospective economic advantage].)  So, Pacific Gas did not 
answer the question now before us. 
 
Fourteen years later in Reeves, supra, 33 Cal.4th 1140, we 
resolved part of the question Pacific Gas left open.  Reeves held 
that a plaintiff must plead independent wrongfulness to state a 
claim for interference with a specific category of at-will 
contracts:  employment contracts.  (Reeves, at p. 1145.)  That 
holding was based on two rationales.  First, California’s public 
policy favoring employment competition supported such a rule.  
We observed that “it has long been the public policy of our state 
that ‘[a] former employee has the right to engage in a 
competitive business for himself and to enter into competition 
with his former employer, even for the business of . . . his former 
employer, provided such competition is fairly and legally 
conducted.’ ”  (Id. at p. 1149.)  Our previous decisions indicated 
that “[w]here no unlawful methods are used, public policy 
generally supports a competitor’s right to offer more pay or 
better terms to another’s employee, so long as the employee is 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
13 
free to leave.”  (Id. at p. 1151; see also id. at p. 1145 [observing 
that the independent wrongfulness requirement “will promote 
the public policies supporting the right of at-will employees to 
pursue opportunities for economic betterment and the right of 
employers to compete for talented workers”].) 
 
Second, we reasoned that “the economic relationship 
between parties to contracts that are terminable at will is 
distinguishable from the relationship between parties to other 
legally binding contracts.”  (Reeves, supra, 33 Cal.4th at 
p. 1151.)  We explained that interference with other legally 
binding contracts, such as contracts of a definite term, is tortious 
“ ‘because the exchange of promises resulting in such a formally 
cemented economic relationship is deemed worthy of protection 
from interference by a stranger to the agreement.’ ”  (Ibid., 
quoting Della Penna, supra, 11 Cal.4th at p. 392.)  But at-will 
contracts do not involve the same “cemented economic 
relationship[s]” as contracts of a definite term.  (Della Penna, at 
p. 392.)  Quoting the Restatement Second of Torts, we explained 
that “ ‘any interference with [an at-will contract] that induces 
its termination is primarily an interference with the future 
relation between the parties, and the plaintiff has no legal 
assurance of them.  As for the future hopes he has no legal right 
but only an expectancy; and when the contract is terminated by 
the choice of [a contracting party] there is no breach of it.  The 
competitor is therefore free, for his own competitive advantage, 
to obtain the future benefits for himself by causing the 
termination.  Thus, he may offer better contract terms, as by 
offering an employee of the plaintiff more money to work for him 
or by offering a seller higher prices for goods, and he may make 
use of persuasion or other suitable means, all without liability.’ ”  
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
14 
(Reeves, at pp. 1151–1152, first bracketed insertion added, 
quoting Rest.2d Torts, § 768, com. i.) 
 
Ixchel argues that we should limit Reeves to the 
employment context.  It cites the employment-specific policy 
concerns animating Reeves as well as appellate decisions that 
have limited Reeves’s holding to suits involving a former 
employer suing a competitor for hiring away a former employee.  
(See Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 
1003; Popescu v. Apple Inc. (2016) 1 Cal.App.5th 39, 62.)  Biogen 
contends that the rationale in Reeves applies beyond the 
employment context to intentional interference with contract 
whenever a “defendant induces a new partner to terminate an 
at-will agreement.”   
 
It is true that our holding in Reeves relied partly on 
reasoning specific to the employment context.  But the broader 
logic underlying that decision is persuasive with respect to other 
spheres of economic relations.  The Restatement’s rationale on 
which Reeves relied is not limited to employment relationships.  
The Restatement explains:  “One’s interest in a contract 
terminable at will is primarily an interest in future relations 
between the parties, and he has no legal assurance of them.  For 
this reason, an interference with this interest is closely 
analogous 
to 
interference 
with 
prospective 
contractual 
relations.  [Citation.]  If the defendant was a competitor 
regarding the business involved in the contract, his interference 
with the contract may be not improper.”  (Rest.2d Torts, § 766, 
com. g; accord, id., § 768, com. i.) 
 
A number of states have adopted this section of the 
Restatement to require proof of independent wrongfulness in a 
claim for interference with at-will contractual relations.  (See 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
15 
Nostrame v. Santiago (2013) 213 N.J. 109, 121; Macklin v. 
Robert Logan Associates (1994) 334 Md. 287, 304; Duggin v. 
Adams (1987) 234 Va. 221, 226–227; Memorial Gardens, Inc. v. 
Olympian Sales & Management Consultants, Inc. (Colo. 1984) 
690 P.2d 207, 211; Guard-Life Corp. v. S. Parker Hardware Mfg. 
Corp. (1980) 50 N.Y.2d 183, 191.)  We have often aligned the 
elements of both economic relations torts with the Restatement 
(see Korea Supply, supra, 29 Cal.4th at p. 1156 [intentional 
interference with contract does not contain a specific intent 
requirement]; 
Quelimane, 
supra, 
19 
Cal.4th 
at 
p. 56 
[interference with prospective economic advantage does not 
contain a specific intent requirement]; Della Penna, supra, 11 
Cal.4th at p. 378 [interference with prospective economic 
advantage requires proof of a “ ‘wrongful act’ ”]), and we find the 
Restatement persuasive here as well. 
 
The 
purpose 
of 
the 
independent 
wrongfulness 
requirement in economic interference torts is to “balance 
between providing a remedy for predatory economic behavior 
and keeping legitimate business competition outside litigative 
bounds.”  (Della Penna, supra, 11 Cal.4th at p. 378; see 
Buckaloo, supra, 14 Cal.3d at p. 828; Imperial Ice, supra, 18 
Cal.2d at p. 36.)  Where economic relationships have solidified 
into binding future promises, the stability of the contractual 
relationship takes precedence over business competition.  While 
“[o]urs is a competitive economy in which business entities vie 
for economic advantage” (Buckaloo, at p. 828), that competition 
must at some point result in entities making agreements and 
exchanging things of value.  When parties enter a contract not 
terminable at will, they cement their bargained-for intentions in 
accordance with the terms of that contract into the future.  The 
concreteness of this relationship means that contracting parties 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
16 
as well as other entities may structure their decisions, invest 
resources, and take risks in reliance on it.  It is precisely this 
“exchange of promises resulting in such a formally cemented 
economic relationship [that courts have] deemed worthy of 
protection from interference by a stranger to the agreement.”  
(Della Penna, at p. 392.)  “Intentionally inducing or causing a 
breach of an existing contract is therefore a wrong in and of 
itself.”  (Quelimane, supra, 19 Cal.4th at pp. 55–56.) 
 
The same balance of interests does not apply to 
prospective economic relationships.  Such relationships are only 
“probable” (Korea Supply, supra, 29 Cal.4th at p. 1164), and 
harms resulting from a breach of such relationships are 
“speculative” (Quelimane, supra, 19 Cal.4th at p. 56).  Neither 
party to such a relationship has a legal claim to continued 
relations with the other.  Because the expectation of future 
relations is weaker and the interest in maintaining open 
competition is stronger, “the law usually takes care to draw lines 
of legal liability in a way that maximizes areas of competition 
free of legal penalties.”  (Della Penna, supra, 11 Cal.4th at 
p. 392.)  In circumstances where parties have no legal assurance 
of future relations, “the rewards and risks of competition are 
dominant.”  (Ibid.) 
 
Like parties to a prospective economic relationship, 
parties to at-will contracts have no legal assurance of future 
economic relations.  (See Beckwith v. Dahl (2012) 205 
Cal.App.4th 1039, 1053 [at-will contracts provide “only an 
expectation of future contractual relations”].)  An at-will 
contract may be terminated, by its terms, at the prerogative of 
a single party, whether it is because that party found a better 
offer from a competitor, because the party decided not to 
continue doing business, or for some other reason.  And the other 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
17 
party has no legal claim to the continuation of the relationship.  
The contracting parties presumably bargained for these terms, 
aware of the risk that the relationship may be terminated at any 
time.  At-will contractual relations are thus not cemented in the 
way that a contract not terminable at will is.  The interest in 
protecting the contract from interference more closely resembles 
the interest in protecting prospective economic relationships 
than the interest in protecting a contractual relationship that, 
by its terms, is expected to continue on pain of breach. 
 
Indeed, sometimes the only difference between an at-will 
contract and a prospective economic relationship is the formality 
of how a contractual relationship is structured.  For example, a 
buyer who regularly renews a one-time contract to purchase 
goods has a prospective economic relationship with the vendor 
with respect to future purchases of those goods.  (See Shida v. 
Japan Food Corp. (1967) 251 Cal.App.2d 864, 866 [interference 
with yearly renewal of contract treated as interference with 
prospective economic advantage].)  But that same buyer would 
have an at-will contractual relationship if it entered into a single 
contract with the vendor to provide those goods at regular 
intervals terminable at the buyer’s will.  In both, the vendor has 
no legal assurance of the buyer’s continued purchases. 
 
We recognize that in an at-will contract, the parties’ 
expectations are of continuity unless one party terminates the 
contract, whereas the expectations of a continued relationship 
are more speculative where no contract exists.  But from the 
perspective of third parties, there is no legal basis in either case 
to expect the continuity of the relationship or to make decisions 
in reliance on the relationship.  We are not convinced that any 
difference in expectations between the parties requires a 
different 
pleading 
standard 
between 
interference 
with 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
18 
prospective economic advantage and interference with at-will 
contractual relations.   
 
Finally, allowing interference with at-will contract claims 
without requiring independent wrongfulness risks chilling 
legitimate business competition.  An actionable claim for 
interference with contractual relations does not require that the 
defendant have the specific intent to interfere with a contract.  
A plaintiff states a claim so long as it alleges that the defendant 
knew interference was “ ‘certain or substantially certain to occur 
as a result of [defendant’s] action.’ ”  (Quelimane, supra, 19 
Cal.4th at p. 56.)  Without an independent wrongfulness 
requirement, a competitor’s good faith offer that causes a 
business to withdraw from an at-will contract could trigger 
liability or at least subject the competitor to costly litigation.  In 
fact, even if a business in an at-will contract solicits offers on its 
own initiative, a third party that submits an offer could face 
liability if it knew that acceptance of the offer would cause the 
soliciting business to withdraw from its existing contract.  
Allowing disappointed competitors to state claims for 
interference 
with 
at-will 
contracts 
without 
alleging 
independently wrongful conduct may expose routine and 
legitimate business competition to litigation. 
 
We therefore hold that to state a claim for interference 
with an at-will contract by a third party, the plaintiff must 
allege that the defendant engaged in an independently wrongful 
act.  We disapprove Redfearn v. Trader Joe’s Co., supra, 20 
Cal.App.5th 989 and Popescu v. Apple Inc., supra, 1 Cal.App.5th 
39 to the extent they are inconsistent with this opinion. 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
19 
III. 
Ixchel alleges that the wrongful act Biogen committed was 
including section 2.13 in the Forward-Biogen Agreement in 
violation of Business and Professions Code section 16600.  
Section 2.13 of the Forward-Biogen Agreement required 
Forward to terminate its Collaboration Agreement with Ixchel 
and barred Forward from engaging in business with any other 
entity to develop neurological treatments containing DMF.  
Ixchel claims that this contractual provision is an unlawful 
restraint of trade in violation of section 16600, which provides:  
“Except as provided in this chapter, every contract by which 
anyone is restrained from engaging in a lawful profession, trade, 
or business of any kind is to that extent void.” 
The Ninth Circuit certified the following question to us:  
“Does section 16600 of the California Business and Professions 
Code void a contract by which a business is restrained from 
engaging in a lawful trade or business with another business?”  
(Ixchel, supra, 930 F.3d at p. 1033.)  That question appears to 
ask this court to decide whether section 16600 applies to 
contracts in the business context.  The Ninth Circuit suggested 
that “the California Supreme Court . . . [has not] considered 
whether section 16600 extends beyond the employment setting 
entirely to contractual restraints on business operations.”  
(Ixchel, at p. 1036.)   
Ixchel asks us to decide that question only.  But the 
primary dispute between Ixchel and Biogen in the Ninth Circuit 
was not whether section 16600 applies to business contracts.  At 
oral argument in the Ninth Circuit, Biogen acknowledged that 
it does.  Instead, the dispute was whether contractual restraints 
on business operations or commercial dealings are subject to a 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
20 
reasonableness standard under section 16600.  Moreover, the 
proper standard governing alleged restraints of trade under 
section 16600 presents an important question of California law, 
potentially affecting all contracts in California that in some way 
restrain a contracting party from engaging in a profession, 
trade, or business. 
To provide the Ninth Circuit sufficient guidance to resolve 
the contentions of the parties and to answer an important 
question of California law, we address not only whether section 
16600 applies to contracts in the business context (the parties 
agree that it does) but also the proper standard — in particular, 
whether a rule of reason applies — to evaluate whether 
restraints on trade in business contracts are void under section 
16600.  (See Cal. Rules of Court, rule 8.548(f)(5); Verdugo v. 
Target Corp. (2014) 59 Cal.4th 312, 317, fn. 1 [restating certified 
question “to conform to the facts at issue in the underlying 
action”].) 
Ixchel argues that deciding this question is premature 
because the case is at the pleading stage and the parties have 
not had the opportunity to discover facts that would show 
whether section 2.13 of the Forward-Biogen Agreement was 
unreasonable.  But in deciding whether section 16600 includes 
a reasonableness requirement in the context of business 
contracts, we are deciding a pure question of law.  The question 
at this stage is whether Ixchel must plead and prove 
unreasonableness, not whether it has actually done so.  Whether 
the 
parties 
have 
put 
forth 
facts 
demonstrating 
unreasonableness is immaterial to the antecedent question of 
whether a reasonableness requirement applies here.  
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
21 
A. 
As an initial matter, we agree with the parties that section 
16600 applies to business contracts.  The chapter of the Business 
and Professions Code containing section 16600 excepts from 
section 16600’s coverage certain noncompetition agreements 
upon the sale of goodwill or of ownership interest in a business 
(§ 16601) and upon the dissolution or dissociation from a 
partnership 
(§ 16602) 
or 
limited 
liability 
corporation 
(§ 16602.5).  If section 16600 did not apply to business contracts, 
these exceptions would be unnecessary.  Indeed, California 
courts have frequently analyzed whether contracts involving 
business dealings are void under section 16600.  (See, e.g., 
Centeno v. Roseville Community Hospital (1979) 107 Cal.App.3d 
62, 68 (Centeno); Dayton Time Lock Service, Inc. v. Silent 
Watchman Corp. (1975) 52 Cal.App.3d 1, 6 (Dayton Time Lock); 
Great Western Distillery Products v. John A. Wathen Distillery 
Co. (1937) 10 Cal.2d 442, 445–446 (Great Western Distillery) 
[applying Civ. Code, former § 1673, the predecessor statute to 
Bus. & Prof. Code, § 16600]; Getz Bros. & Co. v. Federal Salt Co. 
(1905) 147 Cal. 115, 118–119 (Getz Brothers) [same].) 
The parties do not contend that any of the exceptions to 
section 16600 apply here.  Instead, they disagree on the 
applicable standard to examine the validity of section 2.13 of the 
Forward-Biogen Agreement under section 16600.  Biogen 
argues that the rule of reason used to analyze antitrust 
violations under the Cartwright Act (§ 16700 et seq.) should also 
govern restraints on business dealings under section 16600.  
That inquiry asks “whether an agreement harms competition 
more than it helps” by considering “ ‘the facts peculiar to the 
business in which the restraint is applied, the nature of the 
restraint and its effects, and the history of the restraint and the 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
22 
reasons for its adoption.’ ”  (In re Cipro Cases I & II (2015) 61 
Cal.4th 116, 146 (Cipro).)  Ixchel counters that section 16600 is 
not subject to a reasonableness standard; it urges the court to 
extend Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937 
(Edwards) and hold that any contract in restraint of trade is per 
se void.   
The language of section 16600 is broad on its face:  “Except 
as provided in this chapter, every contract by which anyone is 
restrained from engaging in a lawful profession, trade, or 
business of any kind is to that extent void.”  Read in isolation, 
the text suggests that any part of an agreement restraining a 
party from engaging in a trade, profession, or business is per se 
invalid unless certain exceptions apply.  But in reading statutes, 
we consider the text in the context of “the statutory framework 
as a whole in order to determine its scope and purpose.”  
(Coalition of Concerned Communities, Inc. v. City of Los Angeles 
(2004) 34 Cal.4th 733, 737.)  And we must consider the statute 
in light of precedent construing it.  (See Coker v. JPMorgan 
Chase Bank, N.A. (2016) 62 Cal.4th 667, 676.) 
In context, section 16600 is best read not to render void 
per se all contractual restraints on business dealings, but rather 
to subject such restraints to a rule of reason.  Section 16600 was 
initially enacted in 1872 as section 1673 of the Civil Code using 
substantively identical language.  (Civ. Code, former § 1673, 
repealed by Stats. 1941, ch. 526, § 2, p. 1847 and enacted as 
Bus. & Prof. Code, § 16600 by Stats. 1941, ch. 526, § 1, p. 1834.)  
Our decisions interpreting Civil Code former section 1673 thus 
inform the interpretation of section 16600.  (See People v. 
Bonnetta (2009) 46 Cal.4th 143, 151 [“[W]hen a statute has been 
construed by the courts and the Legislature thereafter reenacts 
the statute without changing the interpreted language, a 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
23 
presumption is raised that the Legislature was aware of and has 
acquiesced in that construction.”].)  And Civil Code former 
section 1673 was enacted against the backdrop of well-
established common law prohibitions against restraints of 
trade.  (See Vulcan Powder Co. v. Hercules Powder Co. (1892) 96 
Cal. 510, 513 (Vulcan Powder).)  As explained below, this court 
has interpreted section 16600 and its Civil Code predecessor on 
numerous occasions, and we have declined to categorically 
invalidate all agreements limiting the freedom to engage in 
trade.  Over time, our case law has generally invalidated 
agreements not to compete upon the termination of employment 
or upon the sale of interest in a business without inquiring into 
their reasonableness, while invalidating other contractual 
restraints on businesses operations and commercial dealings 
only if such restraints were unreasonable. 
We must also consider section 16600’s “language in its 
‘broader statutory context’ and, where possible, harmonize that 
language with related provisions by interpreting them in a 
consistent fashion.”  (ZB, N.A. v. Superior Court (2019) 8 Cal.5th 
175, 189 (ZB).)  Section 16600 sits alongside another antitrust 
statute, the Cartwright Act (§ 16700 et seq.), which we have 
construed to permit reasonable restraints of trade.  (Cipro, 
supra, 61 Cal.4th at p. 137.)  This statutory context further 
supports the conclusion that a rule of reason applies to 
contractual restraints on business operations and commercial 
dealings under section 16600. 
B. 
We turn first to the statute’s history and our precedent.  
“Under the common law, . . . contractual restraints on the 
practice of a profession, business, or trade, were considered 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
24 
valid, as long as they were reasonably imposed.”  (Edwards, 
supra, 44 Cal.4th at p. 945; accord, Wright v. Ryder (1868) 36 
Cal. 342, 357 (Wright).)  As noted, the Legislature in 1872 
adopted Civil Code former section 1673, which provided:  “Every 
contract by which any one is restrained from exercising a lawful 
profession, trade, or business of any kind, otherwise than is 
provided by the next two sections, is to that extent void.”  The 
next two sections excepted certain contractual restraints upon 
the sale of goodwill in a business (Civ. Code, former § 1674) or 
upon dissolution of a partnership (Civ. Code, former § 1675). 
The Code Commissioners’ note stated that Civil Code 
former section 1673 was enacted in response to certain “modern 
decisions” that allowed contractual restraints to a “dangerous 
extent.”  (Code commrs., note foll. 1 Ann. Civ. Code, § 1673 (1st 
ed. 1872, Haymond & Burch, commrs.-annotators) p. 502 
(Commissioners’ Note).)  Specifically, it disapproved of two cases 
upholding agreements not to compete in the operation of boats.  
(Id. at pp. 502–503, citing Dunlop v. Gregory (1851) 10 N.Y. 241, 
California Steam Nav. Co. v. Wright (1856) 6 Cal. 258.)  But the 
Commissioners’ Note did not go so far as to say that Civil Code 
former section 1673 categorically replaced the common law 
standard of reasonableness with a per se rule.  In fact, the note 
stated that the statute’s limitation on contractual restraints was 
consistent with two decisions adopting the common law 
reasonableness standard.  (Commissioners’ Note, at p. 503, 
citing Wright, supra, 36 Cal. 342, More v. Bonnet (1870) 40 Cal. 
251 (More).)  And one of those decisions expressly upheld a 
noncompetition agreement “because the limits [were] not 
unreasonable.”  (More, at p. 254.)  Thus, the Commissioners’ 
Note suggests that Civil Code former section 1673, in 
prohibiting agreements that restrained trade to a “dangerous 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
25 
extent,” was not intended to invalidate all restraints on trade.  
(Commissioners’ Note, at p. 502; see People v. Chun (2009) 45 
Cal.4th 1172, 1187 [Commissioners’ notes are “entitled to 
substantial weight”].) 
Nor did this court’s decisions interpreting Civil Code 
former section 1673 adopt a per se rule invalidating all contracts 
that limit business dealings.  Our cases initially offered little 
clarity on the appropriate standard to evaluate agreements 
restraining trade.  In our first reasoned opinion interpreting the 
statute, we invalidated an agreement between manufacturers of 
dynamite to fix prices and limit output.  (Vulcan Powder, supra, 
96 Cal. at pp. 514–515.)  We noted that the common law rule of 
reason “led to much perplexing legislation” and had been 
replaced by Civil Code former section 1673, but we did not 
explain what standard the new statute imposed.  (Vulcan 
Powder, at p. 513.)  We simply said that the agreement at issue 
was “clearly in restraint of trade and against public policy; and 
this conclusion is too obvious to need argument, authorities, or 
elucidation.”  (Id. at p. 515.)  Our reasoning did not explain 
whether we found the agreement per se invalid or invalid by 
some other standard.  (See also Schwalm v. Holmes (1875) 49 
Cal. 665, 669 [holding that exclusive sales contract was “not 
illegal, as being in restraint of trade” in two-sentence disposition 
without further analysis].) 
Over time, however, two discernible categories of holdings 
emerged in our case law:  Agreements not to compete after the 
termination of employment or the sale of interest in a business 
were invalid without regard to their reasonableness.  And 
agreements limiting commercial dealings and business 
operations were generally invalid if they were unreasonable. 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
26 
As to agreements not to compete after termination of 
employment or the sale of interest in a business, an early case 
was Merchants’ Ad-Sign Co. v. Sterling (1899) 124 Cal. 429 
(Merchants’ Ad-Sign), which invalidated an agreement not to 
compete as part of the sale of stock in an advertising company.  
(Id. at p. 434.)  Our reasoning in that case rested on the plain 
language of the statute, and we did not examine whether the 
restraint was reasonable.  We emphasized that “[t]he language 
of the code is unmistakable” and rejected the applicability of 
cases adopting a more “liberal construction” of the statute.  
(Ibid.)  Because the noncompetition agreement prevented one 
party from engaging in the business of bill posting after he sold 
his interest in the advertising business to the other party, it 
violated the plain language of Civil Code former section 1673 
and was therefore void.  (Merchants Ad-Sign, at p. 434.) 
Likewise, in Chamberlain v. Augustine (1916) 172 Cal. 285 
(Chamberlain), we invalidated an agreement imposing a 
financial penalty for competition, which was included as part of 
the sale of stock in a foundry company.  (Id. at p. 288.)  The 
$5,000 penalty was a sufficient deterrent to competition to 
constitute a restraint of trade under Civil Code former section 
1673.  Pointing to “the very language of [former] section 1673,” 
we determined that “[t]he statute makes no exception in favor 
of contracts only in partial restraint of trade.”  (Chamberlain, at 
pp. 288, 289; accord, Gregory v. Spieker (1895) 110 Cal. 150, 154 
[agreement not to compete in a particular county as part of the 
sale of a liquor business “transgressed the statute”].) 
It is true that these decisions spoke in broad terms, 
suggesting that restraints on trade in all contexts were void per 
se.  (See Merchants’ Ad-Sign, supra, 124 Cal. at p. 434 [“[t]he 
language of the code is unmistakable”]; Chamberlain, supra, 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
27 
172 Cal. at pp. 288–289 [“the very language of [former] section 
1673 . . . makes no exception in favor of contracts only in partial 
restraint of trade”].)  But “[i]t is axiomatic that an unnecessarily 
broad holding is ‘informed and limited by the fact[s]’ of the case in 
which it is articulated.”  (Covenant Care, Inc. v. Superior Court 
(2004) 32 Cal.4th 771, 790, fn. 11; see People v. Mendoza (2000) 23 
Cal.4th 896, 915 [“ ‘we must view with caution seemingly 
categorical directives not essential to earlier decisions’ ”].)  The 
contracts at issue in these cases involved agreements not to 
compete upon terminating employment or selling a business, 
and we understand their holdings to be informed and limited by 
the factual context presented. 
By contrast, we did not interpret Civil Code former section 
1673 so literally with regard to contractual restraints on 
business operations and commercial dealings.  We generally 
declared agreements in this context valid if the restraints they 
imposed were reasonable.  In Grogan v. Chaffee (1909) 156 Cal. 
611 (Grogan), we upheld a contract between a manufacturer and 
purchaser of olive oil requiring the purchaser to resell the 
product at a certain price.  We interpreted Civil Code former 
section 1673 to contain a reasonableness requirement:  “It is not 
every limitation on absolute freedom of dealing that is 
prohibited. . . . ‘The question is whether, under the particular 
circumstances of the case, and the nature of the particular 
contract 
involved 
in 
it, 
the 
contract 
is, 
or 
is 
not, 
unreasonable.’  . . . [I]t must be taken to be settled that the 
sections of the Civil Code, [former] sections 1673, 1674, 1675, 
relating to contracts in restraint of trade are to be construed in 
the light of these principles.”  (Grogan, at p. 615.)  The 
agreement, we concluded, was a reasonable restraint because its 
purpose was not to create a monopoly but to “secur[e] the 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
28 
legitimate benefits of the reputation which [the manufacturer’s] 
product may have attained.”  (Id. at p. 614.) 
Similarly, in Associated Oil Co. v. Myers (1933) 217 Cal. 
297 (Associated Oil), we upheld a contract between the lessor of 
an automobile service station and a lessee of the station, which 
included an agreement that the lessor would only sell the 
lessee’s petroleum products.  Citing the reasonableness 
standard in Grogan, we concluded that the lessee “had the right 
to decline to sell any but its own product upon the leased 
property.  We can see nothing unreasonable in requiring the 
[lessor] to do the same thing.  The public interest is not involved 
and competition is not stifled.  In no way does the agreement 
attempt to limit production or fix the price of the commodity 
involved.”  (Associated Oil, at p. 306.) 
Some of our cases invalidating contractual restraints in 
the business context did not expressly apply a reasonableness 
standard.  (See Morey v. Paladini (1922) 187 Cal. 727 (Morey); 
Pacific Wharf & Storage Co. v. Standard Am. Dredging Co. 
(1920) 184 Cal. 21 (Pacific Wharf); Getz Brothers, supra, 147 Cal. 
115; Vulcan Powder, supra, 96 Cal. 510.)  But these decisions 
did not invalidate contractual provisions merely because they 
restrained trade in some way.  Instead, we examined the 
purpose of the contracts at issue, much as we would do in a 
reasonableness inquiry, and we found the contracts to be invalid 
when their purpose was to restrain trade by creating a 
monopoly, restricting supply, or fixing prices.  (See Cipro, supra, 
61 Cal.4th at p. 146 [recounting that the rule of reason asks 
“ ‘whether the challenged conduct promotes or suppresses 
competition’ ”].) 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
29 
In Morey, for example, we invalidated an agreement 
requiring a vendor to sell lobsters exclusively to a purchaser in 
a certain geographic area.  (Morey, supra, 187 Cal. at pp. 732, 
736.)  We emphasized that the overall purpose of the agreement 
was to “secure to [the purchaser], so far as possible, a monopoly 
of the lobster business in the selected territory.”  (Id. at p. 738; 
see id. at p. 736 [contract had “the purpose of putting it into the 
power of the [purchaser] to control the lobster market”]; id. at 
p. 737 [contract “intended to effect a virtual monopoly of the 
lobster trade”].)  Our reasoning was more concerned with the 
potential monopoly effect of the agreement than with whether 
its terms limited trade per se.   
Our other decisions in the business context followed 
similar logic.  (See Endicott v. Rosenthal (1932) 216 Cal. 721, 
725 (Endicott) [invalidating an agreement between clothes 
dyeing businesses to form an association that set industry-wide 
prices and prevented its members from soliciting each other’s 
customers because “the two main purposes for which this 
association was formed were to increase prices and eliminate 
competition”]; Getz Brothers, supra, 147 Cal. at p. 119 
[invalidating a contract by two companies to exclusively buy and 
sell salt from each other and to discourage salt shipments by 
third parties because it had a “direct and primary purpose” to 
restrain trade]; Santa Clara Val. M. & L. Co. v. Hayes (1888) 76 
Cal. 387, 392 [invalidating exclusive dealing agreement with an 
“object and view to suppress the supply and enhance the price 
of lumber in four counties of the state”]; but see Pacific Wharf, 
supra, 184 Cal. at p. 23 [invalidating agreement forbidding 
seller of harbor dredge to compete in the dredging business 
because “[t]he language of [Civil Code former section 1673] is 
clear and unambiguous”].) 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
30 
Our last decision to interpret Civil Code former section 
1673 in the context of business dealings made clear that a rule 
of reason applies in this context.  In Great Western Distillery, 
supra, 10 Cal.2d 442, we upheld a contract in which a buyer 
agreed to purchase whiskey exclusively from a distillery in 
exchange for being the sole merchant of that whiskey in 
California.  We summarized the law as follows:  “ ‘Statutes are 
interpreted in the light of reason and common sense, and it may 
be stated as a general rule that courts will not hold to be in 
restraint of trade a contract between individuals, the main 
purpose and effect of which are to promote and increase business 
in the line affected, merely because its operations might possibly 
in some theoretical way incidentally and indirectly restrict trade 
in such line.’ ”  (Id. at p. 446.)  Reviewing the cases upholding 
and invalidating contractual agreements, we explained that this 
general rule was consistent with each of them.  (Id. at pp. 447–
449, citing Associated Oil, supra, 217 Cal. at p. 304, Grogan, 
supra, 156 Cal. at p. 615, Morey, supra, 187 Cal. 727, Endicott, 
supra, 216 Cal. 721.)  Applying this rule to the agreement at 
issue, we upheld the agreement because it “disclose[d] merely 
an intent to provide for the promotion of the business of the 
defendant” and had the effect of “develop[ing] a market for the 
sale of the commodity within the limited territory.”  (Great 
Western Distillery, at pp. 449, 450.) 
Thus, like previous decisions evaluating business 
contracts, Great Western Distillery rejected a literal reading of 
Civil Code former section 1673 in favor of a rule of 
reasonableness:  Contracts with the purpose and effect of 
promoting trade and competition are valid even if their terms 
incidentally restrain commercial freedom in some way.  After 
Great Western Distillery, the “trend of authorities [was] to 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
31 
construe such statutes as [former] section 1673 of the Civil Code, 
and contracts between individuals intended to promote rather 
than to restrict a particular business, ‘[i]n the light of reason 
and common sense’ so as to uphold reasonable limited 
restrictions.”  (Keating v. Preston (1940) 42 Cal.App.2d 110, 123, 
quoting Great Western Distillery, supra, 10 Cal.2d at p. 446.) 
To summarize, our decisions interpreting Civil Code 
former section 1673, the predecessor to Business and 
Professions Code section 16600, gradually evolved to evaluate 
contractual restraints on business operations and commercial 
dealings based on a reasonableness standard.  In this respect, 
Civil Code former section 1673 did not depart from the common 
law rule.  (See Centeno, supra, 107 Cal.App.3d at p. 68 
[observing in a case involving an exclusive medical services 
contract that “[s]ection 16600 is basically a codification of the 
common law relating to contracts in restraint of trade”].)  But 
we often interpreted the statute more strictly when it came to 
agreements not to compete after the termination of employment 
or the sale of interest in a business.  Thus, instead of adopting a 
per se rule that all contractual limitations on the freedom to 
engage in commercial dealings are invalid, our precedent 
interpreting Civil Code former section 1673 was more nuanced. 
In 1941, the Legislature repealed Civil Code former 
section 1673 and reenacted it as Business and Professions Code 
section 
16600 
using 
substantively 
identical 
language.  
(Stats. 1941, ch. 526, § 1, p. 1834.)  In doing so, the Legislature 
is presumed to have incorporated this court’s construction of 
Civil Code former section 1673 into section 16600.  (People v. 
Bonnetta, supra, 46 Cal.4th at p. 151.)  Since then, this court has 
had occasion to construe section 16600 only in relation to 
contracts restraining competition after the termination of 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
32 
employment or the sale of interest in a business.  (See Edwards, 
supra, 44 Cal.4th at p. 950 [termination of employment]; 
Swenson v. File (1970) 3 Cal.3d 389, 395 (Swenson) [termination 
of partnership]; Muggill v. Reuben H. Donnelley Corp. (1965) 62 
Cal.2d 239, 242–243 (Muggill) [termination of employment]; 
Martinez v. Martinez (1953) 41 Cal.2d 704, 706 (Martinez) [sale 
of business].)  These cases have followed our earlier decisions by 
strictly construing the prohibition on restraint of trade in such 
contexts. 
In Muggill, we invalidated a noncompetition agreement 
between a retiree and his former employer when the former 
employer ceased pension payments after the employee went to 
work for a competitor.  (Muggill, supra, 62 Cal.2d at p. 240.)  We 
said that the “settled interpretation” of section 16600 created an 
unambiguous rule:  “This section invalidates provisions in 
employment contracts prohibiting an employee from working for 
a competitor after completion of his employment . . . .”  (Muggill, 
at pp. 243, 242).  Comparing the facts to those in Chamberlain, 
a pre-reenactment decision involving the sale of business stock 
by a former employee, we stated that “[s]imilarly, in this case, 
the provision forfeiting plaintiff’s pension rights if he works for 
a competitor restrains him from engaging in a lawful business 
and is therefore void.”  (Id. at p. 243.) 
Even when we have upheld portions of noncompetition 
agreements under statutory exceptions to section 16600, we 
have recognized that any portion of the agreement restraining 
competition not within an exception is per se invalid.  For 
example, we said in Swenson that a noncompetition agreement 
between a former partner of an accounting firm and his firm 
would fall outside the section 16602 exception and thus be 
invalid “[o]n its face” if “it forb[ade him] from serving former 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
33 
partnership clients without regard to territorial limits.”  
(Swenson, supra, 3 Cal.3d at p. 395; see § 16602, subd. (a) [“Any 
partner may, upon [dissolution or disassociation from the 
partnership], agree that he or she will not carry on a similar 
business within a specified geographic area where the 
partnership business has been transacted, so long as any other 
member of the partnership . . . carries on a like business 
therein.”]; see also Martinez, supra, 41 Cal.2d at p. 706 [trial 
court “properly limited the duration of the covenant [not to 
compete] by providing that it should continue so long as plaintiff 
. . . should carry on a like business in San Diego County, that 
being the period permitted by sections 16600 and 16601 of the 
Business and Professions Code”].) 
Our most recent section 16600 decision broke no new 
ground in holding that a noncompetition agreement between a 
tax manager and his employer was per se invalid.  (Edwards, 
supra, 44 Cal.4th at p. 955.)  The plaintiff in Edwards signed an 
agreement with his employer Arthur Andersen, which 
prohibited him from working for or soliciting certain clients of 
the firm for limited periods following his termination of 
employment.  (Id. at p. 942.)  When HSBC acquired Arthur 
Andersen, it offered to employ Edwards on the condition that he 
sign a “ ‘Termination of Non-compete Agreement,’ ” which would 
effect a general release of claims against Arthur Andersen and, 
in turn, induce Arthur Andersen to release Edwards from the 
noncompetition agreement he had previously signed.  (Id. at 
p. 943.)  When Edwards refused to sign the termination of 
noncompete agreement, Arthur Andersen fired him, and HSBC 
withdrew its offer to employ him.  (Ibid.)  Edwards sued Arthur 
Andersen for interference with prospective economic advantage, 
claiming that the interference was wrongful because the 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
34 
underlying noncompetition agreement he signed was invalid 
under section 16600.  (Edwards, at p. 944.) 
We agreed, holding that “an employer cannot by contract 
restrain a former employee from engaging in his or her 
profession, trade, or business unless the agreement falls within 
one of the exceptions to the rule.”  (Edwards, supra, 44 Cal.4th 
at pp. 946–947.)  We said that section 16600 and its predecessor 
statute had rejected the common law “ ‘rule of reasonableness’ ” 
for a “legislative policy in favor of open competition and 
employee mobility.”  (Edwards, at pp. 945, 946.)  Stressing the 
statute’s plain meaning, we rejected the argument that section 
16600 only voids restraints that entirely prohibit an employee 
from engaging in a profession and not less restrictive limitations 
that are reasonable.  (Edwards, at pp. 946–947.)  Similarly, we 
rejected the Ninth Circuit’s “narrow restraint” construction of 
section 16600, which excepted agreements limiting only a 
narrow part of a party’s business, trade, or profession.  
(Edwards, at pp. 948–950.) 
Ixchel argues that Edwards conclusively held that section 
16600 invalidates all restraints on trade for all contracts, no 
matter how reasonable.  It relies on our conclusion that 
“[s]ection 16600 is unambiguous, and if the Legislature intended 
the statute to apply only to restraints that were unreasonable 
or overbroad, it could have included language to that effect.”  
(Edwards, supra, 44 Cal.4th at p. 950.)  But Ixchel reads too 
much into Edwards.  “It is axiomatic that language in a judicial 
opinion is to be understood in accordance with the facts and 
issues before the court.”  (Chevron U.S.A., Inc. v. Workers’ Comp. 
Appeals Bd. (1999) 19 Cal.4th 1182, 1195.)  The plaintiff in 
Edwards sought to invalidate a noncompetition clause in his 
employment agreement, and we “limited our review” to whether 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
35 
“Business and Professions Code section 16600 prohibit[s] 
employee noncompetition agreements . . . .”  (Edwards, at 
p. 941, fn. omitted.)  We held that “section 16600 prohibits 
employee noncompetition agreements unless the agreement 
falls within a statutory exception . . . .”  (Id. at p. 942.)  The 
question of whether noncompetition agreements outside the 
employment context are per se invalid was not presented in 
Edwards.  
Moreover, the rationale in Edwards focused on policy 
considerations specific to employment mobility and competition:  
“The law protects Californians and ensures ‘that every citizen 
shall retain the right to pursue any lawful employment and 
enterprise of their choice.’  [Citation.]  It protects ‘the important 
legal right of persons to engage in businesses and occupations of 
their choosing.’ ”  (Edwards, supra, 44 Cal.4th at p. 946; see ibid. 
[the statute “evinces a settled legislative policy in favor of open 
competition and employee mobility”].)  And we cited cases 
exclusively from the employment context in our reasoning.  (Id. 
at pp. 945–948, citing Bosley Medical Group v. Abramson (1984) 
161 Cal.App.3d 284, D’sa v. Playhut, Inc. (2000) 85 Cal.App.4th 
927, Muggill, supra, 62 Cal.2d 239, Chamberlain, supra, 172 
Cal. 285, Armendariz v. Foundation Health Psychcare Services, 
Inc. (2000) 24 Cal.4th 83, South Bay Radiology Medical 
Associates v. Asher (1990) 220 Cal.App.3d 1074, and Vacco 
Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34.) 
Finally, the holding and language in Edwards simply 
confirmed our long line of decisions interpreting section 16600 
strictly in the context of noncompetition agreements following 
the termination of employment or the sale of interest in a 
business.  Nothing about Edwards indicates a departure from 
that precedent to also invalidate reasonable contractual 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
36 
limitations on business operations and commercial dealings.  
Nor did Edwards address our substantial body of law permitting 
such reasonable limitations. 
In sum, a survey of our precedent construing section 16600 
and its predecessor statute reveals that we have long applied a 
reasonableness standard to contractual restraints on business 
operations and commercial dealings.  We do not disturb the 
holding in Edwards and other decisions strictly interpreting 
section 16600 to invalidate noncompetition agreements 
following the termination of employment or sale of interest in a 
business.  But those cases do not call into doubt the applicability 
of a reasonableness standard to contractual restraints on 
business operations and commercial dealings. 
C. 
We also consider section 16600 in its broader statutory 
context and seek to harmonize its language with related 
provisions.  (ZB, supra, 8 Cal.5th at p. 189.)  Section 16600 
appears alongside the Cartwright Act (§ 16700 et seq.), which 
also employs broadly worded language to prohibit agreements 
in restraint of trade.  Section 16722 provides:  “Any contract or 
agreement in violation of this chapter is absolutely void and is 
not enforceable at law or in equity.”  And section 16726 provides:  
“Except as provided in this chapter, every trust is unlawful, 
against public policy and void.”  But we have not interpreted 
these provisions in a sweeping fashion.  “Though the Cartwright 
Act is written in absolute terms, in practice not every agreement 
within the four corners of its prohibitions has been deemed 
illegal.”  (Cipro, supra, 61 Cal.4th at p. 136.)  The provisions of 
the Cartwright Act “draw upon the common law prohibition 
against restraints of trade.”  (Cipro, at p. 136; accord, Speegle, 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
37 
supra, 29 Cal.2d at p. 44.)  Accordingly, this court has taken 
direction from the common law in establishing a reasonableness 
standard for determining whether an agreement violates the 
Cartwright Act.  (Cipro, at pp. 137, 146.)  That standard asks 
whether an agreement “ ‘promotes or suppresses competition’ ” 
by considering the “ ‘circumstances, details, and logic of a 
restraint.’ ”  (Id. at pp. 146, 147.) 
Similarly, Civil Code former section 1673 was enacted 
against the backdrop of a common law standard prohibiting 
unreasonable restraints of trade.  Our interpretation of that 
statute and section 16600 did not depart from the common law 
reasonableness standard for contractual restraints on business 
operations and commercial dealings.  Section 16600 should 
therefore be read in accordance with the Cartwright Act to 
incorporate the same rule of reason in such cases.  Indeed, we 
have 
occasionally 
relied 
on 
antitrust 
decisions 
when 
interpreting Civil Code former section 1673 (see Great Western 
Distillery, supra, 10 Cal.2d at pp. 448–449, citing United States 
v. American Tobacco Co. (1911) 221 U.S. 106, 179), and Courts 
of Appeal have evaluated section 16600 and antitrust claims 
together under a reasonableness standard (see Dayton Time 
Lock, supra, 52 Cal.App.3d at p. 6; Lafortune v. Ebie (1972) 26 
Cal.App.3d 72, 74–75). 
Amicus curiae Beckman Coulter, Inc. argues that Cianci 
v. Superior Court (1985) 40 Cal.3d 903 (Cianci) rejected the use 
of the Cartwright Act as an aid to construing section 16600.  
Cianci held that the Cartwright Act applied to the medical 
profession.  In doing so, we overturned a previous decision that 
reasoned that because section 16600 includes the word 
“profession” in its scope, the absence of the same word in the 
Cartwright Act implied that it was not intended to apply to 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
38 
professions.  (Cianci, at pp. 921–922, citing Willis v. Santa Ana 
etc. Hospital Assn. (1962) 58 Cal.2d 806, 809.)  We concluded 
that because section 16600 and the Cartwright Act were enacted 
separately and only later consolidated in the Business and 
Professions Code, “ ‘a finding of legislative intent to exclude the 
professions from the Cartwright Act, based upon nothing more 
than language differences between the two code sections, 
exceeds the limits of plausible inference.’ ”  (Cianci, at p. 922.)  
But Cianci’s focus on a specific textual difference between the 
two statutes does not cast doubt on the broader point here:  The 
similarities between the two statutes stretch beyond their 
language.  They share a statutory purpose and doctrinal 
heritage in common law prohibitions on restraints of trade.  
They should therefore be interpreted together. 
D. 
Finally, we are mindful of the consequences of strictly 
interpreting the language of section 16600 to invalidate all 
contracts that limit the freedom to engage in commercial 
dealing.  “Every agreement concerning trade . . . restrains.”  
(Chicago Board of Trade v. United States (1918) 246 U.S. 231, 
238.)  In certain circumstances, contractual limitations on the 
freedom to engage in commercial dealings can promote 
competition.  Businesses engaged in commerce routinely employ 
legitimate partnership and exclusive dealing arrangements, 
which limit the parties’ freedom to engage in commerce with 
third parties.  Such arrangements can help businesses leverage 
complementary capabilities, ensure stability in supply or 
demand, and protect their research, development, and 
marketing efforts from being exploited by contractual partners. 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
39 
These arrangements can have procompetitive effects since 
they “enable long-term planning on the basis of known costs,” 
“give protection against price fluctuations, and — of particular 
advantage to a newcomer to the field to whom it is important to 
know what capital expenditures are justified — offer the 
possibility of a predictable market.”  (Standard Oil Co. of 
California v. United States (1949) 337 U.S. 293, 306–307; see 
also Sterling Merchandising, Inc. v. Nestle, S.A. (1st Cir. 2011) 
656 F.3d 112, 123 [“exclusive dealing agreements ‘can achieve 
legitimate economic benefits (reduced cost, stable long-term 
supply, predictable prices)’ ”].)  Exclusive dealing arrangements 
also “may provide an incentive for the marketing of new 
products and a guarantee of quality-control distribution.”  
(Dayton Time Lock, supra, 52 Cal.App.3d at p. 6; accord, 
Fisherman’s Wharf Bay Cruise Corp. v. Superior Court of San 
Francisco (2003) 114 Cal.App.4th 309, 335.)  For example, 
exclusive dealing arrangements are “often a part of a franchise 
agreement or a distributorship contract.”  (UAS Management, 
Inc. v. Mater Misericordiae Hospital (2008) 169 Cal.App.4th 357, 
365.)  In exchange for the right to sell the franchisor’s products, 
franchisees often agree to purchase from a particular supplier 
or operate in a particular geographic area.  (See, e.g., Dayton 
Time Lock, at pp. 4–5 [describing franchise agreement].)  We 
decline to construe section 16600 to call such arrangements into 
question simply because they restrain trade in some way. 
Ixchel and amicus curiae Beckman Coulter, Inc. argue 
that these dire consequences are exaggerated because section 
16600 only voids agreements that restrain a party from 
“engaging in a lawful . . . business” and not all contractual 
restraints on business activity do so.  (Italics added.)  But they 
do not explain where the line is to be drawn.  Many forms of 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
40 
exclusive dealing restrain parties from “engaging in a lawful . . . 
business.”  (§ 16600.)  Franchise agreements often prohibit the 
franchisee from selling a third party’s products; requirements 
and output contracts restrain buyers and sellers respectively 
from doing business with third parties.  In Great Western 
Distillery, we upheld a contract in which a business agreed to 
purchase whiskey exclusively from another whiskey distillery in 
exchange for being the sole merchant of that whiskey in 
California.  (Great Western Distillery, supra, 10 Cal.2d at 
pp. 445–446.)  Under the agreement, the purchaser was 
restrained from engaging in the business of buying whiskey 
from a third party, and the whiskey distiller was restrained 
from doing any business with other potential whiskey buyers.  
Our opinion applied a reasonableness standard in determining 
whether the agreement ran afoul of Civil Code former section 
1673.  (Great Western Distillery, at pp. 445–446.)  Similarly 
here, the Forward-Biogen Agreement restrained Forward from 
engaging in business with Ixchel or another third party to 
develop drugs containing the active ingredient DMF.  Ixchel 
fails to meaningfully differentiate Great Western Distillery from 
this case with respect to the applicability of a reasonableness 
standard. 
CONCLUSION 
 
We hold that tortious interference with at-will contracts 
requires independent wrongfulness.  Because Ixchel alleges that 
Biogen interfered with its at-will contract, it must allege that 
Biogen did so through wrongful means. 
 
We also hold that a rule of reason applies to determine the 
validity of a contractual provision by which a business is 
restrained from engaging in a lawful trade or business with 
IXCHEL PHARMA, LLC v. BIOGEN, INC. 
Opinion of the Court by Liu, J. 
41 
another business.  Section 2.13 of the Biogen-Forward 
Agreement is such a restraint because it prevents Forward from 
collaborating with Ixchel or any other partner in the 
development of treatments containing the active ingredient 
DMF.  Its validity under section 16600 must therefore be 
evaluated based on a rule of reason.  We express no view on the 
validity of the agreement at issue. 
 
LIU, J. 
 
We Concur: 
CANTIL-SAKAUYE, C. J. 
CHIN, J. 
CORRIGAN, J. 
CUÉLLAR, J. 
KRUGER, J. 
GROBAN, J. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Ixchel Pharma, LLC v. Biogen, Inc.   
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding XXX on request pursuant to rule 8.548, Cal. Rules of Court 
Review Granted    
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S256927 
Date Filed:  August 3, 2020 
__________________________________________________________________________________ 
 
Court:    
County:    
Judge:    
 
__________________________________________________________________________________ 
 
Counsel: 
 
Banys, Christopher D. Banys and Richard C. Lin for Plaintiff and Appellant. 
 
California Appellate Law Group, Anna-Rose Mathieson, Greg Wolff; Behmer & Blackford, Timothy S. 
Blackford; Williams & Connolly, John E. Schmidtlein and Carl R. Metz for Beckman Coulter, Inc., as 
Amicus Curiae on behalf of Plaintiff and Appellant. 
 
Ropes & Gray, Mark S. Popofsky, Rocky Chiu-Feng Tsai; Greines, Martin, Stein & Richland and Laurie J. 
Hepler for Defendant and Respondent. 
 
Gibson, Dunn & Crutcher, Thomas G. Hungar, Rachel S. Brass, Caeli A. Higney; LevatoLaw and Ronald 
C. Cohen for California Chamber of Commerce and California Business Roundtable as Amici Curiae on 
behalf of Defendant and Respondent. 
 
Lowenstein & Weatherwax and Kenneth J. Weatherwax for Amici Scholars as Amici Curiae. 
 
Horvitz & Levy, Robert H. Wright, Jeremy B. Rosen; Charis Lex and Sean P. Gates for Quidel Corporation 
as Amicus Curiae. 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Christopher D. Banys 
Banys, P.C. 
567 Marsh Street 
San Luis Obispo, CA 93401 
(650) 308-8505 
 
Carl R. Metz 
Williams & Connolly LLP 
725 Twelfth Street, N.W. 
Washington, D.C. 20005 
(202) 434-5000 
 
Laurie J. Hepler 
Greines, Martin, Stein & Richland LLP 
50 California Street, Suite 1500 
San Francisco, CA 94111 
(415) 315-1774