Title: Reeves v. Hanlon
Citation: N/A
Docket Number: S114811
State: California
Issuer: California Supreme Court
Date: August 12, 2004

1 
Filed 8/12/04 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
ROBERT L. REEVES et al., 
) 
 
 
) 
 
Plaintiffs and Respondents, 
) 
 
 
) 
S114811 
 
v. 
) 
 
 
) 
Ct.App. 2/4 B151460 
DANIEL P. HANLON et al., 
) 
 
) 
Los Angeles County 
 
Defendants and Appellants. 
) 
Super. Ct. No. GC023679 
___________________________________ ) 
 
The primary issue presented is whether a defendant may be held liable 
under an intentional interference theory for having induced an at-will employee to 
quit working for the plaintiff.  Because an interference as such is primarily an 
interference with the future relation between the plaintiff and the at-will employee, 
we hold that inducing the termination of an at-will employment relation may be 
actionable under the standard applicable to claims for intentional interference with 
prospective economic advantage.  Accordingly, to recover for a defendant’s 
interference with an at-will employment relation, a plaintiff must plead and prove 
that the defendant engaged in an independently wrongful act—i.e., an act 
“proscribed by some constitutional, statutory, regulatory, common law, or other 
determinable legal standard” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 
29 Cal.4th 1134, 1159 (Korea Supply))—that induced the at-will employee to 
leave the plaintiff. 
 
2 
Adopting this standard of recovery in the context of at-will employment 
relations is particularly appropriate.  Not only will it guard against unlawful 
methods of competition in the job market, but it 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.  In this 
regard, it is clear from the standard that one commits no actionable wrong by 
merely soliciting or hiring the at-will employee of another. 
Another issue presented in this case concerns the propriety of the trial 
court’s award for violations of the Uniform Trade Secrets Act (UTSA) (Civ. Code, 
§ 3426 et seq.).  We find the award was proper, and affirm the judgment of the 
Court of Appeal in its entirety. 
FACTUAL AND PROCEDURAL BACKGROUND 
Plaintiffs Robert L. Reeves and Robert L. Reeves & Associates, A 
Professional Law Corporation, brought the instant lawsuit against defendants 
Daniel P. Hanlon, Colin T. Greene, and Hanlon & Greene, A Professional 
Corporation (H&G).  The operative complaint included the following allegations:  
In 1995, Reeves’s law firm, which emphasized immigration law and litigation, 
employed Hanlon as an attorney.  In 1997, the firm employed Greene as an 
associate attorney.  In 1998, Reeves entered into an agreement with Hanlon 
whereby Hanlon could earn an equity position in a law firm to be formed; 
thereafter, the firm’s name was changed to “Reeves and Hanlon, Professional Law 
Corporation.”  On or about June 30, 1999, both Hanlon and Greene resigned from 
Reeves’s firm without notice or warning.  They improperly persuaded plaintiffs’ 
employees to join H&G, personally solicited plaintiffs’ clients to discharge 
plaintiffs and to instead obtain services from H&G, misappropriated plaintiffs’ 
trade secrets, destroyed computer files and data, and withheld plaintiffs’ property, 
including a corporate car.  The complaint asserted 14 causes of action, including 
 
3 
intentional interference with contractual relationships, interference with 
prospective business opportunity, conspiracy to interfere with prospective 
economic advantage, misappropriation of confidential information in violation of 
the UTSA, unauthorized use of a corporate car, and destruction of corporate 
property.1 
Pursuant to a stipulated order, plaintiffs agreed to proceed to trial only on 
the foregoing causes of action.  As pertinent here, the stipulated order specified 
that plaintiffs’ claims would be resolved by a bench trial and that any recovery 
following trial would be limited to $150,000. 
Trial of the matter commenced in January 2001.  Following the 
presentation of briefing, evidence, and arguments, the trial court issued a statement 
of decision concluding that Hanlon and Greene had assumed fiduciary duties to 
plaintiffs and that they had engaged in interference with contracts and prospective 
business opportunity, and misappropriation of trade secrets.  The court determined 
that, for more than five months prior to their departure, Hanlon and Greene had 
accessed plaintiffs’ password-protected computer database to print out confidential 
name, address, and phone number information on 2,200 clients and had fomented 
dissatisfaction among plaintiffs’ personnel.  Although Greene had been chair of 
plaintiffs’ litigation department and Hanlon had been responsible for over 500 
client matters when they abruptly resigned without notice, they left no status 
                                             
 
1  
Hanlon and H&G filed a separate action against plaintiffs, and the two 
actions were consolidated.  Greene then filed a separate cross-complaint against 
plaintiffs in the consolidated action.  Hanlon and H&G alleged that plaintiffs had 
improperly withheld files and other materials belonging to H&G’s clients after 
Hanlon resigned, and that plaintiffs had converted Hanlon’s car.  Greene, in turn, 
alleged that plaintiffs had failed to pay him commissions in accordance with his 
employment contract.  These claims and cross-claims were either settled or 
arbitrated and are not at issue here. 
 
4 
reports or list of matters or deadlines on which they had been working.  Nor did 
they attempt to cooperate with plaintiffs on a notice to clients.  Shortly before 
resigning, Greene intentionally erased extensive computer files in plaintiffs’ 
computer server containing client documents and form files used by plaintiffs.  
The evening of their resignations, defendants personally solicited plaintiffs’ key 
employees.  As a result, plaintiffs lost nine employees over the next 60 days, six of 
them joining defendants’ new firm.  Defendants also began a campaign to solicit 
plaintiffs’ clients, contacting at least 40 clients by telephone without offering them 
a choice of counsel.  All of this had been “intentionally done . . . to disrupt 
[plaintiffs’] ongoing business.”  Although historically, plaintiffs typically lost only 
one or two clients a month, plaintiffs lost 144 clients to defendants over the next 
12 months. 
The trial court found that defendants’ conduct caused damage to plaintiffs 
in the total amount of $182,180.18, as follows:  (1) 144 of plaintiffs’ clients who 
transferred to H&G did not pay $62,540.50 in fees that they owed to plaintiffs; (2) 
plaintiffs suffered $36,000 in lost future business revenue; (3) plaintiffs incurred 
$61,639.68 in expenses to mitigate damages, including $41,630.49 for informing 
clients that the firm was still in business and $20,009.19 for recruiting replacement 
employees; and (4) defendants were unjustly enriched in the amount of $22,000 
due to the misappropriation of confidential client information.  The court, 
however, declined to award punitive damages, finding that defendants did not act 
with malice, oppression or fraud, but instead acted out of “immaturity” and “an 
apparent get-rich-quick mentality at the expense of [plaintiffs].”  The court 
reduced the damages award to $150,000 pursuant to the parties’ stipulation, and 
thereafter awarded plaintiffs $47,427.63 in costs after granting in part and denying 
in part a motion to tax costs.  Judgment was entered accordingly. 
 
5 
The Court of Appeal reversed the trial court’s order denying in part the 
motion to tax costs and remanded for entry of a new order regarding costs.  It 
affirmed the judgment in all other respects.  As relevant here, the appellate court 
concluded that plaintiffs’ interference claims were legally sound and substantially 
supported by the record, and also that their misappropriation of trade secrets claim 
was substantially supported. 
DISCUSSION 
A.  Intentional Interference with At-Will Employment Relations 
Preliminarily, we state what is not at issue here.  We have not been asked to 
review the propriety of the determinations by the trial court and the Court of 
Appeal that defendants are liable to plaintiffs for their tortious interference with 
plaintiffs’ client relations and prospective client opportunities.  Accordingly, we 
accept in full the Court of Appeal’s conclusion that “[t]here is direct evidence that 
[Hanlon’s and Greene’s] departure was calculated to cripple the Reeves firm’s 
ability to provide legal services:  they left abruptly, damaged computer files, 
removed firm property, and failed to provide adequate guidance concerning their 
open cases.  [¶] There is also evidence indicating that Hanlon and Greene phoned 
far more clients than the 40 or so clients they admitted to contacting, and [that] 
they exploited these clients’ lack of facility with English and ignored their rights 
concerning the selection of counsel [citation].” 
While the issue here does concern defendants’ interference with plaintiffs’ 
employee relations, we emphasize the following matters also are not in dispute.  
First, it is not disputed that the nine employees who left Reeves’s firm, including 
the six who joined H&G, had employment relationships with plaintiffs that they 
could terminate at will.  Second, we accept as undisputed the Court of Appeal’s 
conclusion that the record contains substantial evidence that defendants “mounted 
 
6 
a campaign against the Reeves firm involving destruction of computer records, 
misuse of confidential information, and unethical conduct, of which the cultivation 
of employee discontent was only a component.  This campaign unfairly impaired 
the Reeves firm’s ability to retain its employees.”  Third, we accept the Court of 
Appeal’s additional determination that the record contains substantial evidence 
that plaintiffs incurred expenses, above the historical baseline, of $20,009.19 for 
employee recruitment to mitigate damages.2 
What is disputed is the Court of Appeal’s legal conclusion that “an 
employer may recover for interference with the employment contracts of its at-will 
employees by a third party when the third party does not show that its conduct in 
hiring the employees was justifiable or legitimate.”  Relying primarily on GAB 
Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 
Cal.App.4th 409 (GAB), defendants argue California law does not and should not 
recognize a cause of action in favor of an employer against another employer for 
interference with contractual relations by virtue of an offer of employment to an 
at-will employee. 
We start by observing that, in California, the law is settled that “a stranger 
to a contract may be liable in tort for intentionally interfering with the 
performance of the contract.”  (Pacific Gas & Electric Co. v. Bear Stearns & Co. 
(1990) 50 Cal.3d 1118, 1126, and cases cited.)  To prevail on a cause of action for 
intentional interference with contractual relations, a plaintiff must plead and prove 
(1) the existence of a valid contract between the plaintiff and a third party; (2) the 
                                             
 
2  
Defendants did not petition the Court of Appeal for a rehearing regarding 
these factual matters, nor did they petition this court for their review.  We 
therefore shall disregard any attempts defendants make in their briefing to expand 
the scope of review to include such matters. 
 
7 
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.  
(Ibid.)  To establish the claim, the plaintiff need not prove that a defendant acted 
with the primary purpose of disrupting the contract, but must show the defendant’s 
knowledge that the interference was certain or substantially certain to occur as a 
result of his or her action.  (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 
19 Cal.4th 26, 56.) 
May the tort of interference with contractual relations be predicated upon 
interference with an at-will contract?  Historically, the answer is yes.  A third 
party’s “interference with an at-will contract is actionable interference with the 
contractual relationship” because the contractual relationship is at the will of the 
parties, not at the will of outsiders.  (Pacific Gas & Electric Co. v. Bear Stearns & 
Co., supra, 50 Cal.3d at p. 1127; Speegle v. Board of Fire Underwriters (1946) 29 
Cal.2d 34, 39.) 
More specifically, may such tort be based on interference with an at-will 
employment relationship?  Again, historically, the answer is yes.  (E.g., Savage v. 
Pacific Gas & Electric Co. (1993) 21 Cal.App.4th 434, 448 [tort of interference 
with contractual relations may be based on an at-will employment contract]; 
Kozlowsky v. Westminster Nat. Bank (1970) 6 Cal.App.3d 593, 598 [“the fact that 
the Bank was privileged to discharge plaintiff at any time does not necessarily 
privilege a third party unjustifiably to induce the termination”].) 
As reflected in our decisional and statutory law, however, 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.”  (Continental Car-Na-Var Corp. v. 
 
8 
Moseley (1944) 24 Cal.2d 104, 110; Bus. & Prof. Code, § 16600 [generally 
recognizing as void any agreement “by which anyone is restrained from engaging 
in a lawful profession, trade, or business of any kind”].)  Consistent with this 
policy favoring competition, decisions involving parties in competition readily 
indicate that certain competitive conduct is nonactionable when it interferes with 
the at-will contract relations of another.  Buxbom v. Smith (1944) 23 Cal.2d 535 
(Buxbom), for example, explained that “where the means of interference involve 
no more than recognized trade practices such as advertising or price-cutting, the 
plaintiff’s loss as a result of the competitive strife is deemed damnum absque 
injuria.”  (Id. at p. 546; see San Francisco Design Center Associates v. Portman 
Companies (1995) 41 Cal.App.4th 29, 41 [the privilege of competition is 
inapplicable to interference with an existing contract unless the contract is 
terminable at will].) 
More to the point here, Buxbom observed that “it is not ordinarily a tort to 
hire the employees of another for use in the hirer’s business.”  (Buxbom, supra, 23 
Cal.2d at p. 547.)  As Buxbom explained, however, this general rule is subject to 
one significant limitation:  “This immunity against liability is not retained . . . if 
unfair methods are used in interfering in such advantageous relations.”  (Ibid.)  In 
Buxbom, the record established that the defendant gained an unfair advantage over 
the plaintiff through “deceptive dealings” (ibid.) and “false promises” made in 
connection with a distribution contract between the parties that the defendant had 
no intention of performing (id. at p. 548).3  He “deliberately induced the plaintiff 
                                             
 
3  
There were two defendants in Buxbom, defendant Smith and defendant 
Wright.  Buxbom sustained the judgment against Smith, who was a party to the 
distribution contract at issue, but reversed the judgment against Wright, finding 
that Wright acted merely as Smith’s agent.  (See Buxbom, supra, 23 Cal.2d at p. 
540.)  Although the Buxbom opinion refers sometimes to both defendants, and at 
 
(footnote continued on next page) 
 
9 
to build up his distributing organization” to perform the contract and in a matter of 
weeks became the plaintiff’s sole customer.  (Id. at p. 547.)  Once the defendant 
acquired this strategic position, he breached the distribution contract “to cut off the 
work required to sustain plaintiff’s organization” and “to prevent plaintiff from 
competing effectively for the retention of [his] employees.”  (Id. at p. 548.) 
Buxbom first indicated that the defendant’s breach of the distribution 
contract was “a wrong and in itself actionable,” but then proceeded to find the 
breach also constituted “an unfair method of interference with advantageous 
relations.”  (Buxbom, supra, 23 Cal.2d at p. 548.)  Its reasoning was this:  
“Although defendant’s conduct may not have been tortious if he had merely 
broken the contract and subsequently decided to hire plaintiff’s employees,” he 
was “guilty of a tortious interference in the relationship between the plaintiff and 
his employees” because he “intentionally utilized” the breach of the distribution 
contract “as the means of depriving plaintiff of his employees.”  (Ibid.) 
Subsequent to Buxbom, the court in Diodes, Inc. v. Franzen (1968) 260 
Cal.App.2d 244 (Diodes) reiterated the so-called privilege of competition, as 
applied in the context of employment relations, as follows:  “Even though the 
relationship between an employer and his employee is an advantageous one, no 
actionable wrong is committed by a competitor who solicits his competitor’s 
employees or who hires away one or more of his competitor’s employees who are 
not under contract, so long as the inducement to leave is not accompanied by 
unlawful action.”  (Id. at p. 255.)  “However, if either the defecting employee or 
                                                                                                                                                              
 
(footnote continued from previous page) 
 
other times only to Smith, in describing the same wrongful conduct, our opinion 
simply will refer to “defendant” in the singular for the sake of consistency. 
 
10 
the competitor uses unfair or deceptive means to effectuate new employment, or 
either of them is guilty of some concomitant, unconscionable conduct, the injured 
former employer has a cause of action to recover for the detriment he has thereby 
suffered.”  (Ibid.; see also Metro Traffic Control, Inc. v. Shadow Traffic Network 
(1994) 22 Cal.App.4th 853, 860 (Metro) [“[a]s a competitor of Metro, absent a 
showing of unlawful purpose or means, Shadow is privileged and not liable for 
inducing Metro’s employees to leave and move to Shadow”].) 
Strictly speaking, the foregoing authorities did not address the matter of 
competition in suits involving causes of action for intentional interference with at-
will employment relations; rather, those cases involved breach of fiduciary duty 
claims (Diodes), claims for injunctive relief based on contractual noncompete 
clauses and trade secrets allegations (Metro), or claims for damages sustained in 
conjunction with a breach of contract (Buxbom).4 
Nonetheless, the same considerations support similar limitations for actions 
alleging interference with an at-will employment relation.  Where 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 free to 
leave.  As Judge Learned Hand observed long ago, if the law were to the contrary, 
the result “would be intolerable, both to such employers as could use the 
employe[e] more effectively and to such employe[e]s as might receive added pay.  
                                             
 
4  
Although the plaintiff in Buxbom was awarded damages of $4,000 for the 
loss of his trained organization, supervisors, goodwill, and general damages to his 
business, the decision observed that such items could not be a proper element of 
damages for the defendants’ breach of the distribution contract at issue.  (Buxbom, 
supra, 23 Cal.2d at pp. 540-541.)  Nonetheless, Buxbom affirmed the damages 
award because the plaintiff’s complaint sufficiently alleged “loss occasioned by 
the [defendants’] tortious acts” and the relief awarded was “commensurate with 
the injuries shown to have been sustained.”  (Id. at p. 543.) 
 
11 
It would put an end to any kind of competition.”  (Triangle Film Corp. v. Artcraft 
Pictures Corp. (2d Cir. 1918) 250 F. 981, 982.)  Or as Diodes put it:  “The 
interests of the employee in his own mobility and betterment are deemed 
paramount to the competitive business interests of the employers, where neither 
the employee nor his new employer has committed any illegal act accompanying 
the employment change.”  (Diodes, supra, 260 Cal.App.2d at p. 255.) 
Moreover, the economic relationship between parties to contracts that are 
terminable at will is distinguishable from the relationship between parties to other 
legally binding contracts.  We have explained the policy generally protecting 
contracts this way:  “The 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, however, should stand on a different legal 
footing as far as the potential for tort liability is reckoned.”  (Della Penna v. 
Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392.) 
But as the Restatement Second of Torts explains, if a party to a contract 
with the plaintiff is free to terminate the contractual relation when he chooses, 
“there is still a subsisting contract relation; but any interference with it 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 
 
12 
persuasion or other suitable means, all without liability.”  (Rest.2d Torts, § 768, 
com. i.)5  Under this analysis, an interference with an at-will contract properly is 
viewed as an interference with a prospective economic advantage, a tort that 
similarly compensates for the loss of an advantageous economic relationship but 
does not require the existence of a legally binding contract. 
We observe that in California, both of these torts protect the public interest 
in stable economic relationships and both share the same intent requirement.  
(Korea Supply, supra, 29 Cal.4th at p. 1157 [defendant must know that 
interference was certain or substantially certain to occur as a result of its action].)  
But while many of the elements of the two torts are similar,6 a plaintiff seeking to 
recover for interference with prospective economic advantage must also plead and 
prove that the defendant engaged in an independently wrongful act in disrupting 
the relationship.  (Korea Supply, supra, 29 Cal.4th at p. 1158.)  In this regard, “an 
act is independently wrongful if it is unlawful, that is, if it is proscribed by some 
                                             
 
5  
We have in the past acknowledged the Restatement’s view and observed 
that certain judicial and other authorities also have treated claims of interference 
with contracts terminable at will (and with voidable contracts) as coming within 
the cause of action for interference with prospective advantage.  (Pacific Gas & 
Electric Co. v. Bear Stearns & Co., supra, 50 Cal.3d at p. 1128, fn. 4.)  Although 
we suggested it may be preferable not to distinguish the two as separate torts, we 
left the matter open.  (Ibid.) 
 
6  
To prevail on a cause of action for intentional interference with prospective 
economic advantage in California, a plaintiff must plead and prove (1) an 
economic relationship between the plaintiff and some third party, with the 
probability of future economic benefit to the plaintiff; (2) the defendant’s 
knowledge of the relationship; (3) the defendant’s intentional acts designed to 
disrupt the relationship; (4) actual disruption of the relationship; and (5) economic 
harm to the plaintiff proximately caused by the defendant’s acts.  (Youst v. Longo 
(1987) 43 Cal.3d 64, 71, fn. 6.) 
 
13 
constitutional, statutory, regulatory, common law, or other determinable legal 
standard.” (Ibid., fn. omitted.) 
Consistent with the decisions recognizing that an intentional interference 
with an at-will contract may be actionable, but mindful that an interference as such 
is primarily an interference with the future relation between the contracting 
parties, we hold that a plaintiff may recover damages for intentional interference 
with an at-will employment relation under the same California standard applicable 
to claims for intentional interference with prospective economic advantage.  That 
is, to recover for a defendant’s interference with an at-will employment relation, a 
plaintiff must plead and prove that the defendant engaged in an independently 
wrongful act—i.e., an act “proscribed by some constitutional, statutory, 
regulatory, common law, or other determinable legal standard” (Korea Supply, 
supra, 29 Cal.4th at p. 1159)—that induced an at-will employee to leave the 
plaintiff.7  Under this standard, a defendant is not subject to liability for intentional 
interference if the interference consists merely of extending a job offer that 
induces an employee to terminate his or her at-will employment. 
We now turn to defendants’ contention, supported by GAB, supra, 83 
Cal.App.4th 409, that an employer should not, as a matter of law, be permitted to 
maintain a cause of action against another employer for intentional interference 
with an at-will employment contract.  In GAB, the plaintiff’s regional vice-
president obtained an employment offer from a competitor.  (83 Cal.App.4th at pp. 
413-414.)  Before leaving the plaintiff, he successfully recruited several of the 
                                             
 
7  
Because the wrongful conduct in this case pertains only to the termination 
of at-will contracts, we need not and do not express an opinion whether an 
independent wrongfulness requirement would be appropriate for cases in which a 
defendant allegedly induces the breach of an otherwise enforceable term of an at-
will contract. 
 
14 
plaintiff’s employees to join the competitor with him.  (Id. at pp. 414-415.)  At 
trial, a jury rendered verdicts in favor of the competitor and the plaintiff’s former 
regional vice-president on the plaintiff’s claims for breach of fiduciary duty, unfair 
competition, misappropriation of trade secrets, and interference with contract. 
Finding that the trial court erred prejudicially in refusing to instruct the jury 
that the regional vice-president was a fiduciary of the plaintiff as a matter of law, 
GAB reversed the judgment with respect to both the breach of fiduciary duty and 
unfair competition causes of action.  But GAB further held that the plaintiff could 
not, as a matter of law, maintain a cause of action for interference with its at-will 
employment contracts, even though breaches of fiduciary duty and unfair 
competition may have occurred.  Although previous decisions had recognized 
tortious interference claims brought by employees to redress interference with their 
at-will employment relationships, GAB found significant the apparent lack of case 
law expressly authorizing employers to assert such claims.  (GAB, supra, 83 
Cal.App.4th at p. 427; but see Buxbom, supra, 23 Cal.2d 535.)  GAB concluded 
that to “expand” the tort to include employer claims would “invite innumerable 
lawsuits,” undermine California’s strong public policy supporting the mobility and 
betterment of employees, and chill employment opportunities.  (83 Cal.App.4th at 
pp. 427-428.)  Although GAB professed its reluctance “to condone unfair or 
unlawful conduct among employers competing for talented employees,” it 
believed the “tort of unfair competition” could adequately address that problem.8  
(GAB, supra, at p. 428.) 
                                             
 
8  
It may be inferred from the facts of GAB and the authority to which GAB 
cites (Bancroft-Whitney Co. v. Glen (1966) 64 Cal.2d 327) that the “tort of unfair 
competition,” so indicated, refers to a theory of liability premised upon an 
employee’s breach of fiduciary duty to the plaintiff.  (GAB, supra, 83 Cal.App.4th 
at p. 425; Bancroft-Whitney Co. v. Glen, supra, 64 Cal.2d at pp. 352-353.) 
 
15 
We are not convinced.  First, it is firmly established in California that 
intentionally interfering with an at-will contractual relation is actionable in tort, 
and we perceive no legal, logical, or policy basis for restricting the availability of 
this tort to employees.  Significantly, neither GAB nor defendants here point to any 
empirical or evidentiary support for the conclusion that employer claims requiring 
a showing of unlawful conduct would prompt innumerable lawsuits and chill 
employment opportunities. 
If anything, GAB’s assertion that another tort presently addresses the 
problem of unlawful conduct among employers supports, rather than undermines, 
the idea that employers should be able to invoke the interference tort.  The fact 
that such interference may already be actionable reinforces the point that 
employers deserve protection from other employers who engage in such wrongful 
conduct.  Moreover, there is no indication that current litigation over such matters 
is rampant or has had the chilling effect GAB describes.  Hence, such concerns 
appear unfounded and speculative at best. 
Second, as discussed, case law in analogous contexts shields those 
employers who hire a competitor’s at-will employees without engaging in 
unlawful conduct.  (E.g., Metro, supra, 22 Cal.App.4th 853; Diodes, supra, 260 
Cal.App.2d 244; see Buxbom, supra, 23 Cal.2d 535.)  By recognizing similar 
restrictions in interference actions, we respect both the right of at-will employees 
to pursue opportunities for economic betterment and the right of employers to 
compete for talented workers, and in doing so strike the proper balance between 
society’s interest in fostering robust competition in the job market and its interest 
in protecting against unlawful methods of competition. 
Accordingly, we reject GAB’s categorical holding that an employer may 
never maintain a cause of action against a competitor for intentional interference 
with its at-will employment relations.  We disapprove GAB Business Services, Inc. 
 
16 
v. Lindsey & Newsom Claim Services, Inc., supra, 83 Cal.App.4th 409, to the 
extent it conflicts with the views expressed herein. 
We now address whether application of the principles we announce today 
calls for affirmance of the $20,009.19 award against defendants.  We conclude it 
does.  Here, it is undisputed that Hanlon and Greene engaged in unlawful and 
unethical conduct in mounting a campaign to deliberately disrupt plaintiffs’ 
business.  (See ante, at pp. 5-6 & fn. 2.)  Greene had been chair of plaintiffs’ 
litigation department, and Hanlon had been responsible for over 500 client 
matters, and both had assumed fiduciary duties to plaintiffs.  When the two 
abruptly resigned without notice, they left no status reports or list of pending 
matters or deadlines on which they were working.  Not only did they leave without 
providing such information, they acted unlawfully to delete and destroy plaintiffs’ 
computer files containing client documents and forms.  Additionally, Hanlon and 
Greene misappropriated confidential information (see post, pt. B), improperly 
solicited plaintiffs’ clients, and cultivated employee discontent.  While the 
computer files and the confidential information all appear to have pertained to 
plaintiffs’ clients, not their employees, and while Hanlon and Greene waited until 
after their resignations to offer jobs to plaintiffs’ employees, we cannot conclude 
the trial court abused its discretion in finding that defendants’ unlawful and 
unethical actions were designed in part to interfere with and disrupt plaintiffs’ 
relationships with their key at-will employees. 
In short, defendants did not simply extend job offers to plaintiffs’ at-will 
employees.  Rather, defendants purposely engaged in unlawful acts that crippled 
plaintiffs’ business operations and caused plaintiffs’ personnel to terminate their 
at-will employment contracts.  Accordingly, the Court of Appeal properly upheld 
the award of $20,009.19 for damages attributable to that wrongful conduct. 
 
17 
B.  Violations of the UTSA 
At trial, the court found that defendants violated the UTSA (Civ. Code, 
§ 3426 et seq.) by misappropriating plaintiffs’ confidential client list and, pursuant 
to Civil Code section 3426.3, subdivision (b), awarded plaintiffs $22,000 
(representing a royalty fee of $10 for each of the 2,200 clients on the list).  
Defendants argue the Court of Appeal erroneously affirmed the trial court on this 
matter. 
Under the UTSA, a client list qualifies as a “[t]rade secret” if it “[d]erives 
independent economic value, actual or potential, from not being generally known 
to the public or to other persons who can obtain economic value from its 
disclosure or use” and “[i]s the subject of efforts that are reasonable under the 
circumstances to maintain its secrecy.”  (Civ. Code, § 3426.1, subd. (d); see, e.g., 
Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1520-1522.)  A violation of the 
UTSA occurs when an individual misappropriates a former employer’s protected 
trade secret client list, for example, by using the list to solicit clients (American 
Credit Indemnity Co. v. Sacks (1989) 213 Cal.App.3d 622, 632-633 (American 
Credit)) or to otherwise attain an unfair competitive advantage (see Morlife, supra, 
56 Cal.App.4th at p. 1523). 
Here, defendants do not dispute that plaintiffs’ client list derived 
independent economic value from not being generally known or that plaintiffs 
took reasonable efforts to maintain the list’s secrecy under the circumstances.  
Instead, defendants claim the trial court erroneously found violations of the UTSA 
based on their mailing of a professional announcement to the clients appearing on 
that list. 
 
18 
Under defendants’ authorities, although an individual may violate the 
UTSA by using a former employer’s confidential client list to solicit clients, the 
UTSA does not forbid an individual from announcing a change of employment, 
even to clients on a protected trade secret client list.  (American Credit, supra, 213 
Cal.App.3d at pp. 634-636; see Hilb, Rogal & Hamilton Ins. Services v. Robb 
(1995) 33 Cal.App.4th 1812, 1821; accord, MAI Systems Corp. v. Peak Computer, 
Inc. (9th Cir. 1993) 991 F.2d 511, 521-522 [applying California law].)  As one 
decision explains, merely announcing a new business affiliation, without more, is 
not prohibited by the UTSA definition of misappropriation because such conduct 
is “basic to an individual’s right to engage in fair competition.”  (American Credit, 
supra, 213 Cal.App.3d at p. 636; cf. Aetna Bldg. Maintenance Co. v. West (1952) 
39 Cal.2d 198, 204 [stating the common law rule].) 
We have no quarrel with defendants’ authorities, but find they support the 
trial court’s determinations that defendants violated the UTSA by using the trade 
secret client data in an improper manner “to directly solicit clients” and for 
defendants’ “own pecuniary gain to the detriment and damage of” plaintiffs.  
There is substantial evidence in the record supporting these findings, including 
testimony that defendants used the data to solicit a number of plaintiffs’ clients 
directly by telephone.  Additionally, there is substantial evidence showing that 
defendants’ business announcement caused plaintiffs’ clients, many of whom 
lacked fluency in English, to believe Reeves had died or his firm had gone out of 
business, and that plaintiffs had to conduct their own mail campaign to reassure  
 
19 
clients their firm remained able to serve them.9  Because defendants’ conduct as 
such was not in furtherance of their right to engage in fair competition, the 
authorities they cite do not support a different result. 
DISPOSITION 
The judgment of the Court of Appeal is affirmed. 
 
 
 
 
 
 
BAXTER, J. 
WE CONCUR: 
 
GEORGE, C.J. 
KENNARD, J. 
WERDEGAR, J. 
CHIN, J. 
BROWN, J. 
MORENO, J. 
 
                                             
 
9  
Prior to defendants’ departure, plaintiffs’ firm went by the name of “Reeves 
and Hanlon, Professional Law Corporation.”  The business announcement 
defendants mailed out informed plaintiffs’ clients of the formation of “Hanlon & 
Greene, A Professional Corporation,” but made no mention of Robert Reeves’s 
continuing practice. 
 
In recognition of the principle that the professional obligation of attorneys 
to their clients requires attorneys to provide for an orderly transition in the event of 
an employment change, Formal Opinion No. 1985-86 of the State Bar Standing 
Committee on Professional Responsibility and Conduct provides that departing 
attorneys should cooperate with their former employers to arrange for the issuance 
of a joint notice to clients.  Here, defendants prepared and distributed their 
business announcement without seeking plaintiffs’ input or approval. 
 
20 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Reeves v. Hanlon 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 106 Cal.App.4th 433 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S114811 
Date Filed: August 12, 2004 
__________________________________________________________________________________ 
 
Court: Superior 
County: Los Angeles 
Judge: Jan A. Pluim 
 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Dwyer, Daly, Brotzen & Bruno, Toni Rae Bruno, Marlin D. Wall and Ilan A. Charnelle for Defendants and 
Appellants. 
 
Deborah J. La Fetra and Timothy Sandefur for Pacific Legal Foundation as Amicus Curiae on behalf of 
Defendants and Appellants. 
 
 
 
 
 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Ballard, Rosenberg, Golper & Savitt, John J. Manier, Linda C. Miller Savitt; Arter & Hadden, David 
Gurnick, Sue Bendavid-Arbiv; Robert L. Reeves & Associates, Robert L. Reeves, Robert J. DuPont and 
Richard M. Wilner for Plaintiffs and Respondents. 
 
 
 
 
 
 
 
21 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Toni Rae Bruno 
Dwyer, Daly, Brotzen & Bruno 
550 South Hope Street, Suite 1900 
Los Angeles, CA  90071-2632 
(231) 627-9300 
 
John J. Manier 
Ballard, Rosenberg, Golper & Savitt 
10 Universal City Plaza, Sixteenth Floor 
Universal City, CA  91608-1097 
(818) 508-3700