29 Cal. 4th 1134, 63 P.3d 937, 131 Cal. Rptr. 2d 29 (2003)
In the mid-1990s the Republic of Korea solicited bids for synthetic aperture radar systems for its military.1
Plaintiff Korea Supply Company is a corporation engaged in the business of representing manufacturers of military equipment in transactions with the Republic of Korea.2 KSC represented MacDonald, Dettwiler, and Associates Ltd., a Canadian company, in its bid to obtain the contract award.3 KSC expected a commission of 15 percent of the contract price, or over $30 million, if MacDonald Dettwiler were awarded the contract.4
In June 1996 the Korean Ministry of Defense announced that Loral, an American competitor of MacDonald Dettwiler, was awarded the contract.5 This occurred despite the fact that MacDonald Dettwiler's bid was about $50 million lower and that the project management office of the Korean Defense Intelligence Command had determined that MacDonald Dettwiler's equipment was far superior to Loral's system.6
Beginning in October 1998 major news publications in the Republic of Korea revealed that an internal investigation had established that the SAR contract was awarded to Loral as a result of bribes and sexual favors.7 Loral's agent for the procurement of the SAR contract, defendant Linda Kim, had bribed two Korean military officers.8 In addition, Ms. Kim had extended bribes and sexual favors to the Minister of National Defense, the ultimate decision maker with respect to the award of the SAR contract.9 Ms. Kim reportedly received approximately $10 million in commission from Loral, an amount that exceeded the maximum established by the Foreign Corrupt Practices Act.10
Several persons were imprisoned as a result of the internal investigation by the Republic of Korea, including high-ranking Korean military officers.11 Ms. Kim herself was indicted in absentia but avoided imprisonment because she resides in the United States.12
On May 5, 1999, KSC commenced the present action.13 The first amended complaint asserted three causes of action: conspiracy to interfere with prospective economic advantage, intentional interference with prospective economic advantage, and unfair competition pursuant to Business and Professions Code section 17200.14 For its unfair competition claim, KSC sought disgorgement to it of the profits realized by Lockheed Martin on the sale of the SAR to Korea.15 For the tort claims, KSC sought damages for the loss of its expected compensation from MacDonald Dettwiler.16
Lockheed Martin, joined by Ms. Kim, generally demurred to all counts.17 The trial court sustained the demurrer without leave to amend on September 7, 1999, and entered judgment dismissing the action.18 After the trial court subsequently denied KSC's motion for reconsideration, KSC filed its notice of appeal.19 The Court of Appeal reversed the trial court's judgment in full.20 Lockheed Martin sought review in this court of two bases of the Court of Appeal's decision, and the Supreme Court granted review.21
Whether disgorgement of profits allegedly obtained by means of an unfair business practice is an authorized remedy under the UCL where these profits are neither money taken from a plaintiff nor funds in which the plaintiff has an ownership interest?22
Under Business and Professions Code section 17203 the UCL authorizes courts to enjoin unfair competition.23 The court may make such orders or judgments as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition.24 The court may also make orders necessary to restore to any person in interest any money or property which may have been acquired by means of such unfair competition.25 Restitution is the only monetary remedy expressly authorized by section 17203.26 Nonrestitutionary disgorgement of profits is not available in an individual private action under the UCL.27
No. The statutory language limits monetary relief to restitution of money or property in which the plaintiff has an ownership interest.28 KSC never possessed the profits Lockheed Martin received from the Republic of Korea.29 KSC held only a contingent expectancy of a commission from MacDonald Dettwiler.30 The Court of Appeal's reliance on language from Kraus defining disgorgement was misplaced.31 That language merely distinguished the term from restitution and did not authorize nonrestitutionary disgorgement.32 Allowing such relief would permit plaintiffs to obtain tort damages while bypassing the elements of traditional tort claims.33 It would also expose defendants to duplicative liability without the protections of standing rules.34
The facts show that KSC's requested remedy is properly characterized as nonrestitutionary disgorgement.35 The funds cannot be traced to any property KSC surrendered.36 KSC's interest remained contingent on MacDonald Dettwiler winning the contract.37
Disgorgement of profits is not an authorized remedy under the UCL on these facts.38
Related opinions on this issue
Kennard concurred in the result on the UCL issue.39 She explained that the holding follows directly from this court's decision in Kraus v. Trinity Management Services, Inc.40 Kraus held that the Legislature has not expressly authorized monetary relief other than restitution in UCL actions.41 Although the Legislature authorized disgorgement into a fluid recovery fund in class actions, it has not done so for representative UCL actions.42
Kennard noted that the present case involves an individual entity rather than a representative action.43 Plaintiff here paid no money to the defendant successful bidder.44 Therefore restitution is unavailable.45
She agreed that the majority's conclusion logically follows from Kraus.46
Werdegar concurred under compulsion of Kraus v. Trinity Management Services, Inc., from which she had dissented.47 She agreed that nonrestitutionary disgorgement of profits is not an available remedy in an individual action under the unfair competition law.48 Business and Professions Code section 17200 et seq.
Werdegar joined the judgment on this issue solely because of the binding effect of the earlier precedent.49 She expressed no independent agreement with the reasoning beyond the compulsion of stare decisis.
Chin concurred in the conclusion that disgorgement of profits is not a proper remedy where an individual private plaintiff alleges a violation of California's unfair competition law.50 He agreed that the requested disgorgement would not be restitutionary in nature.51 Chin joined the majority's holding that the UCL does not authorize nonrestitutionary disgorgement in an individual private action.52
He noted that the statutory language and history limit monetary relief to restitution. Chin's separate opinion focused primarily on the second issue but expressly concurred on the UCL remedial question.
Whether, to state a claim for interference with prospective economic advantage, a plaintiff must allege that the defendant specifically intended to interfere with the plaintiff's prospective economic advantage?53
The tort of intentional interference with prospective economic advantage requires an economic relationship between the plaintiff and some third party with the probability of future economic benefit to the plaintiff.54 The defendant must have knowledge of the relationship.55 The defendant must engage in intentional acts designed to disrupt the relationship.56 The relationship must be actually disrupted.57 Economic harm to the plaintiff must be proximately caused by the acts of the defendant.58 The intent element is satisfied if the defendant knew that interference was certain or substantially certain to occur as a result of its action.59 Specific intent or purpose to interfere with the plaintiff's expectancy is not required.60
No. The elements formulated in Buckaloo remain applicable after Della Penna, with the addition of the independent wrongfulness requirement. The Restatement Second of Torts section 766B comment d defines intent to include both desire to bring about the interference and knowledge that interference is certain or substantially certain to occur.61 KSC alleged that Lockheed Martin acted with full knowledge of the commission relationship between KSC and MacDonald Dettwiler.62 KSC further alleged that Lockheed Martin knew its interference with the award of the contract would cause KSC severe loss.63 The complaint alleged that Lockheed Martin bribed and offered sexual favors to Korean officials in violation of the Foreign Corrupt Practices Act.64 This satisfied the independent wrongfulness element.65
The substantial-certainty standard, together with the five elements of the tort, sufficiently limits the class of potential plaintiffs.66 It prevents recovery for unforeseeable harm.67
A plaintiff need not plead specific intent to interfere with its own prospective economic advantage.68
Related opinions on this issue
Kennard joined the majority opinion without separate comment on the interference issue.69 She concurred in the judgment that a plaintiff need not plead that the defendant acted with the specific intent to interfere with the plaintiff's business expectancy.70 Kennard agreed that the knowledge that interference was certain or substantially certain to occur satisfies the intent requirement.71
She joined the reasoning leading to that conclusion without additional elaboration in her separate writing.72
Werdegar agreed with the majority that a plaintiff need not plead specific intent to interfere with the plaintiff's business expectancy.73 She joined the reasoning leading to that conclusion.74 Werdegar accepted the Restatement Second of Torts formulation that intent is satisfied when the defendant knows interference is certain or substantially certain to occur.75
She concurred in the holding that the elements from Buckaloo remain applicable after Della Penna with the addition of the independent wrongfulness requirement.76 Werdegar joined the affirmance on the interference claim.77
Joined by Justice Brown
Chin dissented on the interference issue.78 He concluded that KSC's alleged injury was only an indirect and remote consequence of Lockheed Martin's acts directed at the Republic of Korea.79 Recovery should be limited to plaintiffs who can show the defendant specifically intended to interfere with the plaintiff's own expectancy.80
Chin argued that the majority's substantial-certainty standard fails to provide a principled limit on liability.81 He contended that KSC's claim should have been analyzed as one for interference with contract rather than prospective advantage because KSC alleged an existing commission contract with MacDonald Dettwiler.82 Chin maintained that the remoteness of KSC's injury from Lockheed Martin's conduct toward the Republic of Korea precluded recovery.83
He would have affirmed the trial court's dismissal of the tort claim.84