Hearing Demurrer

Cal. Super. - 6th Dist.August 30, 2016

SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER ~ Wellex Corporation vs Nvidia Corporation et al Hearing Start Time: 9:00 AM 16CV299320 Hearing Type: Hearing: Demurrer Date of Hearing: 09/14/2017 Comments: 10 Heard By: Elfving, William J Location: Department 3 Courtroom Reporter: - No Record Transcribed Courtroom Clerk: Shantel Hernandez Court Interpreter: Court Investigator: Parties Present: Future Hearings: Exhibits: - Tentative Ruling Not Contested. Adopted. See Below: Case Name: Wellex Corporation v. NVIDIA Corporation, et al. Case No.: 16-CV-299320 Currently before the Court are the following matters: (1) the demurrer by defendant NVIDIA Corporation ( NVIDIA) to the second amended complaint ( SAC ) of plaintiff Wellex Corporation ( Plaintiff); and (2) the demurrer by defendants Fabrinet USA, Inc. and Fabrinet West, Inc. (collectively, Fabrinet ) to the SAC of Plaintiff Factual and Procedural Background This action, initiated by Plaintiff against NVIDIA and Fabrinet, arises from a failed business relationship. Plaintiff is in the business of electronic manufacturing services. (SAC, 8.) Part of its business includes new product introduction ( NPI ), whereby Plaintiff is provided with designs of printed circuit boards from its customers and manufactures prototype boards for the customers further analysis and testing. (Ibid.) To place electronic components onto printed circuit boards, Plaintiff uses surface mount technology ( SMT ) a process utilizing robotic machines. (Ibid.) Several SMT machines with different functions are used to form a single production line. (Ibid.) Plaintiff has been one of NVIDIA s NPI vendors since 2008. (SAC, 9.) NVIDIA is Plaintiff s primary customer, generating approximately $3,000,000 of gross revenue and $600,000.00 of profit yearly. (Ibid.) Plaintiff was primarily working on consignment NPI production, whereby NVIDIA would supply all electronic components for its prototype builds. (Ibid.) For its other customers, Plaintiff performs turnkey production, meaning that Plaintiff supplies the necessary components. (Ibid.) Primed: 9/14/2017 09/14/2017 Hearing: Demurrer - 16CV299320 Page 1 of 10 ~ SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER As condition of performing NPI services, NVIDIA required Plaintiff to reserve two SMT production lines ( NVIDIA Lines) at all times for their needs, which NVIDIA s engineering team must certify. (SAC, 10.) NVIDIA also required Plaintiff to disclose the identities and expertise of all employees working on the NVIDIA Lines. (|bid.) Plaintiff agreed to NVIDIA s conditions in order to secure NVIDIA s business. (|bid.) From 2011 to 2014, NVIDIA demanded that Plaintiff upgrade the NVIDIA Lines by purchasing new SMT machines with parts on part capability ( P0P) and increased precision. (SAC, 11.) NVIDIA s representatives orally stated to Plaintiff s representatives on numerous occasions that if [Plaintiff] upgraded the [NVIDIA] Lines as per [NVIDIA s] request, it would receive continuing NPI business from [NVIDIA] to make this substantial investment worthwhile ( Upgrade Offers(s) ). (Id. at 11 and 17.) Plaintiff understood the Upgrade Offers to mean that the revenue generated by [NVIDIA s] continuing NPI business would allow [it] to recoup its costs of upgrading the [NVIDIA] Lines, plus a reasonable profit margin. (Id. at 11.) Plaintiff allegedly accepted the Upgrade Offer from NVIDIA by purchasing a new SMT machine for approximately $230,000. (SAC, 12.) NVIDIA and Plaintiff s engineering teams worked closely together to set up the machine to NVIDIA s specifications. (|bid.) Although the new SMT machine was tailored to NVIDIA s specifications, NVIDIA did not commission any NPI work from Plaintiff involving PoP capability. (Id. at 13.) Plaintiff alleges that the utilization of the NVIDIA Line with the new SMT machine was below 35 percent. (|bid.) In 2013, in further acceptance of the Upgrade Offer, Plaintiff purchased another SMT machine for over $690,000 to complete the NVIDIA Line with P0P capability. (SAC, 14.) However, later in 2013, Plaintiffs representatives were informed by Talbert Aquilar ( Aquilar ) from NVIDIA that the NVIDIA Line with P0P capability was insufficient for NVIDIA s needs. (|bid.) The Upgrade Offer was again orally made by [Aquilar] for additional machine upgrades, specifically PoP capable high-end Fuji SMT machines (Subsequent Upgrade Offer(s) ). (|bid.) Plaintiff accepted NVIDIA s Subsequent Upgrade Offer by purchasing two Fuji PoP machines in 2014, for over $700,000. (Id. at 15.) Plaintiff alleges that NVIDIA s statements to it (i.e., the Upgrade Offer and the Subsequent Upgrade Offer) amounted to a clear promise that if [Plaintiff] upgraded the [NVIDIA] Lines such that it would become PoP- capable and PoP-qualified, [NVIDIA] would take [Plaintiff] to [NVIDIA s] next level by continuing to provide, and likely increase, the NPI projects to [Plaintiff] so that [its] upgrade costs and labor would be successful and profitable. (SAC, 16.) Plaintiff further alleges that NVIDIA failed to provide the work promised and terminated its NPI services. (Id. at 18.) Specifically, NVIDIA orally informed Plaintiff in August 2015, that it was terminating its business relationship with Plaintiff due to cost concerns. (Id. at 19.) Plaintiff would not have invested over $1,600,000 plus additional costs for labor to upgrade the NVIDIA Lines if it understood the parties relationship was merely at will and terminable at any time by [NVIDIA]. (Id. at 18.) Plaintiff was also forced to lay of approximately one-third of its workforce, incurring additional sums for employee severance and other incidental expenses. (Id. at 19.) In August 2015, NVIDIA moved all of its NPI services to Fabrinet. (SAC, 20.) Fabrinet USA, Inc. set up a new company Fabrinet West, Inc. on January 16, 2015, for the primary purpose ofdiverting NVIDIA s NPI business away from Plaintiff. (|bid.) NVIDIA allegedly disclosed the identity of Plaintiff s employees working on the NVIDIA Lines, and their areas of expertise, to Fabrinet, which was short on technical knowledge and Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 PageZ of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER personnel. (Id. at 20-21.) NVIDIA disclosed this confidential information to facilitate the recruitment of Plaintiffs employees and the smooth transition of work flow to [Fabrinet] from [Plaintiff]. (Id. at 21.) To date, Fabrinet has recruited 12 former employees of Plaintiff to work at its Santa Clara facility. (Ibid.) Based on the foregoing, Plaintiff filed the operative SAC against NVIDIA and Fabrinet, alleging causes of action for (1) breach of express contract (against NVIDIA); (2) breach of implied-in-fact contract (against NVIDIA); (3) breach of implied covenant of good faith and fair dealing (against NVIDIA); (4) common count goods and services rendered (against NVIDIA); (5) promissory estoppel (against NVIDIA); (6) promissory fraud (against NVIDIA); (7) intentional interference with contractual relations/inducing breach of contract (against Fabrinet); (8) intentional interference with prospective economic relations (against Fabrinet); (9) negligent interference with prospective economic relations (against Fabrinet); and (10) unfair business practices in violation of Business and Professions Code section 17200, et seq. ( UCL) (against Fabrinet). On August 14, 2017, NVIDIA and Fabrinet filed their respective demurrers to the SAC. Plaintiff filed papers in opposition to the demurrers on August 31, 2017. On September 7, 2017, NVIDIA and Fabrinet filed reply papers in support of their respective demurrers. Discussion |. Legal Standard The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code Civ. Proc., 430.30, subd. (a).) It is not the ordinary function of a demurrer to test the truth of the [] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant s conduct. [ ] Thus, [] the facts alleged in the pleading are deemed to be true, however improbable they may be. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while [a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact. (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.) ||. Demurrer by NVIDIA NVIDIA demurs to the first through six causes of action of the SAC on the ground of failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., 430.10, subd. (e).) A. First Cause of Action In the first cause of action for breach of express contract, Plaintiff alleges that it and NVIDIA entered into an express contract whereby NVIDIA expressly offered to [Plaintiff] on numerous occasions that if it upgraded Primed: 9/14/2017 09/14/2017 Hearing: Demurrer - 16CV299320 Page?! of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER the [NVIDIA] Lines as per [its] specifications, [Plaintiff] would receive continuing NPI business from [NVIDIA] to make its substantial investment worthwhile. (SAC, 24.) NVIDIA allegedly breached the parties contract by: (1) refusing to work with Plaintiff to complete the Fuji NVIDIA Line; and (2) ultimately terminating Plaintiff as its NPI vendor and giving its business to Fabrinet. (Id. at 27.) As NVIDIA persuasively argues, its alleged oral promise is too vague and uncertain to impose contractual liability. Under California law, a contract will be enforced if it is sufficiently definite (and this is a question of law) for the court to ascertain the parties obligations and to determine whether those obligations have been performed or breached. [Citation.] To be enforceable, a promise must be definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages. (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 209.) Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable. [Citations.] The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. [Citations.] But [i]f a supposed contract does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, there is no contract. [Citation.] (Ibid.) According to Plaintiff, the allege contract consists of NVIDIA s express offer to [Plaintiff] on numerous occasions that if it upgraded the [NVIDIA] Lines as per [NVIDIA s] specifications, [Plaintiff] would receive continuing NPI business from [NVIDIA] to make its substantial investment worthwhile. (SAC, 24.) Plaintiff alleges that it accept these terms by upgrading its machines and continuing to collaborate with NVIDIA during the upgrade process. (Id. at 25.) As is readily apparent from the foregoing allegations, the conditions for performance of the alleged contract fatally uncertain. As NVIDIA points out: What does it mean to received continuing business to make an investment to upgrade one s own assets worthwhile ? How much continuing business was [it] required to provide to [Plaintiff] to make such an investment worthwhile ? Is there a specific dollar amount of continuing business that [it] was required to provide? If so, what was that amount or the method for determining that amount? If not, for how long was [it] required to provide continuing business to [Plaintiff]? Was [it] required to provide [Plaintiff] a fixed or minimum amount of business per day, week, month or year? Would the increase in value and capability of [Plaintiff s] production assets which [Plaintiff] retained and continues to benefit from be taken into account in determining whether the cost of the upgrades was worthwhile ? Would the revenue generated from other customers using the upgraded production lines be taken into account? (Mem. Ps. & As., p. 7:4-17.) These questions, and many others, remain unanswered such that the Court cannot determine the scope of the duty or the limits of performance. (See Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 770 [To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages. ].) The vague and uncertain nature of the obligation asserted provides no rational method for determining breach or computing damages. Furthermore, Plaintiff s unexpressed subjective interpretation of NVIDIA s alleged promise does not change this analysis. California recognizes the objective theory of contracts [citation], under which [i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation [citation]. The parties undisclosed intent or understanding is irrelevant to contract interpretation. [Citation.] (Founding Members ofthe Newport Beach Country Club v. Newport Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 Page4 of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955 56.) For these reasons, NVIDIA s demurrer to the first cause of action is SUSTAINED, with 10 days leave to amend. B. Second Cause of Action In the second cause of action for breach of implied-in-fact contract, Plaintiff alleges that [b]y their actions, [it] and [NVIDIA] entered into a contract whereby [NVIDIA] would continue to supply [it] with NPI business as long as [it] upgraded its [NVIDIA] Lines according to [NVIDIA s] specifications. (SAC, 30.) Plaintiffallegedly performed its duties under the implied-in-fact contract by purchasing new SMT machines and upgrading the NVIDIA Lines to meet NVIDIA s specifications. (Id. at 32.) Finally, NVIDIA allegedly breached the implied-in-fact contract by: (1) refusing to work with Plaintiff to complete the Fuji NVIDIA Line; and (2) ultimately terminating Plaintiff as its NPI vendor and giving its business to Fabrinet. (Id. at 33.) A cause of action for breach of implied contract has the same elements as does a cause of action for breach of contract, except that the promise is not expressed in words but is implied from the promisor s conduct. (Yari v. Producers Guild of America, Inc. (2008) 161 Cal.App.4th 172, 182.) In addition, it is well settled that an action based on an implied-in-fact or quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter. (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 203 [ Here, the Insured has alleged the existence and validity ofan enforceable written contract between the parties in its first two causes of action. The Insured then realleges the existence of the written contract in its claim of a quasi-contract. This is internally inconsistent. The Insured must allege that the express contract is void or was rescinded in order to proceed with its quasi- contract claim. [Citation.] 1.) In its first cause of action, Plaintiff alleges the existence of an express written contract between it and NVIDIA regarding the continuing provision of NPI business by NVIDIA in exchange for Plaintiff upgrading its machines. (SAC, 24-27.) The second cause of action realleges and incorporates those allegations. (Id. at 29.) The allegations of an express contract are inconsistent with the allegations of an implied-in-fact contract. Moreover, the allegations regarding the implied-in-fact contract are not pled in the alternative. Consequently, as NVIDIA persuasively argues, the implied-in-fact contract cannot lie. For this reason, NVIDIA s demurrer to the second cause of action is SUSTAINED, with 10 days leave to amend. C. Third Cause of Action In the third cause of action for breach of the implied covenant of good faith and fair dealing, Plaintiff alleges that NVIDIA breached the implied covenant of good faith and fair dealing in the parties contract by misrepresenting the reason for the termination oftheir business relationship and disclosing the identities and expertise of its employees to Fabrinet. (SAC, 36-38.) As NVIDIA points out, Plaintiff has failed to sufficiently plead the existence of an enforceable contract in its first and second causes of action. Without a contractual underpinning, there is no independent claim for breach ofthe implied covenant. (Fireman s Fund Ins. Co. v. Maryland Casualty Co. (1994) 21 Cal.App.4th Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 Page 5 of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER 1586, 1599 citing Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1153 [implied covenant is auxiliary and supplementary to express contractual obligations; it has no existence separate from the contractual obligations].) Consequently, the third cause of action fails as well. Accordingly, NVIDIA s demurrer to the third cause of action is SUSTAINED, with 10 days leave to amend. D. Fourth Cause of Action The fourth cause of action alleges a common count for goods and services rendered. The claim is based on allegations that NVIDIA expressly requested by way of the Upgrade Offer and the Subsequent Upgrade Offer that Plaintiff perform services for its benefit (i.e., upgrade the NVIDIA Lines). (SAC, 40.) Plaintiffalleges that the services rendered by it were intended to and did benefit NVIDIA. (Id. at 41.) Plaintiff seeks to recover the reasonable value of its services, which includes at least $1,600,000 in upgrades performed at the behest of [NVIDIA]. (Id. at 42.) Quantum meruit permits the recovery of the reasonable value of services rendered. [Citation] To recover in quantum meruit, the plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant; further, the defendant must have retained [the] benefit with full appreciation of the facts.... [Citation.] (Pacific Bay Recovery, Inc. v. California Physicians' Services, Inc. (2017) 12 Cal.App.5th 200, 214 15.) Here, NVIDIA convincingly argues that the fourth cause of action fails because there are not facts alleged demonstrating that it retained the benefit of the services rendered. While Plaintiff alleges that it expended money to improve NVIDIA s Lines and its services benefited NVIDIA, it appears that Plaintiff still retained the benefit of the upgrades when NVIDIA terminated their business relationship (i.e., plaintiff kept the new SMT machines). Plaintiff does not plead any facts showing that NVIDIA has retained any benefit that it received as a result ofthe upgrades; in fact, Plaintiff pleads that NVIDIA is now paying even higher rates to Fabrinet. (SAC, 22.) Consequently, NVIDIA s demurrer to the fourth cause of action is SUSTAINED, with 10 days leave to amend. E. Fifth Cause of Action In the fifth cause of action for promissory estoppel, Plaintiff alleges that NVIDIA made a promise that it would continue its MPI business with [Plaintiff] [to make Plaintiffs investment worthwhile] if [Plaintiff] upgraded the [NVIDIA] Lines. (SAC, 11, 16-17, 24, 30, 44.) Plaintiffallegedly relied on NVIDIA s promise of continued business by investing over $1,600,000 to upgrade the NVIDIA Lines. (Id. at 45.) Finally, NVIDIA allegedly failed to perform as promised because it terminated the parties business relationship in August 2015 and moved its business to Fabrinet. (Id. at 46.) The elements of a promissory estoppel claim are (1) a promise clear and unambiguous in its terms; (2) Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 Page 6 of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER reliance by the party to whom the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance. (Granadino v. Wells Fargo Bank, NA (2015) 236 Cal.App.4th 411, 416.) For the reasons articulated above in connection with the first cause of action, NVIDIA s alleged promise to Plaintiff is not clear and unambiguous in its terms. Thus, Plaintiff fails to plead sufficient facts supporting the first element of its claim for promissory estoppel. Accordingly, NVIDIA s demurrer to the fifth cause of action is SUSTAINED, with 10 days leave to amend. F. Sixth Cause of Action In the sixth cause of action for promissory fraud, Plaintiff alleges that NVIDIA s representatives orally stated to [its] representatives on numerous occasions that if [it] upgraded the [NVIDIA] Lines as per [NVIDIA s] request, it would receive continuing NPI business from [NVIDIA] to make this substantial investment worthwhile. (SAC, 48.) In reliance on this promise, Plaintiff expended over $1,600,000 in upgrade costs, and it would not have made those upgrades absent NVIDIA s promise. (Id. at 50.) Plaintiffalso disclosed the names and expertise of its employees to NVIDIA in reliance on the alleged promise. (Id. at 55.) NVIDIA knew Plaintiff would rely on its promise and it had no intention of continuing its NPI business with Plaintiff at the time it made the alleged promise. (Id. at 51-54.) Promissory fraud occurs when a person makes a promise to perform without the intention to actually perform. (Lazar v. Super. Ct. (1996) 12 Cal. 4th 631, 638.) In an action for promissory fraud, the complaint must allege (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false. (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060.) Promises too vague to be enforced will not support a fraud claim any more than they will one in contract. (Rochlis v. Walt Disney Co. (1993) 19 Cal.App.4th 201, 216.) For the reasons previously stated in connection with the first cause of action, NVIDIA s alleged promise is too uncertain and vague to be enforced. Accordingly, NVIDIA s demurrer to the sixth cause of action is SUSTAINED, with 10 days leave to amend. III. Demurrer by Fabrinet Fabrinet demurs to the seventh through tenth causes of action of the SAC on the ground of failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., 430.10, subd. (e).) A. Seventh Cause of Action Primed: 9/14/2017 09/14/2017 Hearing: Demurrer - 16CV299320 Page7 of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER In the seventh cause of action for intentional interference with contractual relations, Plaintiff alleges that there was a valid and existing contract between it and NVIDIA for NPI services. (SAC, 59.) Fabrinet allegedly knew of that contract, intended to disrupt the performance of said contract, encouraged NVIDIA to breach its contract, and actively recruited Plaintiff s employees who were working on the contract. (Id. at 60-61.) Plaintiff also alleges that Fabrinet wrongfully obtained information about the identities of its employees working on the NVIDIA Lines, and their expertise. (Id. at 61.) These acts were allegedly designed to induce the breach or disruption of Plaintiff and NVIDIA s contract, and prevented Plaintiff from performing the same. (Ibid.) The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant s knowledge of this contract; (3) defendant s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption ofthe contractual relationship; and (5) resulting damage. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55 citing Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126; Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1239.) Fabrinet argues, amongst other things, that the seventh cause of action fails to state a claim because Plaintiff does not allege the existence of a valid contract between Plaintiff and NVIDIA. Specifically, Fabrinet contends that NVIDIA s alleged oral promise, which forms the basis of the alleged contract, is too vague and uncertain to impose contractual liability. Fabrinet s argument is well-taken for the reasons already articulated in connection with the first cause of action. Therefore, Fabrinet s demurrer to the seventh cause of action is SUSTAINED, with 10 days leave to amend. B. Eighth Cause of Action In the eighth cause of action for prospective economic advantage, Plaintiff alleges that there was an economic relationship between it and NVIDIA that would have resulted in it receiving an economic benefit. (SAC, 65.) Fabrinet knew of the relationship and actively recruited Plaintiff s employees with the intent to disrupt that relationship. (Id. at 66-67.) Fabrinet also formed Fabrinet West, Inc. primarily to induce a breach or disrupt the contract between Plaintiffand NVIDIA; solicited NVIDIA s NPI business; and caused NVIDIA to breach its contract with Plaintiff. (Id. at 67.) These acts were independently wrongful because they constitute violations of the UCL. (Id. at 68.) The elements for the tort of intentional interference with prospective economic advantage are usually stated as follows: (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) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.) Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 Page 8 of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Fabrinet initial argues that the eighth cause of action fails because Plaintiff fails to allege that it committed an independently unlawful act. With regard to the third element of the claim, the California Supreme Court in Della Penna v. Toyota Motor Sales, USA. (1995) 11 Cal 4th 376, 393 stated, a plaintiff seeking to recover from an alleged interference with prospective contractual or economic advantage must plead and prove as part of its case-in-chief that the defendant not only knowingly interfered with the plaintiff s expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of interference itself. (See also Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152 [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. In this regard, an 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. ]; see also Korea, supra, 29 Cal.4th at pp. 1158-59.) Fabrinet s argument is well-taken. First, Plaintiff fails to state a claim for intentional interference with contractual relations and, therefore, Plaintiff has not established that Fabrinet s interference with the alleged contract was independently wrongful. Second, Plaintiff does not plead any facts demonstrating that the manner in which Fabrinet received NVIDIA Line requirements and information about Plaintiff s employees was unlawful. Third, Fabrinet s solicitation of NVIDIA s business, in and of itself, is not unlawful conduct. (See Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1256 [California law has long recognized a 'competition privilege' which protects one from liability for inducing a third person not to enter into a prospective contractual relation with a business competitor. The privilege applies where ' (a) the relation [between the competitor and third person] concerns a matter involved in the competition between the actor and the competitor, and (b) the actor does not employ improper means, and (c) the actor does not intend thereby to create or continue an illegal restraint of competition, and (d) the actor's purpose is at least in part to advance his interest in his competition with the other. ....' [Citation.] In short, the competition privilege furthers free enterprise by protecting the right to compete fairly in the marketplace. One may compete for an advantageous economic relationship with a third party as long as one does not act improperly or illegally. ].) For these reasons, Fabrinet s demurrer to the eighth cause of action is SUSTAINED, with 10 days leave to amend. C. Ninth Cause of Action The ninth cause of action for negligent interference with prospective economic advantage is based on the same alleged conduct by Fabrinet that forms the basis of the eighth cause of action. (SAC, 72-76.) As Fabrinet persuasively argues, a cause of action for negligent interference with prospective economic relations requires an independent wrongful act. (See National Medical Transp. Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 440.) As articulated above, Plaintiff fails to plead facts demonstrating that Fabrinet s alleged conduct was independently wrongful. Therefore, Fabrinet s demurrer to the ninth cause of action is SUSTAINED, with 10 days leave to amend. D. Tenth Cause of Action Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 Page 9 of 10 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Like the ninth cause of action, the tenth cause of action for violation of the UCL is predicated on the same alleged conduct by Fabrinet that forms the basis of the eighth cause of action. (SAC, 79.) Thus, the ninth cause of action is incidental to and dependent upon the validity (or invalidity) of the preceding claims for relief. That is, the claim stands or falls depending on the fate of the antecedent substantive causes of action. (See Krantz v. BT Visual Images, L.L.C. (2001) 89 Cal.App.4th 164, 178.) Because the other claims alleged against Fabrinet do not survive demurrer, the UCL claim fails as well. Accordingly, Fabrinet s demurrer to the tenth cause of action is SUSTAINED, with 10 days leave to amend. Primed: 9/14/2017 09/14/2017 Hearing: Demuner - 16CV299320 Page 10 of 10