JOHN DELLA PENNA, Plaintiff and Appellant, v. TOYOTA MOTOR SALES, U.S.A., INC., Defendant and Respondent, 11 Cal. 4th 376

Opinion ARABIAN, J. We granted review to reexamine, in light of divergent rulings from the Court of Appeal and a doctrinal evolution among other state high courts, the elements of the tort variously known as interference with “prospective economic advantage,” “prospective contractual relations,” or “prospective economic relations,” and the allocation of the burdens of proof between the parties to such an action.

We conclude that those Court of Appeal opinions requiring proof of a so-called “wrongful act” as a component of the cause of action, and allocating the burden of proving it to the plaintiff, are the better reasoned decisions; we accordingly adopt that analysis as our own, disapproving language in prior opinions of this court to the contrary.

Such a requirement, incorporating the views of several other jurisdictions, much of the Restatement Second of Torts, the better reasoned decisions of the Court of Appeal, and the views of leading academic authorities, sensibly redresses the balance between providing a remedy for predatory economic behavior and keeping legitimate business competition outside litigative bounds.

We do not in this case, however, go beyond approving the requirement of a showing of wrongfulness as part of the plaintiff’s case; the case, if any, to be made for adopting refinements to that element of the tort—requiring the plaintiff to prove, for example, that the defendant’s conduct amounted to an independently tortious act, or was a species of anticompetitive behavior proscribed by positive law, or was motivated by unalloyed malice—can be considered on another day, and in another case.

In this case, after the trial court modified the standard jury instruction to require the plaintiff automobile dealer to show that defendant Toyota’s interference with his business relationships was “wrongful,” the jury returned a verdict for Toyota. The Court of Appeal reversed the ensuing judgment and ordered a new trial on the ground that plaintiff’s burden of proof did not encompass proof of a “wrongful” act and that the modified jury instruction was therefore erroneous.

Given our conclusion that the plaintiff’s burden does include proof that the defendant’s conduct was wrongful by some measure other than an interference with the plaintiff’s interest itself, we now reverse the Court of Appeal and direct that the judgment of the trial court be affirmed.

I John Della Penna, an automobile wholesaler doing business as Pacific Motors, brought this action for damages against defendant Toyota Motor Sales, U.S.A., Inc., and its Lexus division, alleging that certain business conduct of defendants both violated provisions of the Cartwright Act, California’s state antitrust statute (Bus. & Prof. Code, § 16700 et seq.), and constituted an intentional interference with his economic relations. The impetus for Della Penna’s suit arose out of the 1989 introduction into the American luxury car market of Toyota’s Lexus automobile.

Prior to introducing the Lexus, the evidence at trial showed, both the manufacturer, Toyota Motor Corporation, and defendant, the American distributor, had been concerned about the possibility that a resale market might develop for the Lexus in Japan.

Even though the car was manufactured in Japan, Toyota’s marketing strategy was to bar the vehicle’s sale on the Japanese domestic market until after the American rollout; even then, sales in Japan would only be under a different brand name, the “Celsior.” Fearing that auto wholesalers in the United States might reexport Lexus models back to Japan for resale, and concerned that, with production and the availability of Lexus models in the American market limited, reexports would jeopardize its fledgling network of American Lexus dealers, Toyota inserted in its dealership agreements a “no export” clause, providing that the dealer was “authorized to sell [Lexus automobiles] only to customers located in the United States. [Dealer] agrees that it will not sell [Lexus automobiles] for resale or use outside the United States. [Dealer] agrees to abide by any export policy established by [distributor].” Following introduction into the American market, it soon became apparent that some domestic Lexus units were being diverted for foreign sales, principally to Japan.

To counter this effect, Toyota managers wrote to their retail dealers, reminding them of the “no-export” policy and explaining that exports for foreign resale could jeopardize the supply of Lexus automobiles available for the United States market. In addition, Toyota compiled a list of “offenders”—dealers and others believed by Toyota to be involved heavily in the developing Lexus foreign resale market—which it distributed to Lexus dealers in the United States.

American Lexus dealers were also warned that doing business with those whose names appeared on the “offenders” list might lead to a series of graduated sanctions, from reducing a dealer’s allocation to possible reevaluation of the dealer’s franchise agreement. During the years 1989 and 1990, plaintiff Della Penna did a profitable business as an auto wholesaler purchasing Lexus automobiles, chiefly from the Lexus of Stevens Creek retail outlet, at near retail price and exporting them to Japan for resale.

By late 1990, however, plaintiff’s sources began to dry up, primarily as a result of the “offenders list.” Stevens Creek ceased selling models to plaintiff; gradually other sources declined to sell to him as well. In February 1991, plaintiff filed this lawsuit against Toyota Motor Sales, U.S.A., Inc., alleging both state antitrust claims under the Cartwright Act and interference with his economic relationship with Lexus retail dealers.

At the close of plaintiff’s case-in-chief, the trial court granted Toyota’s motion for nonsuit with respect to the remaining Cartwright Act claim (plaintiff had previously abandoned a related claim—unfair competition—prior to trial). The tort cause of action went to the jury, however, under the standard BAJI instructions applicable to such claims with one significant exception.

At the request of defendant and over plaintiff’s objection, the trial judge modified BAJI No. 7.82—the basic instruction identifying the elements of the tort and indicating the burden of proof—to require plaintiff to prove that defendant’s alleged interfering conduct was “wrongful.” The jury returned a divided verdict, nine to three, in favor of Toyota. After Della Penna’s motion for a new trial was denied, he appealed.

In an unpublished disposition, the Court of Appeal unanimously reversed the trial court’s judgment, ruling that a plaintiff alleging intentional interference with economic relations is not required to establish “wrongfulness” as an element of its prima facie case, and that it was prejudicial error for the trial court to have read the jury an amended instruction to that effect. The Court of Appeal remanded the case to the trial court for a new trial; we then granted Toyota’s petition for review and now reverse.

II A Although legal historians have traced the origins of the so-called “interference torts" as far back as the Roman law, the proximate historical impetus for their modem development lay in mid- 19th century English common law. (See, e.g., Sayre, Inducing Breach of Contract (1923) 36 Harv. L.Rev. 663; Note, Tortious Interference With Contractual Relations in the Nineteenth Century: The Transformation of Property, Contract, and Tort (1980) 93 Harv. L.Rev. 1510.) The opinion of the Queen’s Bench in Lumley v.

Gye (1853) 2 E1. & B1. 216 [118 Eng.Rep. 749], a case that has become a standard in torts casebooks, is widely cited as the origin of the two torts —interference with contract and its sibling, interference with prospective economic relations—in the form in which they have come down to us. The plaintiff owned the Queen’s Theatre, at which operas were presented. He contracted for the services of a soprano, Johanna Wagner, to perform in various entertainments between April 15 and July 15, with the stipulation that Miss Wagner would not perform elsewhere during that time without his permission.

In an action on the case, the theater owner alleged that Gye, the owner of a rival theater, knowing of the Wagner-Lumley agreement, “maliciously" interfered with the contract by “enticing” Wagner to abandon her agreement with Lumley and appear at Gye’s theater.

Gye’s demurrer to the complaint was overruled by the trial court, a mling that was affirmed by the justices of the Queen’s Bench on the then somewhat novel grounds that (1) “enticing” someone to leave his or her employment was not limited to disrupting the relationship between master and servant but applied to a “dramatic artiste” such as Miss Wagner, and (2) “wrongfully and maliciously, or, which is the same thing, with notice, interrupt[ing]’’ a personal service contract, regardless of the means the defendant employed, was an actionable wrong. (2 E1. & B1. at p. 224, per Crompton, J.) The opinion in Lumley v.

Gye, supra, 2 E1. & B1. 216 dealt, of course, with conduct intended to induce the breach of an existing contract, not conduct intended to prevent or persuade others not to contract with the plaintiff. That such an interference with prospective economic relations might itself be tortious was confirmed by the Queen’s Bench over the next 40 years. In Temperton v.

Russell (1893) 1 Q.B. 715 (Temperton), a labor union, embroiled in a dispute with a firm of builders, announced what today would be called a secondary boycott, intended to force a resolution of the union’s grievances by pressuring suppliers of the builder to cease furnishing him construction materials. A failure to comply with the union’s boycott demands, suppliers were warned, would result in union pressure on those who bought their supplies not to deal with them.

One such supplier of the builder, Temperton, sued the union’s leadership, alleging that his business had been injured by breaches of supply contracts and the refusal of others to do business with him, all as a result of the union’s threats. A unanimous Queen’s Bench upheld the jury’s verdict for the plaintiff, reasoning in part on the authority of Lumley v.

Gye, supra, 2 E1. & B1. 216, that in the words of Lord Esher, the Master of the Rolls, “the distinction . . . between the claim for inducing persons to break contracts already entered into . . . and . . . inducing persons not to enter into contracts . . . can[not] prevail.” (Temperton, supra, 1 Q.B. at p. 728.) “There was the same wrongful intent in both cases, wrongful because malicious,” Lord Esher wrote. “There was the same kind of injury to the plaintiff.

It seems rather a fine distinction to say that, where a defendant maliciously induces a person not to carry out a contract already made with the plaintiff and so injures the plaintiff, it is actionable, but where he injures the plaintiff by maliciously preventing a person from entering into a contract with the plaintiff, which he would otherwise have entered into, it is not actionable.” (Temperton, supra, 1 Q.B. at p. 728.) As a number of courts and commentators have observed, the keystone of the liability imposed in Lumley v.

Gye, supra, 2 El. & Bl. 216, and Temper-ton, supra, 1 Q.B. 715, to judge from the opinions of the justices, appears to have been the “malicious” intent of a defendant in enticing an employee to breach her contract with the plaintiff, and in damaging the business of one who refused to cooperate with the union in achieving its bargaining aims. While some have doubted whether the use of the word “malicious” amounted to anything more than an intent to commit

an act, knowing it would harm the plaintiff (see, e.g., Dobbs, Tortious Interference With Contractual Relationships (1980) 34 Ark. L.Rev. 335, 347, fn. 37), Dean Keeton, assessing the state of the tort as late as 1984, remarked that “[w]ith intent to interfere as the usual basis of the action, the cases have turned almost entirely upon the defendant’s motive or purpose and the means by which he has sought to accomplish it.

As in the cases of interference with contract, any manner of intentional invasion of the plaintiff’s interests may be sufficient if the purpose is not a proper one.” (Prosser & Keeton on Torts (5th ed. 1984) Interference with Prospective Advantage, § 130, p. 1009.) It was, legal historians have suggested, this early accent on the defendant’s “intentionality” that was responsible for allying the interference torts with their remote relatives, intentional torts of a quite different order— battery, for example, or false imprisonment.

More than one account of the rise of the tort has relied on Lord Bowen’s statement in an interference with contract case that “intentionally to do that which is calculated in the ordinary course of events to damage, and which does, in fact, damage another in that person’s property or trade, is actionable if done without just cause or excuse.” (Mogul Steamship Co. v.

McGregor, Gow & Co. (1889) 23 Q.B.D. 598, 613.) One consequence of this superficial kinship was the assimilation to the interference torts of the pleading and burden of proof requirements of the “true” intentional torts: the requirement that the plaintiff need only allege a so-called “prima facie tort” by showing the defendant’s awareness of the economic relation, a deliberate interference with it, and the plaintiff’s resulting injury. (See, e.g., Brown, The Rise and Threatened Demise of the Prima Facie Tort Principle (1959) 54 Nw. U. L.Rev. 563; Note, The Prima Facie Tort Doctrine (1952) 52 Colum.

L.Rev. 503.) By this account of the matter—the traditional view of the torts and the one adopted by the first Restatement of Torts—the burden then passed to the defendant to demonstrate that its conduct was privileged, that is, “justified” by a recognized defense such as the protection of others or, more likely in this context, the defendant’s own competitive business interests. (See, e.g., Restatement, Torts (1939) § 766, corns, b-m, pp. 50-63; A.F. Arnold & Co. v. Pacific Professional Ins., Inc. (1972) 27 Cal.App.3d 710, 715 [104 Cal.Rptr. 96]; Lowell v.

Mother’s Cake & Cookie Co. (1978) 79 Cal.App.3d 13, 19 [144 Cal.Rptr. 664, 6 A.L.R.4th 184].) These and related features of the economic relations tort and the requirements surrounding its proof and defense led, however, to calls for a reexamination and reform as early as the 1920’s. Tracing the origins and the current status of the two interference torts in 1923, Francis Sayre concluded that “a somewhat uncertain law has resulted. [H .... HD ... .

Courts still punctiliously repeat the well-known formula which requires ‘malice,’ or ‘without just cause’ ... as one of the requirements of the tort; but there has been such a lack of agreement as to what constitutes ‘malice’ or ‘absence of justification’ that such words are becoming little more than empty phrases .... Is it not time to formulate the problem of what these worn phrases mean?” (Sayre, Inducing Breach of Contract, supra, 36 Harv. L.Rev. at pp. 672, 674-675, fn. omitted.) The nature of the wrong itself seemed to many unduly vague, inviting suit and hampering the presentation of coherent defenses.

More critically in the view of others, the procedural effects of applying the prima facie tort principle to what is essentially a business context led to even more untoward consequences. Because the plaintiff’s initial burden of proof was such a slender one, amounting to no more than showing the defendant’s conscious act and plaintiff’s economic injury, critics argued that legitimate business competition could lead to time consuming and expensive lawsuits (not to speak of potential liability) by a rival, based on conduct that was regarded by the commercial world as both commonplace and appropriate.

The “black letter” rules of the Restatement of Torts surrounding the elements and proof of the tort, some complained, might even suggest to “foreign lawyers reading the Restatement as an original matter [that] the whole competitive order of American industry is prima facie illegal.” (Statement of Professor Carl Auerbach at ALI Proceedings, quoted in Perlman, Interference With Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine (1982) 49 U. Chi.

L.Rev. 61, 79, fn. 89; see also Myers, The Differing Treatment of Efficiency and Competition in Antitrust and Tortious Interference Law (1993) 77 Minn. L.Rev. 1097, 1122 [“In an economic system founded upon the principle of free competition, competitors should not be liable in tort for seeking a legitimate business advantage.”].) Calls for a reformulation of both the elements and the means of establishing the economic relations tort reached a height around the time the Restatement Second of Torts was being prepared for publication and are reflected in its departures from its predecessor’s version.

Acknowledging criticism, the American Law Institute discarded the prima facie tort requirement of the first Restatement. A new provision,

section 766B, required that the defendant’s conduct be “improper,” and adopted a multifactor “balancing” approach, identifying seven factors for the trier of fact to weigh in determining a defendant’s liability.

The Restatement Second of Torts, however, declined to take a position on the issue of which of the parties bore the burden of proof, relying on the “considerable disagreement on who has the burden of pleading and proving certain matters” and the observation that “the law in this area has not fully congealed but is still in a formative stage.” (See Rest.2d Torts (1965 ed.) Introductory Note, ch. 37, pp. 5-6.) In addition, the Restatement Second provided that a defendant might escape liability by showing that his conduct was justifiable and did not include the use of “wrongful means.” (Id., §§ 768-771.) B In the meantime, however, an increasing number of state high courts had traveled well beyond the Restatement Second’s reforms by redefining and otherwise recasting the elements of the economic relations tort and the burdens surrounding its proof and defenses.

In Top Serv. Body Shop, Inc. v. Allstate Ins.

Co. (1978) 283 Or. 201 [582 P.2d 1365] (Top Service), the Oregon Supreme Court, assessing this “ ‘most fluid and rapidly growing tort,’ ” noted that “efforts to consolidate both recognized and unsettled lines of development into a general theory of ‘tortious interference’ have brought to the surface the difficulties of defining the elements of so general a tort without sweeping within its terms a wide variety of socially very different conduct.” (Id. at p. 1368, fn. omitted.) Recognizing the force of these criticisms, the court went on to hold in Top Service, supra, 582 P.2d 1365, that a claim of interference with economic relations “is made out when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself.

Defendant’s liability may arise from improper motives or from the use of improper means. They may be wrongful by reason of a statute or other regulation, or a recognized rule of common law, or perhaps an established standard of a trade or profession.

No question of privilege arises unless the interference would be wrongful but for the privilege; it becomes an issue only if the acts charged would be tortious on the part of an unprivileged defendant.” (Id. at p. 1371, italics added, fn. omitted.) Four years later, the views of the Oregon Supreme Court in Top Service, supra, 582 P.2d 1365, were adopted by the Utah Supreme Court. In Leigh Furniture and Carpet Co. v.

Isom (Utah 1982) 657 P.2d 293, that court underlined the same concerns that had moved the Oregon Supreme Court in Top Service: “The problem with the prima facie tort approach is that basing liability on a mere showing that defendant intentionally interfered with plaintiff’s prospective economic relations makes actionable all sorts of contemporary examples of otherwise legitimate persuasion, such as efforts to persuade others not to . . . engage in certain activities, or deal with certain entities.

The major issue in the controversy—justification for the defendant’s conduct—is left to be resolved on the affirmative defense of privilege.

In short, the prima facie approach to the tort of interference with prospective economic relations requires too little of the plaintiff.” (Id. at p. 303.) The Utah Supreme Court went on, however, to reject the alternative, multifactor approach adopted by the Restatement Second: “We concur in the Restatement (Second)'s rejection of the prima facie tort approach because it leaves too much uncertainty about the requirements for a recognized privilege and the defendant’s burden of pleading and proving these and other matters. [Citation.].

But we also reject the Restatement (Second)’s definition of the tort because of its complexity. We seek a better alternative.” (657 P.2d at p. 304.) That alternative, the court concluded, was the one advanced by the Oregon Supreme Court in Top Service, supra, 582 P.2d 1365, a “middle ground” that requires “the plaintiff to allege and prove more than the prima facie tort, but not to negate all defenses of privilege.” (657 P.2d at p. 304; see also Pleas v. City of Seattle (1989) 112 Wn.2d 794 [774 P.2d 1158, 1161-1163 [same]; Duggin v.

Adams (1987) 234 Va. 221 [360 S.E.2d 832, 836-837] [also adopting Top Service requirements].) Over the past decade or so, close to a majority of the high courts of American jurisdictions have imported into the economic relations tort variations on the Top Service line of reasoning, explicitly approving a rule that requires the plaintiff in such a suit to plead and prove the alleged interference was either “wrongful,” “improper,” “illegal,” “independently tortious” or some variant on these formulations. Among others, the high courts of New Mexico (Anderson v. Dairy land Ins.

Co. (1981) 97 N.M. 155 [637 P.2d 837, 840-841] [“wrongful means”]), Rhode Island (Federal Auto Body Works v. Aetna Cas. & Sur. (R.I. 1982) 447 A.2d 377, 379-380 [“improper”]), Connecticut (Blake v. Levy (1983) 191 Conn. 257 [464 A.2d 52, 54-55] [“in fact tortious”]), New Hampshire (Montrone v. Maxfield (1982) 122 N.H. 724 [449 A.2d 1216, 1217] [“wrongfully”]), Iowa (Harsha v. State Sav. Bank (Iowa 1984) 346 N.W.2d 791, 799-800 [52 A.L.R.4th 805] [“improper means” (semble)]), Arizona (Wagenseller v.

Scottsdale Memorial Hosp. (1985) 147 Ariz. 370 [710 P.2d 1025, 1041-1043] [“improper” interference]), Kansas (Turner v. Halliburton Co. (1986) 240 Kan. 1 [722 P.2d 1106, 1115] [“intentional misconduct”]), Oklahoma (Krebsbach v. Henley (Okla. 1986) 725 P.2d 852, 856-858 [“unlawful or unjustified”]), Virginia (Duggin v. Adams, supra, 360 S.E.2d 832, 836 [“illegal or independently tortious” methods]), Kentucky (Nat. Coll. Athletic Ass’n v. Hornung (Ky. 1988) 754 S.W.2d 855, 859 [“malice or some significantly wrongful conduct”]), New Jersey (Printing Mart v.

Sharp Electronics. (1989) 116 N.J. 739 [563 A.2d 31, 39] [“wrongfully without justification”]), Washington (Pleas v. City of Seattle, supra, 774 P.2d 1158, 1161-1163 [“wrongful means”]), Colorado (Westfield Dev. v. Rifle Inv. Assoc. (Colo. 1990) 786 P.2d 1112, 1117-1118 [“improper”]), Massachusetts (United Truck Leasing Corp. v. Geltman (1990) 406 Mass. 811 [551 N.E.2d 20, 21-23] [“improperly”]), Wyoming (Four Nines Gold, Inc. v. 71 Const., Inc. (Wyo. 1991) 809 P.2d 236, 238 [“improper” interference]), Idaho (Idaho First Nat. Bank v.

Bliss Valley Foods (1991) 121 Idaho 266 [824 P.2d 841, 861] [“ ‘wrongful by some measure beyond the fact of the interference itself’ ”]), Maryland (Macklin v. Logan (1994) 334 Md. 287 [639 A.2d 112, 119] [“improper or wrongful conduct”]), Maine (Devine v. Roche Biomedical Lab., Inc. (Me. 1994) 637 A.2d 441, 447 [“fraud or intimidation”]), Montana (State Bd. of Dentistry v. Kandarian (1994) 268 Mont. 408 [886 P.2d 954, 959] [“a wrongful act”]), and Georgia (U.S. Anchor Mfg. v. Rule Industries (1994) 264 Ga. 295 [443 S.E.2d 833, 836] [“some . . . unlawjul element”]) have adopted one or another of these variations.

Ill In California, the development of the economic relations tort has paralleled its evolution in other jurisdictions. For many years this court declined to adopt the holding of Lumley v. Gye, supra, 2 El. & Bl. 216, on the ground that, as we reasoned in Boyson v. Thorn (1893) 98 Cal. 578 [33 P. 492], “[i]t is a truism of the law that

an act which does not amount to a legal injury cannot be actionable because it is done with a bad intent. . . . If it is right, and the means used to procure the breach are right, the motive cannot make it a wrong . . . .” (Id. at pp. 583-584, italics in original.) In Imperial Ice Co. v.

Rossier (1941) 18 Cal.2d 33 [112 P.2d 631], however, a unanimous court, speaking through Justice Traynor, pronounced these statements in Boyson “not necessary to the decision” and directed that they be “disregarded.” (Id. at p. 38.) California thus joined the majority of jurisdictions in adopting the view of the first Restatement of Torts by stating that “an action will lie for unjustifiably inducing a breach of contract.” (Id. at p. 39, italics added.) In the aftermath of Imperial Ice Co. v.

Rossier, supra, 18 Cal.2d 33, our early economic relations cases were principally of two types, either the classic master and servant pattern of the pre-Lumley v. Gye cases (see, e.g., Buxbom v.

Smith (1944) 23 Cal.2d 535, 548 [145 P.2d 305] [hiring away of plaintiff’s employees by defendant after plaintiff had built up his business to distribute defendant’s publication and defendant had breached distribution contract held actionable as “an unfair method of interference with advantageous relations”]) or those involving circumscribed kinds of business relations in which the plaintiff, typically a real estate broker or attorney working on a contingency, sued to recover fees after defendant had refused to share property sales proceeds or a personal injury recovery (see, e.g., Buckaloo v.

Johnson (1975) 14 Cal.3d 815 [122 Cal.Rptr. 745, 537 P.2d 865] (Buckaloo) [defendant refused to pay plaintiff his broker’s commission on the sale of beach property after plaintiff had discussed sale with buyers and directed them to defendant; held, the complaint stated a claim for relief for intentional interference with prospective economic relations].) California cases thus reflected the historical origins and development of the tort, especially as it stood prior to the revisions of the Restatement Second and the concurrent evolution in the case law. In Zimmerman v.

Bank of America (1961) 191 Cal.App.2d 55 [12 Cal.Rptr. 319], for example, the plaintiff real estate agent alleged that the defendant bank had “maliciously” induced third parties to breach an oral agreement with him to broker the sale of their property. In holding that the statute of frauds did not bar the plaintiff’s interference claim, the Court of Appeal discussed the relationship between the two interference torts.

Writing for the court, Justice Tobriner both aligned the source of the economic relations tort with its contractual sibling and employed language that bears a striking symmetry with Lord Esher’s statement in Temperton, supra, 1 Q.B. 715, 728: “The history of the tort,” he wrote, “discloses its essence. It contemplates, basically, a disruption of a relationship, not necessarily the breach of a contract. ... [U ... [^D ...

We cannot conceive how the action for interference with an existing lawful contract, even though unenforceable, could occupy a status lower than that of interference with negotiations contemplating a contract. If interference with the negotiations constitutes the tort, interference with the contract in which the negotiations fructify must necessarily constitute the tort.” (Zimmerman, supra, 191 Cal.App.2d at pp. 57, 60.) This court endorsed the reasoning of Zimmerman v.

Bank of America, supra, 191 Cal.App.2d 55, in Buckaloo, supra, 14 Cal.3d at p. 822, a case in which the plaintiff sued the seller and buyers of beachfront property to recover damages for the loss of his commission from the sale of the land. Among other claims, plaintiff alleged that defendants had intentionally interfered with an expectancy arising out of the seller’s open invitation to brokers and his preliminary discussions regarding the sale of the property with the buyers.

Upholding the allegations of the complaint as sufficient to survive a demurrer, we characterized the economic relations tort as one “infrequently invoked” but a “more inclusive wrong” than its relative, intentional interference with contract. (Id. at pp. 822-823.) Our opinion in Buckaloo, supra, 14 Cal.3d 815, reviewed a number of Court of Appeal decisions upholding the applicability of the tort to real estate brokerage situations (id. at pp. 823-826) and concluded by identifying the following elements of the cause of action. “In a real estate brokerage context these are: (1) an economic relationship between broker and vendor or broker and vendee containing the probability of future economic benefit to the broker, (2) knowledge by the defendant of the existence of the relationship, (3) intentional acts on the part of the defendant designed to disrupt the relationship, (4) actual disruption of the relationship, (5) damages to the plaintiff proximately caused by the acts of the defendant.” (Id. at p. 827.) “In California,” we went on to observe, “privilege or justification is an affirmative defense, and the lack thereof need not be shown by the original pleader." (14 Cal.3d at pp. 827-828.) A note of caution, however, crept into our formulation of principles at this point. “Perhaps the most significant privilege or justification for interference with a prospective business advantage is free competition,” we wrote, “Ours is a competitive economy in which business entities vie for economic advantage.

In a sense, all vendees are potential buyers of the products and services of all sellers in a given line, and success goes to him who is able to induce potential customers not to deal with a competitor.” (14 Cal.3d at p. 828.) In Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752 [206 Cal.Rptr. 354, 686 P.2d 1158] (Seaman’s), overruled in part by Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85 [44 Cal.Rptr.2d 420, 900 P.2d 669], relying on theirs?

Restatement and without reviewing or even mentioning intervening revaluations of the tort by the Restatement Second, other state high courts and our own Court of Appeal, we again endorsed the prima facie tort pleading and burden of proof format, noting that “[o]nly if and when plaintiff establishes an ‘intent to interfere’ does the issue of ‘justification’ come into play. [Citation.] ‘[Wjhile defendant’s culpable intent is an element of the cause of action to be pleaded and proved by plaintiff, defendant’s justification is an affirmative defense . . . .”’(36 Cal.3d at p. 766, italics in original.) We went on to observe that “[defendant] is mistaken when it implies that an improper ‘motive’ is an element of plaintiff’s cause of action rather than a factor in defendant’s affirmative defense.

It is not.” (Id. at p. 767.) Although our opinions following Seaman’s, supra, 36 Cal.3d 752, to the extent they addressed the question at all, continued to enumerate the same prima facie elements of the economic relations tort, the cases consistently denied the plaintiff recovery, on the ground, for example, that the cause of action did not encompass injury resulting from government licensing proceedings (Blank v. Kirwan (1985) 39 Cal.3d 311 [216 Cal.Rptr. 718, 703 P.2d 58]), did not apply to sporting contests (Youst v.

Longo (1987) 43 Cal.3d 64 [233 Cal.Rptr. 294, 729 P.2d 728, 85 A.L.R.4th 1025]), or to a constitutionally protected political boycott of a newspaper’s advertisers by an environmental group (Environmental Planning & Information Council v. Superior Court (1984) 36 Cal.3d 188 [203 Cal.Rptr. 127, 680 P.2d 1086]), or to the filing of a potentially meritorious lawsuit (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118 [270 Cal.Rptr. 1, 791 P.2d 587] (Bear Stearns).

Indeed, in concluding that the policies supporting the economic relations tort were insufficient to trump the competing interests in insuring litigants unhampered access to the courts, our opinion in Bear Stearns renewed and expanded on the caveat we had expressed earlier in Buckaloo, supra, 14 Cal.3d at page 828. “The torts of inducing breach of contract and interference with prospective advantage have been criticized,” we wrote, “as protecting the secure enjoyment of contractual and economic relations at the expense of our interest in a freely competitive economy. [Citation.] We have been cautious in defining the interference torts, to avoid promoting speculative claims. . . .

Given the criticism of these causes of action and the dangers inherent in imposing tort liability for competitive business practices, we have no motivation to expand these torts so that they begin to threaten the right of free access to the courts.” (Bear Stearns, supra, 50 Cal.3d at pp. 1136-1137, fn. omitted.) Meanwhile, developments in the Court of Appeal and in the practical administration of such claims in the trial courts had, if anything, outdistanced our own formulations of the elements of the tort and the allocation of the burden of proof in at least two respects.

First, several Court of Appeal opinions appeared to engraft onto the elements of the plaintiffs cause of action allegations and proof that the defendant’s conduct was “wrongful” or, as the Court of Appeal said in Tri-Growth Centre City, Ltd. v. Silldorf Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1153-1154 [265 Cal.Rptr. 330], was “based on facts that take the defendant’s actions out of the realm of legitimate business transactions.” (See also Rickel v.

Schwinn Bicycle Co. (1983) 144 Cal.App.3d 648, 660 [192 Cal.Rptr. 732] [“The common denominator shared [by cases of interference with prospective economic relations] is an allegation of wrongfulness. Without this requirement of wrongfulness, we fear that actors in perfectly legitimate economic transactions would be ‘put to justifying the conduct of [their] business at the whim of a rival.’ ”]; A.F. Arnold & Co. v.

Pacific Professional Ins., Inc., supra, 27 Cal.App.3d 710, 716 [“Thus, while no particular language should be required, the facts pleaded by a plaintiff must show an intent to do something which takes the defendant’s acts beyond those of a mere competitor securing business for himself.”]; Bert G. Gianelli Distributing Co. v. Beck & Co. (1985) 172 Cal.App.3d 1020, 1053 [219 Cal.Rptr. 203] [“In order to prove their cause of action plaintiffs must show . . . ‘that the acts or conduct of the defendants were wrongful . . . .”’]; cf. San Francisco Design Center Associates v.

Portman Companies (1995) 41 Cal.App.4th 29, 42 [50 Cal.Rptr.2d 716] [“In order to defeat the privilege [of competition] the defendant’s conduct must be unlawful or illegitimate.”].) Second, in 1990, BAJI, the Book of Approved Jury Instructions widely used by trial judges in civil cases, relying on the Restatement Second of Torts and Mr. Witkin’s account of the tort, included an instruction providing that a defendant in an economic relations tort case could defeat liability by showing that its conduct was not independently “wrongful.” (Cf.

BAJI No. 7.86.1 (8th ed. 1994) Use Note & Com.) These developments, of course, closely reflect a nearly concurrent change in views both within the American Law Institute and in other jurisdictions. In the face of those twin lines of development, we are thus presented with the opportunity to consider whether to expressly reconstruct the formal elements of the interference with economic relations tort to achieve a closer alignment with the practice of the trial courts, emerging views within the Court of Appeal, the rulings of many other state high courts, and the critiques of leading commentators.

We believe that we should. IV In searching for a means to recast the elements of the economic relations tort and allocate the associated burdens of proof, we are guided by an overmastering concern articulated by high courts of other jurisdictions and legal commentators: the need to draw and enforce 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 by the defendant.

Many of the cases do in fact acknowledge a greater array of justificatory defenses against claims of interference with prospective relations. Still, in our view and that of several other courts and commentators, the notion that the two torts are analytically unitary and derive from a common principle sacrifices practical wisdom to theoretical insight, promoting the idea that the interests invaded are of nearly equal dignity. They are not.

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.

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. A doctrine that blurs the analytical line between interference with an existing business contract and interference with commercial relations less than contractual is one that invites both uncertainty in conduct and unpredictability of its legal effect.

The notion that inducing the breach of an existing contract is simply a subevent of the “more inclusive” class of acts that interfere with economic relations, while perhaps theoretically unobjectionable, has been mischievous as a practical matter. Our courts should, in short, firmly distinguish the two kinds of business contexts, bringing a 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. ' Beyond that, we need not tread today.

It is sufficient to dispose of the issue before us in this case by holding that a plaintiff seeking to recover for alleged interference with prospective economic relations has the burden of pleading and proving that the defendant’s interference was wrongful “by some measure beyond the fact of the interference itself.” (Top Service, supra, 582 P.2d at p. 1371.) It follows that the trial court did not commit error when it modified BAJI No. 7.82 to require the jury to find that defendant’s interference was “wrongful.” And because the instruction defining “wrongful conduct” given the jury by the trial court was offered by plaintiff himself, we have no occasion to review its sufficiency in this case.

The question of whether additional refinements to the plaintiff’s pleading and proof burdens merit adoption by California courts—questions embracing the precise scope of “wrongfulness,” or whether a “disinterested malevolence,” in Justice Holmes’s words (Amer. Bank & Trust Co. v.

Federal Bank (1921) 256 U.S. 350, 358 [65 L.Ed. 983, 990, 41 S.Ct. 499, 25 A.L.R. 971]), is an actionable interference in itself, or whether the underlying policy justification for the tort, the efficient allocation of social resources, justifies including as actionable conduct that is recognized as anticompetitive under established state and federal positive law (see, e.g., Perlman, Interference With Contract and Other Economic Expectancies; A Clash of Tort and Contract Doctrine, supra, 49 U. Chi. L.Rev. 61)—are matters that can await another day and a more appropriate case.

Conclusion We hold that a plaintiff seeking to recover for an alleged interference with prospective contractual or economic relations 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. The judgment of the Court of Appeal is reversed and the cause is remanded with directions to affirm the judgment of the trial court. Lucas, C. J., Kennard, J., Baxter, J., George, J., and Werdegar, J., concurred.

The standard instruction governing “intentional interference with prospective economic advantage,” BAJI No. 7.82, describes the essential elements of the claim as (1) an economic relationship between the plaintiff and another, “containing a probable future economic benefit or advantage to plaintiff,” (2) defendant’s knowledge of the existence of the relationship, (3) that defendant “intentionally engaged in acts or conduct designed to interfere with or disrupt” the relationship, (4) actual disruption, and (5) damage to the plaintiff as a result of defendant’s acts.

The modification sought by defendant and adopted by the trial court consisted in adding the word “wrongful” in element (3) between the words “in” and “acts.” The trial court also read to the jury plaintiffs special jury instruction defining the “wrongful acts” required to support liability as conduct “outside the realm of legitimate business transactions ....

Wrongfulness may lie in the method used or by virtue of an improper motive.” Throughout this opinion, in an effort to avoid both cumbersome locutions and clumsy acronyms (“IIPEA”), we use the phrase “interference with economic relations” to refer to the tort generally known as “intentional interference with prospective contractual or economic relations” and to distinguish it from the cognate form, “intentional interference with contract.” A century or so ago, the notion of the “prima facie tort” was regarded by the leading legal authorities of the day as a principle vital to the reconstitution of the jurisprudence of civil wrongs in the aftermath of the disintegration of the old common law forms of action.

Competing formulations of “intentionality,” as an aspect of the prima facie wrong, were offered by such luminaries of their day as Dean Pound (see 3 Pound Jurisprudence (1959) p. 9), and by Justice Holmes. (See Aikens v.

Wisconsin (1904) 195 U.S. 194, 204 [49 L.Ed. 154, 159, 25 S.Ct. 3] [“It has been considered that, prima facie, the intentional infliction of temporal damages is a cause of action, which, as a matter of substantive law, whatever may be the form of pleading, requires a justification if the defendant is to escape.”].) Respondent contends that any change in the rules governing the plaintiff’s pleading and burden of proof requirements in an economic relations tort context should be prospective only in application.

He relies on the argument that at the time this case was tried, the law was settled that a plaintiff had no such burden of pleading or proving that the defendant’s conduct was wrongful. The “general rule,” of course, is that “a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation.” (Peterson v.

Superior Court (1982) 31 Cal.3d 147, 151 [181 Cal.Rptr. 784, 642 P.2d 1305], fn. omitted.) And although there are exceptions, founded on fairness and public policy, to the general rule of retroactive application of judicial decisions (see, e.g., id. at pp. 152-154), the circumstances of this case do not support their application here. As the main text of our opinion makes clear, litigants and counsel could have foreseen that a change in the rules regulating the pleading and burden of proof requirements in economic relations litigation was in the wind well before the time this case was tried in 1992.

The modifications of the Restatement Second of Torts occurred in 1965; most of the opinions of the high courts of other American jurisdictions cited, ante, at pages 386-387, were decided well before 1992; and the evolution in the decisions of the Court of Appeal, traced, ante, at pages 390-391 began with Rickel v. Schwinn Bicycle Co., supra, 144 Cal.App.3d 648 decided in 1983. The prospect of a modification of the rule thus could fairly have been foreseen by plaintiffs and the legal profession at the time this case was tried. We discern no unfairness in applying the usual rule of full retroactivity. (Cf. Neel v.

Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 193 [98 Cal.Rptr. 837, 491 P.2d 421].) To the extent that language in Buckaloo, supra, 14 Cal.3d 815, and Seaman's, supra, 36 Cal.3d 752, addressing the pleading and proof requirements in the economic relations tort is inconsistent with the formulation we adopt in this case, it is disapproved.