Menu
Blog Banner Image

The Franchise Memorandum

Ninth Circuit Affirms Dismissal of Franchisee’s Complaint for Alleged Intentional Interference With Economic Relations

The United States Court of Appeals for the Ninth Circuit has affirmed the dismissal of a franchisee’s complaint alleging that franchisor Charter Practices International (“CPI”) improperly refused to renew his franchise. Robinson v. Charter Practices Int’l, LLC, 2017 WL 2684122 (9th Cir. June 21, 2017). The franchisee had purchased a veterinary hospital from CPI and at the same time also owned and operated independent veterinary clinics that were not part of his CPI franchise. Initially, CPI had not enforced a noncompetition covenant contained in the parties’ franchise agreement; however, when the term of the original franchise agreement ended and the franchisee tried to renew, CPI notified the franchisee of its intent to enforce the covenant in the renewal agreement going forward. The franchisee did not divest himself of his independent clinics, and the parties did not execute a renewal agreement. Instead, the franchisee sued CPI for breach of contract, breach of the covenant of good faith and fair dealing, and intentional interference with economic relations.

After affirming the dismissal of the franchisee’s first two claims, the Ninth Circuit held that the franchisee had not adequately alleged that CPI intentionally interfered with economic relations. The court noted that conduct between business competitors is not improper if the conduct is in the defendant’s competitive interest and not done for an improper purpose, such as spite or ill will. Because the franchisee had only alleged that CPI’s actions in not renewing the franchise agreement were done to maximize potential profits, and because the franchisee did not otherwise allege improper means that were independently wrongful by reason of statutory or common law, the Ninth Circuit affirmed the district court’s dismissal of his complaint.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors