By Cathleen S. Yonahara, Freeland Cooper & Foreman LLP
One of the largest tech companies in the world, Apple, Inc., recently bit off more than it could chew when it allegedly convinced an employer to terminate an employee in retaliation for his resistance to Apple’s allegedly illegal anticompetitive conduct. Read the details of this California law case and what it means for employers.
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The issues on appeal were whether (1) an employee whose at-will employment was terminated because of Apple’s interference must allege that the company’s conduct was independently wrongful to state a contract interference claim and (2) Apple’s allegedly anticompetitive conduct may constitute independently wrongful acts to support a business interference claim even if the employee wasn’t harmed by that conduct.
Engineering Manager’s Complaint
Dan Popescu sued Apple for intentional interference with contractual relations (contract interference) and intentional interference with prospective economic advantage (business interference) after he was fired by his employer, Constellium Rolled Products Ravenswood, LLC. Popescu’s allegations in his complaint are described below.
Popescu is an engineering manager who developed cutting-edge alloys for high-tech customers. In 2011, Apple asked Constellium to develop an anodized aluminum alloy to replace the stainless steel iPhone body. Constellium designated Popescu as the project lead.
During the development of the product, Apple required Constellium to sign a development agreement that provided that Apple wasn’t obligated to purchase any developed products from or use Constellium as its supplier and precluded Constellium from supplying alloy to any manufacturer of consumer electronics for a 5-year period. Apple informed Constellium that its competitors (other elite aluminum alloy suppliers) had already signed such an agreement. Popescu objected and refused to sign the agreement.
According to Popescu, Apple wanted to use the executed development agreement to restrict competition in the smartphone market. He alleged that by “lock[ing] up [the elite aluminum] suppliers with the restrictive Development Agreement, Apple would be free to develop . . . its own extruded alloy body for the iPhone 5” and would prevent its competitors from developing a smartphone with a comparable aluminum alloy body.
During a meeting with Apple, Popescu inadvertently activated the recording feature of his Livescribe smartpen. Apple realized the meeting was being recorded and confiscated the smartpen. Following the meeting, Apple insisted that Constellium investigate the incident and terminate Popescu. When Popescu’s supervisors resisted terminating him, Apple appealed to the executive management of the private equity firm that owned Constellium. Popescu was subsequently terminated for cause.
Following Popescu’s termination, Constellium signed the development agreement. Popescu alleged that as a result of his termination and Constellium’s execution of the development agreement, Apple was able to misappropriate Constellium’s aluminum alloy trade secrets.
Further, the development agreements signed by Constellium and other elite aluminum suppliers had allegedly anticompetitive effects in the global marketplace because “Apple’s competitors [were] denied a potentially efficiency-increasing resource while the public [was] denied a better, more durable smartphone.”
Read on for more details in the case and takeaways for employers.