A California appellate court affirmed a judgment holding a corporation and individual managers liable for tortious interference with the contract of a corporate subsidiary. Asahi Kasei Pharma Corp. v. Actelion Ltd., et al, No. A133927, slip op. (Cal. App. 1st Dist., Dec. 18, 2013). The case has at least two important effects on breach of contract lawsuits in California. First, the court held the defendant corporation liable for tortious interference, finding that it was a “stranger” to the contract under state law. Second, it rejected the individual defendants’ claim that the “manager’s privilege” barred liability, holding that they were not managers of the breaching company.
The plaintiff is a Japanese pharmaceutical company that produced and marketed Fasudil, a drug used to treat stroke patients. New research in the late 1990’s suggested that Fasudil could also help patients suffering from pulmonary arterial hypertension (PAH). The plaintiff entered into a license agreement with CoTherix, San Francisco-based pharmaceutical company, in June 2006. CoTherix was to develop Fasudil for PAH treatment and obtain regulatory approval for the drug in the U.S. and Europe. CoTherix developed a plan that envisioned approval of Fasudil for multiple treatments between 2009 and 2011.
The defendant, Actelion, produces Tracleer, which is also used to treat PAH. Actelion began investigating the acquisition of CoTherix soon after the announcement of the license agreement, allegedly for the express purpose of stopping the development of Fasudil. During the negotiation of the merger, a manager at Actelion reportedly recommended that the company return Fasudil to the plaintiff. The merger was completed in November 2006, and in April 2007, the plaintiff declared that CoTherix was in material breach of their agreement.