Insights into Tort Claims by X (Formerly Twitter): Interference and Breach of Contracts

D. Tort Claims

The complaint’s third and fourth causes of action are for intentional interference with contractual relations and inducing breach of contract, respectively. Intentional interference with contractual relations “protects against intentional acts not necessarily resulting in a breach.” Shamblin, 166 Cal. App. 3d at 122–23. It “requires that a plaintiff prove: (1) he had a valid and existing contract with a third party; (2) defendant had knowledge of this contract; (3) defendant committed intentional and unjustified acts designed to interfere with or disrupt the contract; (4) actual interference with or disruption of the relationship; and (5) resulting damages.” Id. at 123. Inducement of a breach of contract “protects against intentional acts designed to produce an actual breach and requires that a plaintiff prove: (1) he had a valid and existing contract [with a third party]; (2) . . . defendant had knowledge of the contract and intended to induce its breach; (3) the contract was in fact breached by the contracting party; (4) the breach was caused by . . . defendant’s unjustified or wrongful conduct; and (5) . . . damage[s] [were suffered as a result.” Id. (internal quotation marks omitted). The two claims are “separate theories upon which the tort of interference with economic relations may be based.” Id. at 122.

X Corp. alleges in support of its interference with contractual relations claim that “Defendants knew, based upon their experience in CCDH purporting to analyze data associated with social media platforms,” that “for Brandwatch to have access to X Corp. data for its SaaS products to analyze, X Corp. must have contracts with Brandwatch, and that Brandwatch would be prohibited under the terms of [its contract with X Corp.] from providing access to unauthorized parties.” FAC ¶ 91. X Corp. further alleges that “Defendants’ conduct prevented Brandwatch from performing under [its contract with X Corp.]” because “Brandwatch failed to secure the data from X Corp. according to the terms of the agreements.” Id. ¶ 93. X Corp. alleges that “[a]s a direct and proximate result of Defendants intentionally interfering with [Brandwatch’s contract with X Corp.], X Corp. has suffered monetary and other damages of at least tens of millions of dollars.” Id.

X Corp. alleges in support of its inducing breach of contract claim that “Defendants knew, based on their experience in CCDH purporting to analyze data associated with social media platforms . . . that for Brandwatch to have access to X Corp. data for its SaaS products to analyze, X Corp. must have contracts with Brandwatch, and that Brandwatch would be prohibited under the terms of [its contract with X Corp.] from providing access to unauthorized parties, or allowing any unauthorized parties to access that data.” Id. ¶ 96. X Corp. further alleges that “Defendants knew . . . that CCDH obtaining login credentials from a valid user such as ECF to access the data would cause Brandwatch to breach [its contract with X Corp.] by allowing an unauthorized third party . . . to gain access to the data without proper permissions or authorizations.” Id. ¶ 97. X Corp. alleges that it was harmed “as a result of Defendant’s conduct when companies paused or refrained from advertising on X, in direct response to CCDH’s reports and articles,” and that “[a]s a direct and proximate result of Defendants inducing Brandwatch to breach [its contract with X Corp.], X Corp. has suffered monetary and other damages in the amount of at least tens of millions of dollars.” Id. ¶¶ 98, 99.

CCDH argues as an initial matter that the two claims are redundant. MTD&S at 23. They certainly are. Inducing a breach of contract is a “species of intentional interference with contractual relations.” See 1-800 Contacts, Inc. v. Steinberg, 132 Cal. Rptr. 2d 789, 802 (Cal. Ct. App. 2003). The difference is that an “interference” claim does not require a breach. See Shamblin, 166 Cal. App. 3d at 123; see also Opp’n at 29 (interference claim is “narrower”). Here, because the only form of interference alleged is inducement of a breach, see FAC ¶¶ 93, 97, the claims allege the same thing. Accordingly, they rise and fall together.

CCDH’s arguments for dismissing the tort claims are that: (1) the complaint shows that CCDH did not cause a breach; (2) the complaint has failed to plausibly allege a breach; (3) the complaint has failed to plausibly allege CCDH’s knowledge; and (4) the complaint fails to adequately allege damages. MTD&S at 23–26. The Court concludes that CCDH’s arguments about causation and about damages are persuasive, and does not reach its other arguments.