Nature of the Case
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Facts
P, a certified public accountant, was hired as a tax manager by the Los Angeles office of D. P's employment was contingent upon P signing a noncompetition agreement, which prohibited him from working for or soliciting certain D clients for limited periods following his termination. It read in relevant part: “If you leave the Firm, for eighteen months after release or resignation, you agree not to perform professional services of the type you provided for any client on which you worked during the eighteen months prior to release or resignation. This does not prohibit you from accepting employment with a client. For twelve months after you leave the Firm, you agree not to solicit (to perform professional services of the type you provided) any client of the office(s) to which you were assigned during the eighteen months preceding release or resignation. You agree not to solicit away from the Firm any of its professional personnel for eighteen months after release or resignation.” Between 1997 and 2002, P worked for D. P was promoted to senior manager, and was on track to become a partner. In March 2002, the United States government indicted Andersen in connection with the investigation into Enron Corporation, and in June 2002, Andersen announced that it would cease its accounting practices in the United States. D began selling off its practice groups to various entities. HSBC was to purchase a portion of D's tax practice, including P's group. HSBC offered P employment. Before hiring any of D's employees, HSBC required them to execute a “Termination of Non-compete Agreement” (TONC) in order to obtain employment with HSBC. The TONC required employees to (1) voluntarily resign from D; (2) release D from “any and all” claims, including “claims that in any way arise from or out of, are based upon or relate to Employee's employment by, association with or compensation from” D; (3) continue indefinitely to preserve confidential information and trade secrets except as otherwise required by a court or governmental agency; (4) refrain from disparaging D or its related entities or partners; and (5) cooperate with D in connection with any investigation of, or litigation against, D. If P signed the TONC, D would agree to accept P's resignation, agree to P's employment by HSBC, and release P from the 1997 noncompetition agreement. P signed the HSBC offer letter, but he did not sign the TONC. D terminated D's employment and withheld severance benefits. HSBC withdrew its offer of employment to P. P filed a complaint against D, HSBC, and WTAS for intentional interference with prospective economic advantage and anticompetitive business practices. P alleged that the Andersen noncompetition agreement violated section 16600., which states “except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” P alleged that the TONC's release of “any and all” claims violated Labor Code sections 2802 and 2804. P settled with all parties except D. The trial court sustained D's concluding P lacked standing to bring the action. The court determined all issues of law in favor of D on the merits and entered judgment in its favor. It held that the noncompetition agreement did not violate section 16600 because it was narrowly tailored and did not deprive P of his right to pursue his profession; and the TONC did not purport to waive P's right to indemnification. P appealed. At issue here is the third element of the tort for intentional interference with prospective economic advantage. P claimed (1) the noncompetition agreement was illegal under section 16600, making D's demand that he give consideration to be released from it against public policy; (2) the TONC's additional release of “any and all” claims constituted a waiver of his indemnity rights in violation of Labor Code sections 2802 and 2804; and (3) the TONC's nondisparagement clause violated Labor Code section 1102. The Court of Appeal held in part that the noncompetition agreement was invalid under section 16600, and requiring Edwards to sign the TONC was an independently wrongful act. D appealed.
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