New England Country Foods v. Vanlaw Food Products

Opinion of the Court by Liu, J.

This case concerns the scope of Civil Code section 1668’s rule that parties may not contract away liability for “willful injury to the person or property of another.” (All undesignated statutory references are to the Civil Code.) Plaintiff New England Country Foods, LLC (NECF) alleges that VanLaw Food Products, Inc. (VanLaw) intentionally undercut its business by secretly promising to replicate NECF’s popular barbeque sauce and sell it directly to Trader Joe’s. NECF sued VanLaw in federal court, alleging tortious interference and other claims. The district court dismissed the case based on a clause limiting damages in a manufacturing contract between the parties. The United States Court of Appeals for the Ninth Circuit asked us whether a contract clause that substantially limits damages for intentional wrongdoing is invalid under section 1668. We hold that a limitation on damages for willful injury to the person or property of another is invalid under section 1668. I. We assume the truth of the facts alleged in NECF’s operative complaint. (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1137–1138.) NECF is a Vermont company that began…