Kadisha

Introduction

Plaintiffs, PMC, Inc., and Winkler Forming, Inc. (WFI), appeal from a summary judgment in favor of defendants Neil Kadisha, Benjamin Nazarian, Parviz Nazarian, and Pioneer Private Equity Fund LLC (Pioneer). The question presented is whether, as shareholders, officers and directors of a corporation, defendants can be held personally liable for misappropriation of trade secrets, unfair competition, or interference with prospective economic advantage. We hold that a corporate officer or director may be liable for an intentional tort if: (1) the officer or director purchased or invested in the corporation the principal assets of which were the result of unlawful conduct; (2) the officer or director took control of the corporation and appointed personnel to run the corporation, which was engaging in unlawful conduct; and (3) the officer or director did so with knowledge or, with respect to trade secret misappropriation, when she or he had reason to know, of the unlawful conduct. We find plaintiffs have raised a triable issue of material fact as to the individual defendants’ active meaningful participation in, consent to, or approval of, the tortious conduct.…