General Commercial Packaging, Inc. v. TPS Package Engineering, Inc.

We decide whether a bargained-for contractual provision barring one party from courting a specific named customer, as opposed to an entire trade or industry or a significant portion of it, violates California’s prohibition against contracts in restraint of trade.

I

General Commercial Packaging (General Commercial) provides packing and crating services to businesses in Florida and California. It was hired by its long-standing customer, Walt Disney Companies (Disney), to package materials for transport to the new EuroDisneyland, and sought a subcontractor to help with the work in California. General Commercial ultimately chose defendant TPS Package Engineering (TPS).

To protect its business relationships with Disney and other California customers, General Commercial required TPS to sign a contract containing the following provision before beginning work on the EuroDisneyland Project:

ER 69 at 14. But it’s a small world after all, and so, before long, TPS began working directly for Disney. General Commercial filed suit in California Superior Court for breach of contract and tortious interference with contractual and business relationships. TPS removed the case to federal…