ORDER DENYING DEFENDANT'S MOTION TO DISMISS

Re: Dkt. No. 10

HOWARD R. LLOYD, Magistrate Judge.

First Financial Security, Inc. ("FFS") sues Freedom Equity Group, LLC ("FEG") for intentional interference with contract as well as related violations of California's Unfair Competition Law ("UCL"). FFS bases its claims on allegations that FEG induced approximately 1,400 sales contractors to leave FFS and join FEG en masse. FEG moves under Federal Rule of Civil Procedure ("FRCP") 12(b)(6) to dismiss for failure to state a claim. Dkt. No. 10. FFS opposes the motion. The parties have expressly consented to magistrate jurisdiction. The court has considered the arguments in the parties' briefs and the arguments heard on September 1, 2015. The court denies the motion to dismiss.

DISCUSSION

A motion to dismiss under FRCP 12(b)(6) tests the legal sufficiency of the claims in the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is appropriate where there is no cognizable legal theory or there are insufficient facts alleged to support a cognizable legal theory. Id. (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990)). The court assumes the truth of factual allegations and construes them in the light most favorable to the claimant. Id. But the court may disregard conclusions not supported by underlying factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 663-64 (2009). The court then draws upon its "experience and common sense" to answer a "context-specific" question: do the alleged facts support a plausible claim? Id.

Alleged facts do not support a plausible claim when the defendant offers a plausible alternative explanation that is consistent with the alleged facts. Eclectic Properties East, LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 2014) (collecting cases and discussing pleading standards). The alleged facts must provide the opposing party fair notice and an opportunity to defend itself effectively, and those facts must suggest it would be fair to subject the opposing party to the expense of defending against the claim. Id.

An interference with contract claim has five elements: (1) a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of the contract; (3) the defendant's intentional acts designed to induce a breach or disruption; (4) actual breach or disruption of the contractual relationship; and (5) resulting damages. Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118, 1126 (1990). The third element does not require specific intent; instead, the plaintiff must show intentional acts that were "certain or substantially certain" to induce a breach or disruption. Davis v. Nadrich, 174 Cal.App.4th 1, 10 (2009) (as modified May 21, 2009). Acts that "induce a . . . disruption" of contract include acts that do not actually cause breach, but still impede contract performance. Shamblin v. Berge, 166 Cal.App.3d 118, 122 (1985).

The UCL applies when the claimant is harmed by business practices that are also illegal acts. See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 180 (1999) (internal quotation marks omitted).

FEG concedes in its reply that FFS plausibly alleges most of the elements in the claim for intentional contract interference. Dkt. No. 17 at 1-2. FEG maintains only that FFS failed to plausibly allege the third element: intentional acts designed to induce a breach or disruption. Id. FFS argues, however, that the complaint contains several specific accusations of intentional conduct by FEG that was substantially certain to induce breaches and disruptions in the contracts between FFS and its sales contractors. Dkt. No. 14 at 5-6.

Indeed, several specific factual allegations support FFS's argument. The contracts between FFS and its contractors contained non-compete clauses. Dkt. No. 1, Exh. A at 4. FFS alleges: (1) an FEG principal met with Moua and Lee in January 2014; (2) the purpose of the meeting was to encourage a mass-defection of the sales contractors who worked under Moua and Lee; (3) Moua and Lee began to agitate against FFS for higher compensation in March and April of 2014; (4) FEG provided both legal and non-legal advice about how the contractors should resign from FFS; (5) many members of Moua and Lee's team sent their resignations to FFS on May 10, 2014, while they met in Moua and Lee's home; (6) FEG drafted the language the defectors used to resign; (7) FEG waived its customary $250 enrollment fee for defectors from FFS; and (8) the defectors assumed the same management hierarchy at FEG that they had used at FFS. Dkt. No. 1 at 10-13. These alleged facts plausibly show that FEG's intentional acts were substantially certain to induce breaches and interferences in contracts between FFS and its contractors.

Since FEG conceded that the other four elements of intentional contract interference have been plausibly pled, FFS has plausibly alleged each element of intentional interference with contract.

FEG provides an alternative explanation of what happened: Moua and Lee "decided on their own" to bring their team to a different brokerage firm. Dkt. No. 17 at 3. This explanation cannot defeat plausible allegations of contract interference because it is not consistent with them. See Eclectic, supra.

The UCL claim is plausible because an illegal business practice—intentional interference with contract—has been plausibly alleged as a sufficient predicate. The alleged facts provide FEG with fair notice and an opportunity to defend itself effectively against FFS's claims. The alleged facts also show it would be fair to subject FEG to the expense of defending against these plausible claims.

CONCLUSION

The motion to dismiss is denied.

IT IS SO ORDERED.