A corporation, LLC, or business owner may on occasion have a claim for, or be subject to a lawsuit for tortious interference. This happens where on party in some “wrongful” manner (either by wrongful means or for wrongful purpose), negatively affects the contractual relation or prospective economic advantage of another.
A claimant must prove the following in order to prevail on a claim for tortious interference:
- the existence of a professional or business relationship (which could include, e.g., a contract or a prospective economic advantage);
- intentional interference with that relationship or advantage;
- by a third party;
- accomplished through improper means or for an improper purpose;
- a causal effect between the interference and the harm to the relationship or prospective advantage;
See Allen v. Hall, 328 Or 276, 281, 974 P2d 199 (1999).
How does one know whether these elements exist in the real world? Elements 5 and 6 are best left for later discussion; liability usually hinges on the following points:
1. There must be a professional/business interest to damage.
The clearest form of interest that the law protects is an arm’s length business contract. “At will” employment contracts qualify as contractual relationships in the context of tortious interference claims. Porter v. Oba, Inc., 180 Or App 207, 214–215, 42 P3d 931 (2002) (“‘[T]he parties to an at-will employment relationship have no less of an interest in the integrity and security of their contract than do any other contracting parties,’). Most other express contracts will qualify as protected relationships, especially in a commercial context.
Although written contracts offer stronger proof of the existence of the contractual relationship (and certain contracts must be written to be legally recognized under the statute of frauds), Oregon law does not generally require that contracts be written for purposes of tortious interference.
Oregon’s courts have recognized that actionable tortious interference may exist even in the absence of an express contract where there is a “prospective economic advantage.” Case law is not well-developed on this point, but the closer a prospective relationship is to a contractual one, the more likely the relationship will hold water.
2. The Interference must be intentional.
Although express intent to interfere is not necessary to prove intentional interference, an action for tortious interference may exist where the Defendant knows that interference is “substantially certain to occur from its action”. See Empire Fire & Marine Ins. v. Fremont Indemnity, 90 Or App 56, 63, 750 P2d 1178 (1988)
3. Interference must be by a third party.
Tortious interference claims create liability where damage is caused by a third party, rather than the opposing party to a contract. If the opposing contractual party causes damage, the proper claim is usually for breach of contract.
In a corporate context, the situation becomes more complex in terms of who is a third party. An LLC or corporate agent (usually somebody employed by the company) will not be liable to a third party for tortious interference so long as the agent was acting “within the scope of his authority and with the intent to benefit the principle.” That is the case even where the agent acts through “mixed motives” to benefit himself or another principal as well. Hampton Tree Farms, Inc. v. Jewett, 320 Or. 599, 617, 892 P.2d 683 (1995).
4. The interference must be wrongful beyond the fact of the interference itself.
Even deliberate interference, without more, will not create liability for tortious interference. The third-party actor must have acted for improper purpose or by improper means.
Improper purpose includes:
(1) Retaliation for legitimate activity (whistle-blowing, criticism of questionable or illicit conduct by a supervisor or superior), Boers v. Payline Systems, Inc., 141 Or App 238, 244–245, 918 P2d 432 (1996)
(2) Creating false information in order to justify a firing or termination, Id.
To be improper, a means “must violate some objective, identifiable standard, such as a statute or other regulation, or a recognized rule of common law, or, perhaps, an established standard of a trade or profession.” Northwest Natural Gas Co. v. Chase Gardens, Inc., 328 Or. 487, 498, 982 P.2d 1117 (1999).
Improper means also include “violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood.” Top Service Body Shop, supra, 283 Or at 210 n 11.
Pragmatically, proving improper purpose is often very difficult unless extremely persuasive circumstantial evidence can be developed, so proof of improper means is often more effective. Actual intent to interfere is difficult to prove for similar reasons; a plaintiff may more easily show substantial certainty of interference. Under skillful deposition, it may be difficult for a defendant to deny substantial certainty of interference without looking foolish or damaging his credibility.
For more information about tortious interference, how it may affect your business, or how best to protect yourself or your business from potentially damaging claims, please feel free to contact our offices at (503) 224-9946, and visit us on the web at www.nwbusinesslawgroup.com.