What Qualifies as Tortious Interference?
Question:
Hi Ken,
I am curious: What exactly qualifies as tortious interference? I have been part of the business for years, and since then, large companies with absolutely no integrity have petitioned my customers regularly. They’ve been able to take a few customers by using deception of facts and events. Sales representatives lie, misinform, misconstrue and tell outright lies to customers all the time — mine and others.
When is it tortious interference? We always have contracts and a lot of other companies don’t. When is it acceptable to directly petition others’ accounts?
Answer:
Today’s article involves you losing subscriber accounts to someone who may not be under any contract with you restricting their activity with your subscribers. This person who ends up with your subscriber [I won’t say steals your subscriber just yet] may have tortiously interfered with your contractual relationship.
Tortious interference is by definition wrong, in a civil sense, and is actionable. It falls within the tort category, as opposed to contract law category. Your legal redress may include both monetary and injunctive or other equitable relief. To get that relief, you are usually required to commence your lawsuit in a court of general jurisdiction, which means that small claims court or some other lower courts will not have the jurisdiction to hear your case and grant you the relief you seek.
The first criteria for tortious interference are that you have a contract with the subscriber that is being interfered with. If you don’t have a contract, then it’s not likely that a cause of action for tortious interference is going to be sustained. When you don’t have a contract with your subscriber, the relationship is “at will,” susceptible to termination at any time without penalty, and thus when you lose the account you really have no certain damages. So, an enforceable contract that is still within its term, where you have a contractual expectation of continued performance by your subscriber, is generally required.
Next, you will usually be required to show that you derive some benefit from your subscriber; that you make a profit on the relationship or that the relationship is valuable for other reasons than making money on the specific contract. Maybe the subscriber relationship give you access into a market or territory, or is a prestigious account that you advertise to attract more business. To recover monetary damages you will probably be required to show what you lost or will lose. If you seek equitable damages, to enjoin the other party [a tort-feasor] from continuing to tortiously interfere with your subscribers, then actual monetary damages may not be required. In fact, if you can pin point the monetary damages you may not be entitled to equitable [injunctive relief is equitable relief] relief.
Tortious inference does require some level or wrongful conduct. Even if you do have a profitable contract with a subscriber, the fact that a competitor takes that account and ends up with a contract for the same service, does not make it tortious interference. You will have to prove that the competitor knew you had a contract with the subscriber and did something wrong to entice the subscriber to breach your contract. What is wrongful conduct? It could be any number of factual scenarios. I’ll suggest a few.
Your employee leaves your employ and takes with him your subscriber information, including name, address, contract terms, type of system, codes and pricing. The employee, not under any contractual restrictive covenant, solicits your subscribers offering to provide the same service for half the price.
Same scenario, but instead of it being your employee offering half price, your competitor knocks on the subscriber door to let them know you are no longer in business, or did something so terrible that you shouldn’t be in business, and they are there to service and take over the system. The idea is that it’s wrong.
What’s not wrongful conduct? Well, a former employee not under any restriction, who gets a call from a subscriber to take over a system. A competitor who gains access to a subscriber through advertising or canvassing, and offers to provide the services without making comparison to you or the existing service.
Each case needs to be evaluated to determine if the conduct is wrongful, constitutes a tort, is actionable and worth pursuing.
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