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Tortious Interference with Economic Advantage

Posted by Attorney Stephen Hance | Feb 22, 2016 | 0 Comments

One claim that sometimes comes up in the business context is called tortious interference with economic advantage.[1] This is a claim against someone for wrongfully taking a business opportunity away from the victim. It comes up often against former employees or co-owners who sidetrack business opportunities that have come to their attention while they worked for the victim.

For example: ABC Company is a marketing firm. XYZ is a competing marketing firm. John is an employee of ABC marketing firm who is looking for other opportunities. XYZ Company contacts John and offers him a job if he can bring ABC's biggest account with him. ABC's relationship with the customer is at will, meaning that either party could terminate the relationship at any time. XYZ asks John to find out the rates ABC charges to the customer and the services it provides so that it can make a proposal to the customer while John is still employed by ABC. XYZ gets the business and hires John. In this example, John breached his duties of loyalty to ABC as an employee, a wrongful act which XYZ knowingly encouraged. If ABC lost business from the customer and can prove that it would have otherwise likely retained the business, it has a claim for tortious interference with economic advantage.

Minnesota Courts have recognized this claim and identify five elements required to prove the claim as follows:

  1. Existence of a reasonable expectation of economic advantage;
  2. The Defendant's knowledge of that expectation of economic advantage;
  3. Intentional interference by the Defendant with the expected advantage which interference is either independently tortious or which is against the law;
  4. That absent the wrongful act, the victim probably would have realized the expected economic benefit; and
  5. The victim sustained damages.

See Gieseke ex rel. Diversified Water Diversion, Inc. v. IDCA, Inc., 844 N.W.2d 210, 219 (Minn. 2014).

The difficult part about proving these claims that often, in the absence of a written contract, it is difficult to provide that the victim would have had a likelihood of realizing the economic advantage. Often the prospective business has committed to doing business with the Defendant and does not support the victim's claim.

There are other obstacles to prove as well. Proving the wrongful act can be difficult if the perpetrator engaged in prospective business orally. Also, the amount of damages can be seen as subjective because the Court will not likely allow lost profits and damages to be determined based on an indefinite period of time.

Tortious interference with economic advantage claims are often fact intensive since the victim needs to prove all of the elements of the claim often by emails and witness statements. In contrast, proving a contract claim may require a little more than the contract itself. So to bring such a claim in addition to having adequate evidence support the allegation in the first place, you will need an experienced business litigation lawyer to conduct as much discovery and secure as many subpoenas that are necessary to thoroughly investigate the history. 

We are always happy to discuss the potential claims or defenses at Hance Law Firm and our initial consults are always free.

[1] Sometimes also referred to as tortious interference with prospective business advantage.

About the Author

Attorney Stephen Hance

Steve represents and advises clients that are dealing with business and real estate disputes. Steve is an investor and business owner, and his approach is unique from other attorneys.

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