Q: One of our competitors has a highly productive independent contractor (IC) whom we would like to retain. After we first solicited the IC, our competitor's attorney wrote us a letter threatening to sue us for "tortious interference with contract" if any of its ICs quit and come to work with us. Could the competitor successfully sue, or is the attorney's letter just a bluff?
A: If your only motive is to gain business at the expense of your competitor, then your competitor could not successfully sue you, as long as you didn't employ illegal means in your solicitation. The attorney's letter is either a bluff or reflects a misunderstanding of the law of tortuous interference.
The law of tortious interference is based on judicial precedents, so it varies somewhat from state to state. However, it is probably safe to say that, in the vast majority of states, you can successfully sue for tortious interference if you can show: 1) the existence of a contract or business relationship that affords plaintiff existing or prospective legal rights; 2) defendant's knowledge of that contract or business relationship; 3) defendant's intentional and unjustified interference with the relationship; and 4) damage to plaintiff.
Incidentally, the funny-sounding word "tortious" means "pertaining to torts," and a "tort" means something that you can sue for, other than breach of contract. For example, negligence and defamation are torts.
In the list of elements above, the most important word is "unjustified." Each state's precedents define when interference is unjustified, but in general, solicitation of a customer is "justified" when the solicitor's only motive is to get more business for itself at the expense of a competitor.
On the other hand, if you make the competitor lose business by spreading false rumors or engaging in defamation, or if you act out of revenge (and the competitor can prove it), then your interference is "unjustified," and you can be successfully sued.
In addition, if you use illegal means to solicit the business, then your interference will also be deemed unjustified. For example, if you continue to send spam emails to the agency's ICs after the recipient has opted out, or if you send unsolicited faxes, your actions would be deemed unjustified.
Finally, if you solicit the IC and then induce the IC to arrange for the transfer of existing reservations from the old agency to your agency without the old agency's permission, or if you get the IC to induce his or her clients to cancel and rebook with you, you are also opening yourself up to a charge that your interference is unjustified. Worse, you could be liable for "conversion," which is another kind of tortious conduct that could lead to punitive damages.
Note that, under the law of some states, it does not matter whether the IC has a written contract or even whether that contract is for a term of years. However, under the law of other states, there is no tortious interference if there is no actual contract. Finally, under other states' laws, you cannot successfully sue for tortious interference if the contract is terminable at will by either party.
So before you continue soliciting the IC, you need to know the law of your state.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].