Competitor’s Privilege a Competitive Advantage? Only if there’s not improper means!

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Tennessee recognizes the tort of interference with prospective business relations. But there’s an exception for competitors:

One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor or not to continue an existing contract terminable at will does not interfere improperly with the other’s relation if:

a)      The relation concerns a matter involved in the competition between the actor and the other, and

b)      The actor does not employ wrongful means, and

c)      His action does not create or continue an unlawful restraint of trade, and

d)     His purpose is at least in part to advance his interest in competing with the other.

In Norvell Skin Solutions, LLC v. Solaire PTY, Ltd., (Case 2:13-CV-0017, M.D.TN. 7/8/14) District Judge Aleta Trauger predicted that Tennessee Courts would dismiss the claim of tortious interference between competitors if the claim were based only on improper motive, recognizing the problematical circumstances resulting from restricting a competitor motivated to entice customers its way and away from its competitors.  But, the competitor cannot use improper means (independently tortious acts, violations of statutes and regulations, violence, threats, intimidation, bribery, etc.).  The Court allowed the counterclaim out to amend the pleadings to assert a claim based on “improper means,” but dismissed its claim based on improper motive.

The Tennessee Court of Appeals, in Tennison Brothers, Inc. v. Thomas (2014 Tenn. App. LEXIS 479) (published 8/6/14), faced the unusual facts of a trial court deciding that the defendant was not liable for tortious interference, in the damages hearing, after a default judgment.  On appeal, the Court found that the default judgment should stand given the allegations of both improper motive and improper means supporting the tortious interference claim.

Take away:  if the facts justify it, plead improper means to support tortious interference claims!

Topics:  Breach of Contract, Competition, Tortious Interference

Published In: Business Torts Updates, Civil Procedure Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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