11.8 Tortious Interference

• Library: Employment Law in Virginia (Virginia CLE) (2020 Ed.)

11.8 TORTIOUS INTERFERENCE

11.801 In General. Tortious interference claims are "'predicated on the common law duty to refrain from interfering with another's contractual and business relationships,' which duty 'does not arise from the contract itself'" and can thereby subject to liability an outsider who causes one of the parties to a contract or business relationship not to perform as reasonably expected. ⁷²² "An action for tortious interference with a contract or business expectancy, however, does not lie against parties to the contract, but only lies against those outside the contractual relationship, i.e., strangers to the contract or business expectancy." ⁷²³ "Accordingly, only a party outside the contractual or business

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expectancy relationship with the plaintiff may be held liable as an interferor." ⁷²⁴

11.802 Interference with Contract Rights. The Virginia Supreme Court first recognized the cause for tortious interference with contract rights in Chaves v. Johnson. ⁷²⁵ The tort's premise is that the party to an existing contract has a property right in the performance of and anticipated benefits from the business relationship. ⁷²⁶ This "cause of action is historically rooted in the principle that 'the common law right of contract necessarily brought with it, as a corollary, a right to seek recompense against those who interfered with a valid contract.'" ⁷²⁷

The elements of the tort are:

1.	The existence of a valid contractual relationship or business expectancy;
2.	Knowledge of the relationship or expectancy on the part of the interferer;
3.	Intentional interference inducing or causing a breach or termination of the relationship or expectancy; and
4.	Resultant damage to the party whose relationship or expectancy has been disrupted. 728

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The contract or business relationship that forms the basis for the claim must be valid. For example, there is no liability if a defendant interferes with a contract that is unenforceable as against public policy. ⁷²⁹

Further, in DurretteBradshaw, P.C. the court stated that a defendant "must act with the intent to interfere with a contract to which the plaintiff was a party in order for the plaintiff to have a claim against that defendant for tortious interference with contract rights." ⁷³⁰ Accordingly, a defendant who intends to induce termination of one contract is not liable for the termination of a different contract that was terminated as a consequence of the termination of that first contract. ⁷³¹

"[T]he essence of a tortious interference claim under Virginia law is that the defendant intentionally induced the third party . . . to breach or terminate the relationship or expectancy with the plaintiff." ⁷³² In the employment context, some federal courts have recognized the possibility that a defendant can tortiously interfere with the plaintiff's employment contract by causing the plaintiff to be constructively discharged. ⁷³³ However, the burden of proof that an employee's at-will contract was tortiously interfered with in a way that left

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the employee in a situation so intolerable that he had "no practical choice other than quitting" is a high one. ⁷³⁴ Moreover, the Virginia Supreme Court has not ruled on this issue. ⁷³⁵

11.803 Interference with At-Will Relationships. In Virginia "the extent of permissible third-party interference increases as the degree of enforceability of a business relationship decreases." ⁷³⁶ Because an at-will contract is essentially only an "expectancy of future gain . . . the cause of action for interference with contractual rights provides no protection from the mere intentional interference with a contract terminable at will." ⁷³⁷ Accordingly, to prove tortious interference with an at-will contract, the claimant must not only prove the above four elements but must additionally show that the defendant interfered through the use of "improper methods." ⁷³⁸ "However, the plaintiff need not prove that 'the improper methods used were inherently illegal or tortious,' but 'only that the interference was intentional and improper under the circumstances' of the particular case." ⁷³⁹ Interference is improper "if it is illegal, independently tortious, or violates an established standard of trade or profession." ⁷⁴⁰ "Improper methods" may include

those means that are illegal or independently tortious, such as violations of statutes, regulations, or recognized common law rules. . . . violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship. . . .

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Methods may also be improper because they violate an established standard of a trade or profession . . . or involve unethical conduct. . . . Sharp dealing, overreaching, or unfair competition may also constitute improper methods. ⁷⁴¹

One federal court has held that mere "false statements concerning work performance" leading to the termination of employment can constitute tortious interference with contract under Virginia common law. In the well-reasoned opinion of Magnuson v. Peak Technical Services, ⁷⁴² the defendants on the tortious interference count were not parties to the contract of employment itself but were a company and its manager who were "de facto" employers of the plaintiff for title VII purposes. The court held that the plaintiff stated a claim against those defendants for common law tortious interference with contract. ⁷⁴³

However, the Virginia Supreme Court has declined "to expand the parameters of 'improper methods' to include 'actions solely motivated by spite, ill will and malice' toward the plaintiff." ⁷⁴⁴ "Thus, the inherent intimidation or duress experienced as a result of the very nature of [an] at-will contract cannot rise to the level of improper methods necessary to establish a cause of action for tortious interference with contract expectancy." ⁷⁴⁵ "Rather, the law provides a remedy in tort only where the plaintiff can prove that the third party's actions were illegal or fell so far outside the accepted practice of that 'rough-and

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tumble world' [of the competitive marketplace] as to constitute improper methods." ⁷⁴⁶

Additionally, the Virginia Supreme Court has held that "the requisite improper methods must have occurred prior to the termination of the contract in order to constitute the cause of the termination." ⁷⁴⁷

11.804 Interference with Contract Expectancy. Similarly, a claim based on tortious interference with a contract expectancy, as opposed to one for interference with a contract, also imposes the additional element of "improper means." In Maximus, Inc. v. Lockheed Information Management Systems Co., ⁷⁴⁸ the Virginia Supreme Court established the following elements for a claim of tortious interference with contract expectancy:

1.	The existence of a contract expectancy;
2.	Knowledge of the expectancy;
3.	Intentional interference with the expectancy;
4.	Use of improper means or methods to interfere with the expectancy; and
5.	Damage as a result of the disruption of the contract expectancy. 749

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Under Virginia law, "the breach of a noncompete clause is not in itself an improper method or means." ⁷⁵⁰ Even if an employee actually does work for entities that had previously been customers of his former employer, the former employer must still allege specific improper methods to prove his claim of tortious interference. ⁷⁵¹ However, the former employer may have a claim against the employee's new employer for tortious interference with the former employee's nondisclosure, non-solicitation, or noncompetition agreements with the former employer. ⁷⁵²

11.805 Interference with Prospective Business or Economic Advantage. The Virginia Supreme Court has also recognized a cause of action for tortious interference with prospective business or economic advantage. ⁷⁵³ To prevail on this cause of action, the claimant must establish the following elements:

1.	The existence of a business relationship or expectancy with a probability of future economic benefit;
2.	Knowledge of the relationship or expectancy;
3.	A reasonable certainty that absent the defendant's intentional misconduct, the plaintiff would have continued in the relationship or realized the expectancy; and
4.	Damages from the interference. 754

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Under Virginia law, the "'expectancy of remaining in business is too general to support a tortious interference claim. . . . Instead, there must be a particular expectancy which [claimant] is reasonably certain will be realized.'" ⁷⁵⁵ Moreover:

proof of the existence of the first and third elements of the tort must meet an objective test; proof of subjective expectations will not suffice. In other words, mere proof of a plaintiff's belief and hope that a business relationship will continue is inadequate to sustain the cause of action ... Second, the proof must establish a 'probability' of future economic benefit to a plaintiff. Proof of a 'possibility' that such benefit will accrue is insufficient." ⁷⁵⁶ .

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11.806 Privilege Issues. Virginia recognizes a qualified privilege to claims of tortious interference. ⁷⁵⁷ The qualified privilege in the tortious interference context is similar to the common interest privilege developed under the law of defamation. Cases analyzing one of the privileges are frequently cited in support of the other. As with defamation, proof of malice will defeat the qualified privilege for tortious interference. ⁷⁵⁸

The defense of qualified privilege is based on "the relationship between the parties and the balance to be struck between the social desirability of protecting the business relationship, on one hand, and the interferer's freedom of action on the other." ⁷⁵⁹ Grounds for...