2.1.1 Third Party Interference in Employment Cases

• Jurisdiction: Arizona

Corporate and governmental employers act through their managers and supervisors.[fn70] Therefore, where the manager or the supervisor acts within the scope of his employment, and for the employer's benefit, he is identified with the employer. The supervisor is generally permitted to advise his employer to terminate the employment relationship with the plaintiff and no liability will attach since he is not a necessary "third party" to the contract:[fn71]

. . .[a]n employee cannot be held liable for inducing his corporate employer's breach. This rule makes sense; otherwise, every breach of contract would also involve, because a corporation can act only through its employees, an inducing to breach by the agent who caused the breach to occur.[fn72]

However, in certain circumstances this general rule does not apply. In Wagenseller v. Scottsdale Memorial Hosp.[fn73] and Bernstein v. Aetna Life & Casualty,[fn74] the Arizona Supreme Court and the Ninth Circuit Court of Appeals, respectively, permitted a cause of action by the employee against the supervisor for interference with the employee's at-will employment contract. As was made clear in subsequent decisions, Wagenseller and Bernstein do not represent an exception to the third party rule. Rather, they explain the proper application of the rule.

In both Wagenseller and Bernstein, the interfering supervisor was allegedly motivated to satisfy a private motive unrelated to any legitimate employment purpose. In Wagenseller, supervisor Smith was motivated by personal animosity toward nurse Wagenseller, and in Bernstein, supervisor Fischer was motivated by religious intolerance toward employee Bernstein. These are private, non-employment related motives and purposes. Such purposes do not advance any interest of the employer. Any interference predicated on such personal motives does not represent a first party action on the part of the employer. It represents a private, third party action on the part of the supervisor.

The distinction between acting for private purposes outside the course and scope of employment and acting for the benefit of the employer within the course and scope of employment has been recognized in a number of cases. In Kelley v. City of Mesa,[fn75] the Arizona District Court differentiated between first and third party interference on whether the supervisor acted individually or in his official capacity. Similarly, in Lindseyv.Dempsey,[fn76] a case decided just two years following Wagenseller, the Court of Appeals found no personal motive to interfere improperly and denied recovery on the basis that the actions of the athletic director and the president were performed strictly with the benefit to the employer in mind.

However, the distinction between acting for a private purpose and acting for a corporate purpose has proven difficult to verbalize, even though it has been indirectly recognized by both Divisions of the Court of Appeals. Division One applied the "scope of employment" principle to distinguish Wagenseller and Bernstein in Mintz v. Bell Atlantic Systems:[fn77]

"[A] cause of action in tort is available to a party to any contract, at-will or otherwise, when a third party improperly and intentionally interferes with the performance of that...