5.8 Defenses

• Library: Virginia Business Torts (Virginia CLE) (2019 Ed.)

5.8 DEFENSES

5.801 Affirmative Defense of Justification or Privilege. Virginia law recognizes the affirmative defense of justification or privilege to claims of tortious interference. The Virginia Supreme Court recognized these defenses in Chaves v. Johnson, ⁷⁷ in which it also first recognized the tort of interference with contract. In Chaves, the defendant architect claimed that he was justified or privileged in writing to the city council about the award of a project to the plaintiff, Chaves. The court explained that justification or privilege

is similar, but not identical, to the defense of qualified privilege in the law of defamation. It is based upon the relationships 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. ⁷⁸

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Following the Restatement (Second) of Torts, ⁷⁹ the court held the specific grounds for the defense to be "legitimate business competition, financial interest, responsibility for the welfare of another, directing business policy, and the giving of requested advice." ⁸⁰ These grounds have been discussed in only a few cases.

Where the plaintiff has alleged interference with a contract terminable at will, a prospective contract, or a business expectancy, the defendant asserting justification or privilege carries the burden of proof to show that the interference was justified or privileged ⁸¹ and, at least in regard to four of the defenses, that the defendant did not use "wrongful means." ⁸² A defendant retains this burden even where the plaintiff is required to show interference by improper methods as an element of its case. ⁸³ The plaintiff is not required to prove malice under such circumstances. ⁸⁴ "The plaintiff, of course, retains the burden of persuasion on the ultimate question: whether the defendant intentionally and improperly, in other words tortiously, interfered with the plaintiff's business relationship causing loss to the plaintiff." ⁸⁵

5.802 Legitimate Business Competition. This defense is available where the defendant's conduct is justified by legitimate business competition. Cases in which courts addressed the legitimate business competition

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justification or privilege include Peterson v. Cooley, ⁸⁶ Charles E. Brauer Co. v. NationsBank of Virginia, N.A., ⁸⁷ and Southprint, Inc. v. H3, Inc. ⁸⁸

5.803 Financial Interest. The justification of financial interest was addressed in Zoby v. American Fidelity Co. ⁸⁹ and Saliba v. Exxon Corp. ⁹⁰ "[T]o invoke the [financial interest] defense one must act for the purpose of protecting a financial interest that one actually possesses." ⁹¹

It appears, however, that the financial interest defense may not be available at all in cases concerning interference with a contract that is not terminable at will. In Chaves v. Johnson, ⁹² a case dealing with a fixed contract, while the Virginia Supreme Court identified the financial interest defense as one of the applicable affirmative defenses to tortious interference, it rejected the defendant's application of the defense, commenting that

[s]ome jurisdictions have held that a competitor is justified by economic self-interest in causing a third person not to enter into a prospective business relationship with another competitor, or not to continue an existing contract terminable at will, provided no "intentional, improper interference" is used[.] His conduct is tortious, however, if he

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induces the third party to breach an existing contract which is not terminable at will. Chaves' contract with the City was terminable only for cause, not at will. ⁹³

If this language is interpreted to say that the financial interest defense can never be used in cases involving contracts not terminable at will, it would be consistent with the Restatement (Second) of Torts, ⁹⁴ which provides that the financial interest defense is inapplicable to the causing of a "breach of contract."

5.804 Responsibility for Welfare of Another. While no court seemingly has applied this defense, the dissent in Duggin v. Adams ⁹⁵ is of interest. There, Justice Whiting argued that Adams was entitled to judgment as a matter of law on the grounds that his actions as a lawyer in advising his client to terminate the contract were justified or privileged because "he was responsible for her welfare."

5.805 Noerr-Pennington Immunity. A long-standing doctrine of federal antitrust law, ⁹⁶ called the Noerr-Pennington doctrine, was first acknowledged by the Virginia Supreme Court in the tortious interference/conspiracy case of Lockheed Information Management Systems Co. v. Maximus, Inc. ⁹⁷ In Maximus, the court explained the doctrine as follows:

This doctrine is based on United Mine Workers v. Pennington, 381 U.S. 657. . . (1965), and Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127. . . (1961). The doctrine developed because business entities seeking to influence legislative or executive policy which would benefit them and injure competitors were charged with violations of the federal antitrust laws. Grounded in the constitutional right to free speech and to petition the government, the Noerr-Pennington doctrine provides that persons petitioning the government cannot be

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charged with violations of the Sherman Antitrust Act for attempts to influence legislative or executive action. Pennington, 381 U.S. at 669; Noerr, 365 U.S. at 135. The doctrine also applies to adjudicatory proceedings before administrative agencies. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510-11. . . (1972). ⁹⁸

Maximus involved claims for tortious interference and conspiracy in connection with a protest by Lockheed of a government notice to award a bid to Maximus. Lockheed argued that the Noerr-Pennington doctrine should shield it from liability for statements it made in connection with the bid protest. The court appeared to accept application of the Noerr-Pennington doctrine generally to business tort cases but rejected its application in Maximus, holding that "under the commercial activities exception, the Noerr-Pennington doctrine does not apply to cases in which the government entity is...