Tortious Interference: What Your Company Needs To Know
Tortious Interference is a serious matter than can have a significantly adverse impact on your company. It is important to understand what it is and how to take action to protect your business. In this post we discuss the two types of tortious interference and what you can do to protect your company.
Building solid relationships, whether with customers, vendors, or clients, is one of the tenants of business success. Without these relationships, your business, despite how promising it is, will not grow and ultimately may collapse. Nearly every state understands and appreciates the importance of protecting business relationships between a business and its clients, customers, vendors, and others. As such, the tortious interference doctrine was established to create liability for someone who deliberately interferes with the relationship between a company and another party.
What Is Tortious Interference?
Simply stated, tortious interference occurs when someone intentionally interferes with your business relationships or interests. More specifically, there are two types of tortious interference. To establish a prima facie case of tortious interference, a plaintiff must show: (1) the existence of a contractual relationship or advantageous business relationship; (2) defendant's knowledge of this relationship; (3) an intentional and unjustified interference by the defendant with the relationship; and (4) damage to plaintiffs resulting from such interference.
As noted above, tortious interference comes in two forms: intentional interference with existing contractual relations and intentional interference with prospective economic advantage. The first type of tortious interference occurs when one party intentionally damages another party's existing contract with a third person. The second form of tortious interference occurs when one party intentionally damages another party's chances or opportunities to enter into a beneficial business relationship with a third person.
Tortious Interference with an Existing Contract
In order to prove intentional interference with an existing contract, a plaintiff must show that: (1) he had a contractual relationship with a third party; (2) the defendant knew of the existence of that contractual relationship; (3) the defendant intentionally interfered with that contractual relationship; and (4) as a result of the defendant's conduct, the plaintiff was damaged.
Tortious Interference with Prospective Economic Advantage
To prove intentional interference with prospective economic advantage, a plaintiff must show: (1) a reasonable expectation of economic advantage; (2) the defendant's knowledge of the expectancy; (3) purposeful interference by the defendant that prevents the plaintiff from realizing the expectancy; and (4) damages suffered by the plaintiff as a result of such interference.
"In the event that you believe tortious interference has occurred, you must act quickly to take legal action against the offender. The longer you wait the more you company can be damaged."
CASE IN POINT: MLW Media LLC, v. World Wrestling Entertainment, Inc.
On January 11, 2022, MLW Media LLC, filed a lawsuit against World Wrestling Entertainment ("WWE") alleging both tortious interference with contractual relations and tortious interference with prospective business advantage. The suit claims that WWE intentionally attempted "to destroy its competitor MLW’s business and maintain its dominance of the U.S. broadcasting market for professional wrestling by unlawfully interfering with MLW’s access to media markets and wrestling talent." (See Complaint - MLW Media LLC, v. World Wrestling Entertainment, Inc., Case 3:22-cv-00179-KAW.)
More specifically, MLW alleges that the WWE "targeted MLW with unlawful predatory conduct, including airing without authority MLW wrestling footage, inducing MLW wrestlers under exclusive contracts with MLW to terminate those contracts, and encouraging MLW wrestlers to breach their contracts with MLW by disclosing MLW’s confidential and proprietary business information." (See Complaint.)
MLW also alleges that "WWE unlawfully interfered with MLW’s television broadcasting agreement with VICE TV (“VICE”), one of the fastest growing entertainment cable networks in America. Under that May 2021 agreement, VICE agreed to air MLW’s archival footage, and the parties were also engaged in negotiations to expand the agreement to include the broadcasting of new licensed programs." (See Complaint.)
MLW seeks compensatory, punitive, and statutory damages, including treble damages and attorney's fees. MLW also seeks injunctive relief to prevent WWE "from engaging in anti-competitive and unfair business practices towards MLW.(See Complaint - MLW Media LLC, v. World Wrestling Entertainment, Inc., Page 18, Par. 5.)
Example of Tortious Interference with Contract
In the Complaint, MLW alleges that it had an existing contract and licensing agreement with Tubi for a planned series to be aired and distributed on the platform. It further alleges that "WWE knew about the existence and terms of the License Agreement. With the intent of disrupting that contract, WWE demanded that Tubi terminate the License Agreement. WWE knew that it had leverage over Tubi due to WWE’s business relationship with Tubi and its affiliate, Fox. WWE caused a disruption of the contractual relations by wrongfully inducing Tubi’s early termination of the License Agreement." (See Complaint - MLW Media LLC, v. World Wrestling Entertainment, Inc., Page 13, Par. 57.)
Example of Tortious Interference with Prospective Economic Advantage
MLW alleges that it was negotiating a media rights deal with VICE that would have resulted in an array of MLW programs airing on VICE platforms." MLW claims that "In June 2021, after WWE learned about the growing relationship between VICE and MLW, WWE executive Levison warned a VICE executive to stop airing MLW programs, saying that Vince McMahon was “pissed” that VICE was airing MLW content." (See Complaint - MLW Media LLC, v. World Wrestling Entertainment, Inc., Page 14, Par. 61-62.)
Take Action to Protect Your Company
The threat of tortious interference is not something that your company should ignore. If you have a contract with another company or are in negotiations for a new contract, it is important to take steps to protect your business.
Some ways that you can do this include:
Requiring employees, contractors, and consultants to sign non-disclosure agreements
Keeping confidential information secure
Monitoring social media and other online platforms for unauthorized disclosures
Acting quickly if you believe tortious interference has occurred
In the event that you believe tortious interference has occurred, you must act quickly to take legal action against the offender. The longer you wait the more you company can be damaged. Retaining an attorney as soon after you become aware of the interference will also allow your attorney to seek injunctive relief to prevent further interference. Tortious interference cases are complex and thus, you need to retain an experienced business litigation attorney.
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As with any legal issue, it is important that you obtain competent legal counsel before making any decisions about how to respond to a subpoena or whether to challenge one - even if you believe that compliance is not required. Because each situation is different, it may be impossible for this article to address all issues raised by every situation encountered in responding to a subpoena. The information below can give you guidance regarding some common issues related to subpoenas, but you should consult with an attorney before taking any actions (or refraining from acts) based on these suggestions. Separately, this post will focus on New Jersey law. If you receive a subpoena in a state other than New Jersey you should immediately seek the advice of an attorney in your state as certain rules differ in other states.