Business owners need to understand how the law can protect them against competitors and insulate them from customer lawsuits. To reinforce this lesson, consider Beef Products, Inc., a closely held South Dakota company that faced severe consequences from negative reports regarding their processed beef product. When businesses are losing money stemming from interference with existing or future business relationships, business should contact a business attorney who can look at all of their options to remedy this threat and mitigate harm, including through litigation.
The Wall Street Journal, among others, is reporting that Beef Products Inc., , has sued ABC for defamation, tortious interference with contract (business relationship), and a state anti-food disparagement statute, among other claims. The beef company also named Diana Sawyer, who reported on the story for ABC and microbiologist Gerald Zirnstein, who as a USDA food inspector investigating a food bacteria outbreak in 2002 toured a BPI plant and coined the term "pink slime" to describe their product. BPI is suing these defendants for $1.20 billion, representing lost profits stemming from the alleged defamatory reporting and characterization of their product.
The Wall Street Journal, among others, is reporting that Beef Products Inc., , has sued ABC for defamation, tortious interference with contract (business relationship), and a state anti-food disparagement statute, among other claims. The beef company also named Diana Sawyer, who reported on the story for ABC and microbiologist Gerald Zirnstein, who as a USDA food inspector investigating a food bacteria outbreak in 2002 toured a BPI plant and coined the term "pink slime" to describe their product. BPI is suing these defendants for $1.20 billion, representing lost profits stemming from the alleged defamatory reporting and characterization of their product.
Tortious interference is separated into to two distinct torts in Illinois: interference with contracts and interference with prospective business relationships. With the limited public information regarding this suit it seems that BPI's suit conflates these two concepts and states damages both as lost contracts and interference with prospective business relationships. There is some level of speculation in terms of damages for prospective business relationships. Understanding the legal differences between the two will help a practitioner decide which of the torts to assert in a claim where tortious interference has occurred.
“It is generally recognized in Illinois that the elements of [tortious interference with contract] are: (1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant’s awareness of this contractual relation; (3) the defendant’s intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other, caused by the defendant’s wrongful conduct; and (5) damages.” HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-55, 545 N.E.2d 672, 676 (1989).
And “[i]t is generally recognized by the Illinois courts that to prevail on a claim for tortious interference with a prospective economic advantage, a plaintiff must prove: (1) his reasonable expectation of entering into a valid business relationship; (2) the defendant’s knowledge of the plaintiff’s expectancy; (3) purposeful interference by the defendant that prevents the plaintiff’s legitimate expectancy from ripening into a valid business relationship; and (4) damages to the plaintiff resulting from such interference.” Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 483-84, 693 N.E.2d 358, 370 (1998).
The tort of interference with prospective advantage recognizes that a person's business relationships constitute a property interest and as such are entitled to protection from unjustified tampering by another. Belden Corp. v. InterNorth Inc., 90 Ill.App.3d 547, 551, 45 Ill.Dec. 765, 413 N.E.2d 98 (1980).
There are instances where a defendant's conduct is justified or privileged. Whether described as “justified” or “privileged,” there are many circumstances in which interfering conduct is not actionable.
To determine whether a defendant acted justifiably in the context of a claim of tortious interference with a contract, Illinois uses a balancing test in which contractual rights are weighed against the particular type of interference claimed. The issue is whether the protection of the particular contract at issue merits prohibition of the particular conduct at issue. Interference with a contractual relationship may be justified if the defendant is privileged to engage in the interference.
This brief article is by no means a holistic summary of the law related to tortious interference with contracts or prospective business relationships. To understand more about how a third party's interference with a contract or a prospective business relationship constitutes a tort, contact a commercial litigation attorney that is familiar with Illinois law and can handle complex commercial litigation.
“It is generally recognized in Illinois that the elements of [tortious interference with contract] are: (1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant’s awareness of this contractual relation; (3) the defendant’s intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other, caused by the defendant’s wrongful conduct; and (5) damages.” HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-55, 545 N.E.2d 672, 676 (1989).
And “[i]t is generally recognized by the Illinois courts that to prevail on a claim for tortious interference with a prospective economic advantage, a plaintiff must prove: (1) his reasonable expectation of entering into a valid business relationship; (2) the defendant’s knowledge of the plaintiff’s expectancy; (3) purposeful interference by the defendant that prevents the plaintiff’s legitimate expectancy from ripening into a valid business relationship; and (4) damages to the plaintiff resulting from such interference.” Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 483-84, 693 N.E.2d 358, 370 (1998).
The tort of interference with prospective advantage recognizes that a person's business relationships constitute a property interest and as such are entitled to protection from unjustified tampering by another. Belden Corp. v. InterNorth Inc., 90 Ill.App.3d 547, 551, 45 Ill.Dec. 765, 413 N.E.2d 98 (1980).
There are instances where a defendant's conduct is justified or privileged. Whether described as “justified” or “privileged,” there are many circumstances in which interfering conduct is not actionable.
To determine whether a defendant acted justifiably in the context of a claim of tortious interference with a contract, Illinois uses a balancing test in which contractual rights are weighed against the particular type of interference claimed. The issue is whether the protection of the particular contract at issue merits prohibition of the particular conduct at issue. Interference with a contractual relationship may be justified if the defendant is privileged to engage in the interference.
This brief article is by no means a holistic summary of the law related to tortious interference with contracts or prospective business relationships. To understand more about how a third party's interference with a contract or a prospective business relationship constitutes a tort, contact a commercial litigation attorney that is familiar with Illinois law and can handle complex commercial litigation.
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