Cancelers Beware: Trying to Get Person Fired by Threatening Employer with Cutting Off Your Business Relationship May Be Tortious

Not all attempts to get someone fired are tortious—but, in some states, these particular attempts may well be.

The rules on this vary from state to state: In some states, this sort of pressure might not be actionable—if the employer is free to fire someone, and you are free to stop doing business with the employer, you're free to threaten the employer with loss of business if it doesn't fire the person. But in other states, it may be tortious "interference with prospective economic advantage." Here's an Illinois decision handed down Friday, in Grako v. Bill Walsh Chevrolet-Cadillac, Inc. (written by Justice Adrienne Albrecht and joined by Justices Lance Peterson and Linda Davenport; see also Drake v. Dickey (Ind. Ct. App. 2013) for a similar holding):

Plaintiff alleged that [defendant] Walsh [the owner of the defendant car dealership] leveraged his status as a client of her former employer [Ramza Insurance Group] to secure her termination….

Based on the pleadings and depositions within the record, Grako filed for bankruptcy protection pursuant to federal law under Chapter 13 in November 2017. In June 2018, Grako returned a vehicle purchased from Bill Walsh Chevrolet-Cadillac, Inc., and discharged the associated debt.

The record reveals that Walsh had several personal insurance policies with Ramza Insurance. It also indicates that Bill Walsh-Chevrolet-Cadillac, Inc., bore the financial brunt of Grako's bankruptcy discharge of her vehicle. Walsh, an agent of Bill Walsh-Chevrolet-Cadillac, Inc., learned of the discharge in early November 2018. To Walsh's displeasure, the process of repossessing Grako's vehicle was at his expense. On November 7, he texted Grako, "R u kidding me after all I've done for you?" After exchanging texts the following day on the financial burden to retrieve the vehicle, Walsh concluded his conversation with Grako by stating: "We are pulling all of our business from ramza tomorrow."

Around this time, Walsh communicated his discontentment with Grako to his friend Schultz. Schultz [who had a business relationship with Ramza] chronicled their conversation in a string of text messages …, serving as an intermediary messenger between the displeased Ramza Insurance client and Ramza Insurance employees. According to Schultz, Walsh asked whether Grako worked at Ramza Insurance. Schultz's message also included the following:

"We have MAJOR [expletive] problems!!! MAJOR!! Walsh is going to pull ALL their business is [sic] [Grako] works for us. She stuffed them For over $15,000!!!! [Walsh] has been texting me all night and I just replied ***. He is like MAJOR LEAGUE p*** ***. This is NOT NOT NOT good."

Grako alleges that, as a result of Walsh's pressure, Ramza fired her; and the court concluded that Grako's lawsuit against Walsh could proceed:

[Even] at-will employees possess an actionable interest in their "future relations between" employee and employer. Restatement (Second) of Torts § 766, cmt. g (1979). The tort recognizes that a person's business relationships constitute a property interest and, as such, are entitled to protection from unjustified tampering by another….

"'To state a cause of action for intentional interference with prospective economic advantage, a plaintiff must allege (1) a reasonable expectancy of entering into a valid business relationship, (2) the defendant's knowledge of the expectancy, (3) an intentional and unjustified interference by the defendant that induced or caused a breach or termination of the expectancy, and (4) damage to the plaintiff resulting from the defendant's interference.'" … [T]he record supports a reasonable inference that Grako possessed a sufficient expectation of continued employment … [and] Walsh conceded he was aware that Ramza Insurance was Grako's employer….

To be found liable for tortious interference with prospective economic advantage, a defendant's interference must be intentional and improper…. Section 767 of the Restatement lists several factors which courts consider in determining whether an alleged interferer's conduct reaches actionable impropriety, including (1) the nature of the interfering conduct, (2) the interferer's motive, and (3) the proximity or remoteness of the interferer's conduct to the interference.

Concerning an interferer's motive, it may become important to determine whether an interferer was motivated "by a desire to interfere with the other's" business expectancy. If that desire was the sole motive behind the interference, it is "almost certain" to qualify as improper interference. As the Restatement makes plain, the "motive to injure another or to vent one's ill will on him [or her] serves no socially useful purpose." …

Although an individual has no legal obligation, barring a contract, to do business with another, there remains a "general duty not to interfere intentionally with another's reasonable business expectancies of trade with third person, whether or not they are secured by contract" unless such interference is not improper. Thus, Walsh's animosity towards Grako would be a legitimate reason to refuse to give Ramza Insurance his continued business. However, tortious interference arises when the individual takes an additional step; in this context, when pressure—financial or otherwise—is exerted to affirmatively induce a breach of agreement…. [T]he evidence before us presents numerous factual questions regarding Walsh's conduct and its possible impact over Grako's termination that precludes entry of summary judgment in defendants' favor….

Note that this ruling stemmed from a threat to cut off your own business relationship. Merely encouraging the employer to fire an at-will employee, or encouraging people not to do business with the employer, would generally not be actionable (and might even be protected by the First Amendment). See, e.g., Moore v. Hoff (Minn. Ct. App. 2012).

I'm generally skeptical of the legal theory on which Grako and similar cases rest; I think that, if T (here Ramza) is free to cut off relations (employment or otherwise) with P (here Grako), and D (here Walsh) is free to cut off relations with T, it's hard to see why D shouldn't be free to threaten T with such a cutoff as a means of pressuring T to stop doing business with P. But, as Grako shows, some state laws do make some such threats legally actionable, and I thought this was worth noting.

Christopher Jahnke (Frankfort Law Group) represents Grako.