The Volokh Conspiracy
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'Intentional interference with business relations' tort claims based on defendant's true statements about plaintiff
Can someone be liable for "intentional interference with business relations" for accurately informing people about facts about the plaintiff, which then leads them to stop doing business with the plaintiff? I think the answer has to be no, both because of the First Amendment and as a matter of sound tort law principles. Some broad definitions of the interference tort might seem to allow such liability, but recent cases rightly reject it. I've blogged about this before as to the Moore v. Hoff/Johnny Northside blogger case, and I came across a couple of cases from the past few months that likewise protect the right to convey truthful information in such situations.
1. In Nieto v. Cherry Creek Properties PM, LLC, 2017 WL 3494075 (Colo. Dist. Ct.), Will Nieto was fired by Cherry Creek, a property management company for which he worked as a broker; this firing led to a bunch of legal claims on both sides, including this one:
The most significant Counterclaim asserted by Defendants is the claim that Nieto defamed [Cherry Creek owner Constantine] Sarganis when he surreptitiously sent letters and e-mails to various employees and relatives of Sarganis notifying them of a 1997 arrest, guilty plea, and deferred judgment probationary sentence for third degree assault involving Sarganis and his wife….
Sarganis, while acknowledging that he did enter a guilty plea to third degree assault in 1997 and did complete a term of probation pursuant to a deferred judgment sentence, argued that once he completed the term of probation, the plea was withdrawn. He asserts that it was defamatory for Nieto to communicate with others about this arrest and plea. Sarganis contends that highlighting portions of the record, referring to it as an act of domestic violence and adding information about the definition of third degree assault constitute defamation. Additionally, there were some examples of correspondence where the information concerning withdrawal of the plea was deleted.
No dice, said the court:
While the Court finds that such information may have been embarrassing to Sarganis, the Court concludes thahe information contained in the communications sent by Nieto was substantially true. The fact that some of the communications may also have included definitions of third degree assault, or may have omitted the ultimate dismissal of the case does not change this finding.
(Note that if the dismissal had been based on a factual exoneration, the matter might have been different—a few cases suggest that reporting on charges after the accused had been exonerated, and not mentioning the exoneration, might be libelous; but here the dismissal was just based on Sarganis's having served out his probation.)
Nor could Sarganis prevail on the theory that the e-mails constituted "intentional interference with prospective business relations":
["]To allow a [party] to establish a tort claim by proving merely that a particular motive accompanied protected speech, … might well inhibit the robust debate that the First Amendment seeks to protect.["] Thus, even where the complaining party establishes that ill will is the motivation behind speech which forms the basis of tortious interference claim "courts have concluded that such lawful activity is insufficient to establish the required element of improper conduct." Since the Court determined that the alleged defamation was based on truthful statements, such a finding necessarily means that Defendants cannot sustain their tortious interference claim based on the same communications.
2. In Calabro v. Northern Trust Corp., the Illinois Appellate Court likewise concluded that true statements couldn't lead to liability under the interference with business relations tort. According to Calabro's petition, Calabro was actively recruited by Northern Trust Investments to leave his current employer and become chief compliance officer for Northern Trust. But two weeks after he moved to Illinois and started at Northern Trust, his supervisor and one of Northern's lawyers met with Calabro and
stated they had been informed that Calabro had been removed from his role as the CCO of the Optimum Fund Trust (Optimum) during his employment with Delaware. They inquired why Calabro had not disclosed such information during the interview process.
Calabro responded that his role with Optimum was "just a small part" of his responsibilities as the deputy CCO for Delaware and that he was never asked questions during his interviews which would have elicited such information. Calabro further explained that he had not been disciplined or demoted as a result of his removal from Optimum and had continued working for Delaware "quite successfully" until his resignation to join Northern Trust. [Two weeks later], Northern Trust terminated Calabro because he had failed to disclose his role with Optimum on his résumé or at any time during the interview process.
Calabro tried to sue whoever it was who gave this information to Northern, and filed a petition asking for an order that Northern reveal the source:
Calabro asserts that the elements of intentional interference with employment relationship are: (1) reasonable expectation of continued employment; (2) knowledge of the business relationship by the interferer; (3) intentional interference; and (4) resultant damage. According to Calabro, the "falsity of an interfering statement is not one of those elements."
But the court didn't distinguish employment relationships from other business relationships, and concluded that true statements can't be punished even when they are aimed at getting someone fired:
Illinois courts in employment and other contexts have consistently held that an intentional interference claim requires the provision of false information. See also Delloma v. Consolidation Coal Co. (7th Cir. 1993) (applying Illinois law; observing that "permitting recovery for tortious interference based on truthful statements would seem to raise significant First Amendment problems").
Section 772 of the Restatement (Second) of Torts, provides additional insight on this issue. The section provides that "[o]ne who intentionally causes a third person not to perform a contract or not to enter into a prospective contractual relation with another does not interfere improperly with the other's contractual relation, by giving the third person … truthful information." Comment (b) to section 772 states, in part, that "[t]here is of course no liability for interference with a contract or with a prospective contractual relation on the part of one who merely gives truthful information to another." As noted in [an Illinois appellate case], "[w]hile our supreme court has not explicitly adopted section 772 of the Restatement, it continues to look to the Restatement for guidance in outlining the contours of tortious interference actions."
(Note that there was no indication that Calabro's firing was a breach of any binding contract between Northern Trust and Calabro: The restrictions on intentionally inducing a breach of a binding contract may sometimes be different from restrictions on intentionally inducing the termination of a contract that the induced party has every right to terminate, such as an at-will employment contract.)
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Sounds right to me. Accurately conveying information to people is generally protected by the First Amendment. There may be a narrow exception to that rule for highly personal information that isn't newsworthy or otherwise legitimately relevant to the parties, such as (in some instances) sexual or medical information; I'm generally skeptical of such a claimed exception, but quite a few courts have indeed expressly or implicitly recognized it. But that exception must be limited to such highly personal information and doesn't extend to information about crimes (as in Nieto, see Gates v. Discovery Communications, Inc. (Cal. 2004) or the severing of earlier business relationships (as in Calabro).