Intentional Interference with Prospective Economic Advantage
Elements
- a prospective contractual relationship between the plaintiff and a third party;
- knowledge by the defendant of the prospective relationship;
- intent to harm the plaintiff by preventing the relationship;
- the absence of privilege or justification by the defendant; and
- actual harm to the plaintiff as a result of the defendant’s conduct.
Wichinsky v. Mosa, 109 Nev. 84, 88, 847 P.2d 727 (1993).
Leavitt v. Leisure Sports, Inc., 103 Nev. 81, 88, 734 P.2d 1221, 1225 (1987).
Example Cases
Proof
Defenses
[California Case] The tort’s ‘protectionist’ premise, however, is at war with itself. For the person who deserves protection in the acquisition of property is not only the interfered-with party but also the interfering party. Why then should the interfered-with party receive favor, while the interfering party is disfavored, by virtue of their respective status? Why should the interfered-with party’s acquisitive efforts be elevated to a kind of property interest, good against the world, while those of the interfering party are deemed illegitimate? It is ‘often assumed … that interference … should produce liability because it is wrong to interfere. This is, however, very much the same as saying it is wrong because it is wrong.’ (Dobbs,Tortious Interference With Contractual Relationships, supra, 34 Ark.L.Rev. at p. 343 [speaking expressly of interference with contract].) In the words Lord Bramwell spoke in the House of Lords inMogul Steamship Company v. McGregor, Gow & Co., supra, [1892] A.C. 25, 47, affirming Mogul Steamship Company v. McGregor, Gow & Co., supra, 23 Q.B.D. 598, ‘[i]t does seem strange’–and more than strange–’that to enforce freedom of trade, of action, the law should punish’ the interfering party ‘who make[s] … perfectly honest’ arrangements ‘with a belief’ that they are ‘fairly required for [his] protection,’ whereas it rewards the interfered-with party who does likewise. (Italics in original.) Reason supports the conclusion that, even when there is a breach of contract, the interfered-with party should not be preferred over the interfering party: the breach may be ‘efficient.’ (See, e.g., Myers, The Differing Treatment of Efficiency and Competition in Antitrust and Tortious Interference Law, supra, 77 Minn.L.Rev. at pp. 1119-1120; Perlman, Interference With Contract and Other Economic Expectancies: A Clash of Contract and Tort Doctrine, supra, 49 U.Chi.L.Rev. at pp. 78-91; Dobbs, Tortious Interference With Contractual Relationships, supra, 34 Ark.L.Rev. at pp. 360-361.) Reason practically compels the same conclusion when there is no breach because there is no contract. (See Perlman, Interference With Contract and Other Economic Expectancies: A Clash of Contract and Tort Doctrine, supra, 49 U.Chi.L.Rev. at pp. 90-91.)
Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 399, 45 Cal. Rptr. 2d 436, 755 (1995) (Mosk, concurring).Statute of Limitations
“Because we have determined that business interests are personal property, we conclude that intentional interference with these business interests are actions for taking personal property and not actions for injuries to a person. See Clark v. Figge, 181 N.W.2d 211, 216 (Iowa 1970) (concluding that a claim for interference in business relationships was ‘fundamentally proprietary in character although incidental injuries may have been of a different nature’). Thus, we conclude that intentional interference with business interests are subject to the three-year statute of limitations set forth in NRS 11.190(3)(c).” Stalk v. Mushkin, 199 P.3d 838, 842 (Nev. 2009).
Privilege or Justification
[California Case] “[P]rivilege or justification is an affirmative defense, and the lack thereof need not be shown by the original pleader.” Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 389, 45 Cal. Rptr. 2d 436, 748 (1995) (quoting Buckaloo v. Johnson, 14 Cal.3d 815, 827-28, 122 Cal.Rptr. 745, 537 P.2d 865 (1975)).
Free Competition
“Perhaps the most significant privilege or justification for interference with a prospective business advantage is free competition. Ours is a competitive economy in which business entities vie for economic advantage. In a sense, all vendees are potential buyers of the products and services of all sellers in a given line, and success goes to him who is able to induce potential customers not to deal with a competitor. Thus, as Prosser states: ‘So long as the plaintiff’s contractual relations are merely contemplated or potential, it is considered to be in the interest of the public that any competitor should be free to divert them to himself by all fair and reasonable means.’ (Prosser, Torts (4th ed. 1971) p. 954).” Crockett v. Sahara Realty Corp., 95 Nev. 197, 199, 591 P.2d 1135, 1136 (1979). SeealsoDella Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 389, 45 Cal. Rptr. 2d 436, 748 (1995) (quoting Buckaloo v. Johnson, 14 Cal.3d 815, 828, 122 Cal.Rptr. 745, 537 P.2d 865 (1975)). “Thus, while no particular language should be required, the facts pleaded by a plaintiff must show an intent to do something which takes the defendant’s acts beyond those of a mere competitor securing business for himself.” Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 390–91, 45 Cal. Rptr. 2d 436, 749 (1995) (quotingA.F. Arnold & Co. v. Pacific Professional Ins., Inc., supra, 27 Cal.App.3d 710, 716, 104 Cal.Rptr. 96 (1972)). “In order to defeat the privilege [of competition] the defendant’s conduct must be unlawful or illegitimate.” Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 391, 45 Cal. Rptr. 2d 436, 446, 902 P.2d 740, 750 (1995).[California Case] In San Francisco Design Center Associates v. Portman Companies (1995) 41 Cal.App.4th 29, 50 Cal.Rptr.2d 716 (San Francisco Design Center ), on which the trial court here relied, the court held that to defeat the privilege of competition, the defendant’s conduct ‘must be unlawful or illegitimate. That is, … the … competitor’s conduct [must have] violated a statute or constituted a tort such as fraud or unfair competition. The defendant’s conduct must be independently actionable. [Citations.]’ (San Francisco Design Center, supra, 41 Cal.App.4th at pp. 42-43, 50 Cal.Rptr.2d 716, fns. omitted, citing Conoco Inc. v. Inman Oil Co., Inc. (8th Cir.1985) 774 F.2d 895, 907 [‘ ‘wrongful means’ … refers to means which are intrinsically wrongful-that is, conduct which is itself capable of forming the basis for liability of the actor’]; Doliner v. Brown (1986) 21 Mass.App. 692 [489 N.E.2d 1036, 1039-1040].)
The court reasoned that ‘[r]equiring proof that the competitor’s wrongful conduct is independently actionable will provide a clearer guide to competitors in the conduct of their business affairs. Detached from the concepts of actionable or unlawful, the term ‘wrongful’ provides little assistance in guiding future activities…. The term ‘wrongful’ is far too broad and covers much activity which should not defeat the competition privilege.’ ( San Francisco Design Center, supra, 41 Cal.App.4th at p. 43, 50 Cal.Rptr.2d 716.) In Della Penna, the court cited San Francisco Design Center favorably for the proposition that to defeat the privilege of competition the defendant’s conduct must be ‘ ‘unlawful or illegitimate.’ ‘ (Della Penna, supra, 11 Cal.4th 376, 391, 45 Cal.Rptr.2d 436, 902 P.2d 740.)”Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc., 116 Cal. Rptr. 2d 358, 365–66, 95 Cal. App. 4th 1249, 1258–259 (2002).
[California Case] “Because ours is a culture firmly wedded to the social rewards of commercial contests, the law usually takes care to draw lines of legal liability in a way that maximizes areas of competition free of legal penalties.” Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 392, 45 Cal. Rptr. 2d 436, 750–51 (1995).
[California Case] “Our courts should, in short, firmly distinguish the two kinds of business contexts, bringing a greater solicitude to those relationships that have ripened into agreements, while recognizing that relationships short of that subsist in a zone where the rewards and risks of competition are dominant.” Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 392, 45 Cal. Rptr. 2d 436, 751 (1995).
[California Case] Further, liability under the tort may threaten values of greater breadth and higher dignity than those of the tort itself. One is the common law’s policy of freedom of competition. ‘ ‘The policy of the common law has always been in favor of free competition, which proverbially is the life of trade. So long as the plaintiff’s contractual relations are merely contemplated or potential, it is considered to be in the interest of the public that any competitor should be free to divert them to himself by all fair and reasonable means…. In short, it is no tort to beat a business rival to prospective customers. Thus, in the absence of prohibition by statute, illegitimate means, or some other unlawful element, a defendant seeking to increase his own business may cut rates or prices, allow discounts or rebates, enter into secret negotiations behind the plaintiff’s back, refuse to deal with him or threaten to discharge employees who do, or even refuse to deal with third parties unless they cease dealing with the plaintiff, all without incurring liability.’ ‘ (A-Mark Coin Co. v. General Mills, Inc. (1983) 148 Cal.App.3d 312, 323-324, 195 Cal.Rptr. 859, quoting, without fns., Prosser, The Law of Torts (4th ed. 1971) Interference With Prospective Advantage, § 130, pp. 954-955; see, e.g., Myers, The Differing Treatment of Efficiency and Competition in Antitrust and Tortious Interference Law, supra, 77 Minn.L.Rev. at p. 1107.)
Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 399–400, 45 Cal. Rptr. 2d 436, 755 (1995) (Mosk, concurring.)
Freedom of Speech
[California Case] Another of these values expresses itself in the guaranty of freedom of speech in the First Amendment to the United States Constitution. [FN2] ‘[S]ociety places a high value on free speech.’ (Perlman, Interference With Contract and Other Economic Expectancies: A Clash of Contract and Tort Doctrine, supra, 49 U.Chi.L.Rev. at p. 74.) ‘ ‘The First Amendment presupposes that the freedom to speak one’s mind is not only an aspect of individual liberty–and thus a good unto itself–but also is essential to the common quest for truth and the vitality of society as a whole.’ ‘ (Blatty v. New York Times Co. (1986) 42 Cal.3d 1033, 1041, 232 Cal.Rptr. 542, 728 P.2d 1177, quoting Bose Corp. v. Consumers Union of U.S., Inc. (1984) 466 U.S. 485, 503-504, 104 S.Ct. 1949, 1960-61, 80 L.Ed.2d 502.) The interfering party, however, often interferes by means of words. It has been said that, ‘so far as tort liability is imposed for the communication of facts, opinions or arguments, that liability is simply inconsistent with the law’s long commitment to free speech.’ (Dobbs, Tortious Interference With Contractual Relationships, supra, 34 Ark.L.Rev. at p. 361; see generally id. at pp. 361-363.) At the very least, the ‘need for limits is acute….’ (Perlman, Interference With Contract and Other Economic Expectancies: A Clash of Contract and Tort Doctrine, supra, 49 U.Chi.L.Rev. at p. 74.) It matters not that the words in question may amount only to so-called ‘commercial speech.’ (See Paradise Hills Associates v. Procel (1991) 235 Cal.App.3d 1528, 1544-1545, 1 Cal.Rptr.2d 514.) That is because ‘commercial speech is not ‘wholly outside the protection of the First Amendment [.]’ ‘ (Linmark Associates, Inc. v. Willingboro (1977) 431 U.S. 85, 91, 97 S.Ct. 1614, 1617, 52 L.Ed.2d 155, quoting Va. Pharmacy Bd. v. Va. Citizens Consumer Council Inc. (1976) 425 U.S. 748, 761, 96 S.Ct. 1817, 1825, 48 L.Ed.2d 346.)
FN2. The First Amendment, of course, is made applicable to the states through the due process clause of the Fourteenth Amendment. (New York Times Co. v. Sullivan(1964) 376 U.S. 254, 277, 84 S.Ct. 710, 724, 11 L.Ed.2d 686.)
Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 400–401, 45 Cal. Rptr. 2d 436, 755–56 (1995) (Mosk, concurring).
Freedom of Association
[California Case] A related value is found in the First Amendment’s guaranty of freedom of association. ‘[O]ne of the foundations of our society is the right of individuals to combine with other persons in pursuit of a common goal by lawful means.’ (NAACP v. Claiborne Hardware Co. (1982) 458 U.S. 886, 933, 102 S.Ct. 3409, 3436, 73 L.Ed.2d 1215.) But when individuals join with each other to achieve an objective and undertake to act in the economic sphere, they run the risk that they will collectively be deemed an interfering party. Thus it happened to labor unionists, in the decades before and after the turn of the century, as they engaged in struggle over the terms and conditions of employment. (S’ee, e.g., Note, Tortious Interference With Contractual Relations in the Nineteenth Century: The Transformation of Property, Contract, and Tort, supra, 93 Harv.L.Rev. at pp. 1529-1537 [dealing with torts including that of intentional interference with prospective economic advantage]; Sayre, Inducing Breach of Contract (1923) 36 Harv.L.Rev. 663, 690-696 [same].) And thus it has happened in the present day as members of minority groups have sought to secure and exercise their political and civil rights. (See, e.g., NAACP v. Claiborne Hardware Co., supra, 458 U.S. at pp. 888-906, 102 S.Ct. at pp. 3413-3421.) It follows that associational freedom, too, calls for the limitation of liability under the tort.
Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 401, 45 Cal. Rptr. 2d 436, 756 (1995) (Mosk, concurring).
Right to Petition the Government
[California Case] Still another value inheres in the First Amendment’s guaranty of the people’s right to petition the government for redress of grievances. This protection is one of our ‘great, … indispensable democratic freedoms,’ and occupies a ‘preferred place … in our scheme.’ (Thomas v. Collins (1945) 323 U.S. 516, 530, 65 S.Ct. 315, 322, 89 L.Ed. 430.) The interfering party, however, may interfere by raising his voice and expressing his views to governmental authorities. (See Matossian v. Fahmie (1980) 101 Cal.App.3d 128, 135-137, 161 Cal.Rptr. 532; see also Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1133, 1135, 270 Cal.Rptr. 1, 791 P.2d 587.) To be sure, the ‘grievances for redress of which the right of petition was insured’ include ‘religious [and] political ones’ and others of that stature. (Thomas v. Collins, supra, 323 U.S. at p. 531, 65 S.Ct. at p. 323.) But they may embrace as well even such as relate merely to ‘business or economic activity.’ (Ibid.) Thus, the right of petition also calls for the limitation of liability under the tort. (Carpenter, Interference With Contract Relations, supra, 41 Harv.L.Rev. at pp. 751- 752.)
Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 401–402 n.4, 45 Cal. Rptr. 2d 436, 756–57 n.4 (1995) (Mosk, concurring).
Qualified Governmental Immunity
“under the terms of NRS 41.032(2), political subdivisions are immune from liability resulting from the discretionary acts of their agents or employees”City of Boulder City v. Boulder Excavating, Inc., 191 P.3d 1175, 1178 (2008).“NRS 41.032(2) provides qualified immunity to state agencies in the performance of discretionary acts.’” City of Boulder City v. Boulder Excavating, Inc., 191 P.3d 1175, 1178 (2008) (quoting University & Community College System v. Sutton, 118 Nev. 609, 55 P.3d 420 (2002)).
Defenses
Misc