For centuries, the law has protected a person from wrongful interference with his economic relationships. For example, if A were to make a false claim against B, in order to drive customers away from B’s business, A would be civilly liable for the business B lost as a result of the false claim. Another example is if A and B have a contract yielding economic benefits for both parties, and C wrongfully interferes with that contract, C is liable to both A and B for the benefits that would have flowed from their contract. Courts even protect potential economic relationships. Thus, if A and B were negotiating a business deal, but had not officially agreed to work together, C will be liable to both A and B if she wrongfully interferes with that potential business relationship.
The official cause of action for the interference described above is often called “tortious interference,” although some states may use a different title. Generally speaking, a person alleging tortious interference (a “plaintiff”) will have to show: (1) The existence of a current contractual or business relationship between the plaintiff and a third-party, or the existence of a potential contractual or business relationship between the plaintiff and a third-party; (2) The defendant knew about the current or potential relationship between the plaintiff and a third-party; (3) The defendant’s intentional actions interfered with that relationship; (4) The defendant’s interference was wrongful and/or illegal; and (5) The plaintiff’s current or potential relationship was damaged by defendant’s interference.
The interference action by the defendant must be wrongful in some way in order for the defendant to be liable. Suppose coffee shop A has a business relationship with its customers where it sells a cup of coffee for $5. Coffee shop B knows about this, and intends to take all of those customers away from coffee shop A. So, coffee shop B opens a location down the road from coffee shop A, and offers a cup of coffee for $4. This results in coffee shop A losing 50% of its customers. Did coffee shop B intentionally interfere with coffee shop A’s business relationship with its customers? Absolutely. Did coffee shop B act in a wrongful way, such as fraudulently or illegally? Not at all. The subject of what type of conduct amounts to tortious interference was at issue in the Utah Supreme Court case Eldridge v. Johndrow, 2015 UT 21, 2015 WL 404491.
Joseph and Lindsey Eldridge (the “Eldridges”) are in the business of managing residential property. David Johndrow is a former friend and client of the Eldridges. The friendship was damaged when Lindsey Eldridge accused Johndrow of attacking her and Johndrow accused the Eldridges of stealing his cell phone. Johndrow eventually discovered various embarrassing facts about the Eldridges and communicated this information to several of the Eldridges’ clients. In response, the Eldridges sued Johndrow and alleged, among other things, tortious interference with their business relationship with their clients.
The trial court analyzed the tortious interference claim under the then-existing framework, which included the “improper purpose or by improper means” element. A plaintiff could show improper means by demonstrating that defendant’s conduct was wrongful or illegal, or plaintiff could show improper purpose by demonstrating that defendant’s predominant purpose was to injure plaintiff. The trial court determined that Johndrow did not use improper means in giving the information to the clients, because he never acted illegally or wrongfully. However, the court determined that a jury must decide if Johndrow acted with an improper purpose. The Eldridges appealed the trial court’s decision to the Utah Supreme Court.
The Supreme Court analyzed the “improper purpose or by improper means” element of tortious interference and elected to remove the improper purpose option. The Court reasoned that “anger and even malice are commonplace human emotions” and punishing those states of mind “would interfere with much competitive commercial activity, such as a businessman's efforts to forestall a competitor in order to further his own long-range economic interests.” The Court further reasoned that if improper purpose was allowed to support a claim for tortious interference, then “a customer leaving angry reviews online” could potentially be sued for driving away business. Therefore, the Court overruled its prior cases that established the “improper purpose or by improper means” element, and replaced it with “improper means” only. Thus, “in order to win a tortious interference claim under Utah law, a plaintiff must now prove (1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) by improper means, (3) causing injury to the plaintiff.”
This decision makes Utah’s tortious interference doctrine comport with the majority of other states.