Protorae Law
Mike Holm | LeClairRyan | UBP Team

Unfair Business Practices



This blog focuses on unfair business and trade practices such as business conspiracy, breach of fiduciary duty, misappropriation of trade secrets and other proprietary information, fraud, tortious interference with contracts and other unfair business practices that are not neatly defined. Since we are located in Tysons Corner, Virginia, many of the cases discussed will come from Virginia, Maryland and the District of Columbia courts. We hope the reader finds this blog instructive.

Friday, January 30, 2009

Subtle Pleading Difference Allows Claim for Intentional Interference with Business Expectancy to Go Forward

Judge James C. Cacheris' most recent opinion in Signature Flight Support Corporation v. Landown Aviation Limited Partnership, 2009 U.S. Dist. LEXIS 1938 (E.D. Va. Jan. 13, 2009), is a good illustration of how subtle shifts in the way a case is plead can be the difference in whether a company can recover in an unfair business practices case. And, it serves as a valuable primer for claims for intentional interference with a business expectancy. A copy of the opinion can be found here.

As we discussed in our prior post, found here, in an earlier opinion in Signature Flight, the court dismissed the plaintiff's tortious interference with contract claim because the plaintiff did not allege an "intentional interference of contract inducing or causing a breach or termination of the relationship or expectancy." Signature Flight, 2008 U.S. District Lexis 93715 at *6-7 (emphasis added).

The plaintiff then amended its complaint to add a claim for intentional interference with a business expectancy as opposed to interference with a contract. To assert a claim for an intentional interference with a business expectancy, a "plaintiff must allege: (1) the existence of a business relationship or expectancy, with a probability of future economic benefit to a plaintiff; (2) defendant's knowledge of the relationship or expectancy; (3) a reasonable certainty that absent defendant's intentional misconduct, plaintiff would have continued the relationship or realized the expectancy; and (4) damage to plaintiff." 2009 U.S. Dist. LEXIS 1938, *5. "In addition, when alleging a mere business expectancy, the plaintiff must show that the defendant's actions were improper." Id. (citations and internal quotations omitted).

The meaning of "improper" methods proves to be expansive and malleable in order to accommodate wide-ranging bad acts that are not easily defined or itemized. "Methods that have been recognized as 'improper' include (1) 'means that are illegal or independently tortious,' (2) 'violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship,' (3) means that 'violate an established standard of a trade or profession,' (4) '[s]harp dealing, overreaching, unfair competition,' or 'other competitive conduct below the behavior of fair men similarly situated.' Duggin v. Adams, 360 S.E.2d at 836-37 (internal quotations and citations omitted) (collecting cases)." Id. at *6.

The defendant tried to attack the claim in a number of ways. First, it argued that the plaintiff "only allege[d] a possibility that Plaintiff would realize its expectancy, not a probability." Id. at *9. The court rejected that argument because a "valid expectancy is still merely an expectancy. It need not be absolutely guaranteed." Id.

Next, the defendants argued that the "alleged actions do not qualify as improper because Plaintiff fails to allege every element of the separate torts of unfair competition or fraud." Id. at *11. The court found, however, that "a plaintiff need not allege a separate and complete tort to state a claim for tortious interference," citing the Restatement (Second) of Torts Sec. 767 cmt. c (1979) ("One may be subject to liability for intentional interference even when his fraudulent representation is not of such a character as to subject him to liability for other torts."). Id.

The court also found that the specific alleged improper conduct was sufficient to state a claim. The plaintiff alleged that the "Defendant made false, deceptive, and misleading statement to others with the intent to divert Plainitff's repeat business to itself." Id. at *12. "The Court finds that these types of statements constitute improper conduct because, as alleged, they fall under the rubric of 'misrepresentations or deceit,' 'sharp dealing, overreaching,' or 'other competitive conduct below the behavior of fair men similarly situated.'" Id. (citing Duggin, 360 S.E.2d at 836-37).

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