NY Court Dismisses Tortious Interference Claim From the Get-Go
In a rare move, a NY federal court dismissed a plaintiff's tortious interference claim at the pleadings stage - even before any discovery was had - and, judging from the court's opinion, it seems to be the correct move.
What Happened in John Mezzalingua Assocs. LLC v. Braunschweig
In summary, defendant Braunschweig represented Mezzalingua in negotiations for its products' use in the buildout of 5G wireless network capabilities for a Resort World casino in Las Vegas, and she signed a severance agreement in December, 2017 that prevented her from competing with plaintiff for six months post-termination.
Plaintiff subsequently lost out on its bid on a particular project that went to a competitor for whom defendant worked, and plaintiff then sued Braunschweig, asserting that Braunschweig directly interfered with that business prospect, and thereby violated the non-solicitation clause in her agreement, which stated that: "Employee agrees that following her separation from employment, she will not directly or indirectly affect and/or disrupt any of the Company’s pending or future sales.”
Why the Court Dismissed the Plaintiff's Claim for Tortious Interference With Prospective Advantage
"Under New York law, a plaintiff claiming tortious interference with prospective business relations must show (1) “the defendant’s interference with business relations existing between the plaintiff and a third party,” (2) “either with the sole purpose of harming the plaintiff or by means that are dishonest, unfair, or in any other way improper.” IQ Dental Supply, Inc. v. Henry Schein, Inc., 924 F.3d 57, 69 (2d Cir. 2019) (quoting PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 269 (2d Cir. 1987)).
"But where “the defendant’s interference is intended, at least in part, to advance its own competing interests, the claim will fail unless the means employed include criminal or fraudulent conduct.” Id. (quoting PPX Enters., 818 F.2d at 269)."
As you may have guessed, it was this third prong that the Court hung its proverbial hat upon in dismissing this claim.
To that end, the Court applied this rule to the allegations in the complaint as follows:
“Plaintiff alleges that Defendant ... expressed…that she believed [Plaintiff's] cost” for the project would be $1.5 million more than SOLiD’s, (id.), and “stated her belief that [Plaintiff] could not compete” for the Resort World contract. (Id.). These allegations suggest that Defendant’s conduct, as SVP’s representative, was “intended, at least in part, to advance its own competing interests” and not “with the sole purpose of harming the plaintiff.” IQ Dental Supply, 924 F.3d 57 at 69 (quoting PPX Enters., 818 F.2d at 269); see also JBCHoldings NY, LLC v. Pakter, 931 F. Supp. 2d 514, 536 (S.D.N.Y. 2013) (finding an allegation that the defendant “acted solely out of malice” was “not only conclusory” but also “inconsistent with plaintiffs’ other allegations that [the defendant] interfered with plaintiffs’ relationships to gain a competitive advantage”)."
This holding certainly seems correct on the law, and is a strong reminder that plaintiffs seeking recovery on various legal theories need to include factual allegations that are consistent with those claims; conclusory assertions without factual support - or that actively undercut those claims may well - and should - lead to the dismissal of those claims.
Additionally - and importantly - from a practical perspective, it bears emphasis that the Court's dismissal of the tortious interference claim in this case appears to be a Pyrrhic victory for the defendant, because the Court allowed the plaintiff's breach of contract claim against her to survive dismissal.
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