Interference with Hawaii Business

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The tort of intentional interference with prospective economic advantage was examined by the Hawaii Supreme Court in Robert’s Hawaii School Bus, Inc. v Laupahoehoe Transp. Co., Inc.

The primary objective of the tort of interference with prospective business advantage or opportunity is the protection of legitimate and identifiable business expectancies… Weighing against social and individual interests in protection of business expectancies and efforts to acquire property are the interests in legitimate business competition. That is, much of the common law is premised on the theory that competitors should have an opportunity to compete for business until such time as it is cemented by contract or agreement. Public and individual interests in free competition become particularly acute where a plaintiff anticipates, but is not yet assured, that a contractual or firm business relationship will materialize. Where the plaintiff’s contractual relations are merely contemplated or potential, the public interest is best served by allowing any competitor the opportunity to divert those prospects to itself, so long as the means used are not themselves improper. Any contrary rule may tend to establish and perpetuate trade monopolies. As the “expectancy” becomes more remote or less firmly established, the interest in free competition among business persons becomes more compelling.

 

Robert’s Hawaii School Bus, Inc. v Laupahoehoe Transp. Co., Inc., 91 Hawaii 224, 258-59 (Hawaii, 1999)(superseded by statute as stated by Hawaii Medical Ass’n v. Hawaii Medical Service Ass’n, Inc., 113 Hawai’i 77 (Hawai’i, 2006) on unrelated grounds)(citing 2 Joseph D. Zamore, Business Torts 12.01[2], at 12-5 to 12-6 (1999) (footnotes omitted) (emphasis added).

Further, the Hawaii Supreme Court provided that,

[T]he following elements have evolved into the tort of intentional or tortious interference with prospective business advantage: (1) the existence of a valid business relationship or a prospective advantage or expectancy sufficiently definite, specific, and capable of acceptance in the sense that there is a reasonable probability of it maturing into a future economic benefit to the plaintiff; (2) knowledge of the relationship, advantage, or expectancy by the defendant; (3) a purposeful intent to interfere with the relationship, advantage, or expectancy; (4) legal causation between the act of interference and the impairment of the relationship, advantage, or expectancy; and (5) actual damages.

Id. (emphasis added).

In Robert’s Hawaii School Bus, Inc. v Laupahoehoe Transp. Co., Inc., the Hawaii Supreme Court used the above factors and upheld the trial court conclusion that plaintiff’s claim for intentional interference with prospective economic advantage failed since “there was insufficient evidence to show that: (1) such conduct was designed to disrupt appellants’ relationship with DAGS; (2) the relationship had the probability of ripening into a future economic benefit for STI; (3) STI would have been awarded the Big Island routes; and/or (4) STI was injured and suffered damages.”

In many cases, the tort of intentional interference with prospective economic advantage comes down to whether “absent the interference, the [prospective business] relations were reasonably likely to develop.” Looney v M-Squared, Inc., 586 S.E.2d 44, 49 (Ga.App., 2003). In Looney v M-Squared, Inc., the Court of Appeals of Georgia held that even with defendants’ interference, plaintiff corporation failed to show that plaintiff would have formed the alleged relationship. Looney v M-Squared, Inc., 586 S.E.2d at 49. Instead, the evidence showed that the corporation “decided not to pursue” that relationship. Id.

As noted, causation is also an element that must be established. “In order to be liable, a defendant’s interference must cause the loss or, in other words, a defendant’s conduct must not only qualify as improper interference, it must also actually induce the third party to terminate its relationship with the plaintiff.” The Film and Tape Works, Inc. v Junetwenty Films, Inc., 856 N.E.2d 612, 620-21 (Ill.App. 1 Dist., 2006) See also Gruber v. Victor, No. 95 CIV. 2285, 1996 WL 492991 at *21 (S.D.N.Y., August 28, 1996). “[T]o maintain an action for intentional interference with prospective economic advantage there must be some certainty that plaintiff would have gotten the contract but for the defendant’s interference.” (citing Mandleblatt v Devon Stores, Inc., 521 N.Y.S.2d 672, 677 (1st Dept., 1987)(internal quotation omitted).

In The Film and Tape Works, Inc. v Junetwenty Films, Inc., defendants produced evidence that the third party corporation would have done business with defendants regardless if defendants worked for plaintiff corporation or for themselves. Id. Basically, the third party would have done business with defendant regardless of the presence of plaintiff corporation. Id. As such, the Appellate Court of Illinois held that defendants’ action did not cause any damages to plaintiff. Id.