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tortious interference with economic expectation
August 20, 2018
tortious interference with economic expectation
    Another alarm company stole your account. Now what. You want to sue the alarm company for tortious interference of contract. It's especially gauling when the other alarm company is your central station and it had all of your customer information. I get these calls regularly. It's a tough prosecution because the better action is against the subscriber who is under contract. Unless the other alarm company is taking enough accounts, it just isn't going to be worth a complete lawsuit alleging tortious interference.
    A recently decided case in a Federal Court in Michigan may interest you. The stakes were a lot higher so that lawsuit may have been warranted. The same principles will apply.
    In BullsEye Telecom v BroadSoft, BroadSoft was the licensor of telecommunication software and BullsEye was a licensee. The Licensor was provided a lot of information about the Licensee's customers. When the Licensor starting competing by contacting the Licensee's customers, and when it actually took one of the large customers as its own, the Licensee sued. [not too different if the central station decided to take a dealer's accounts].
    So the first lesson the Licensee learned is that there was no anti-competition provision in the license agreement. Court ruled the Licensor was free to compete.
    The next thing the Licensee learned was that since it didn't have a contract in place, with a remaining term, the Court would not allow a tortious interference claim to proceed. 
    But all was not lost. The Licensee also claimed tortious interference with economic expectancy. The Court permitted this claim to survive. In order for the Licensee to prove this claim, however, it would have to show 1) existence of a valid business relationship with the customer, 2) the Licensor's knowledge of the relationship and 3) intentional interference that induces termination and 4) damages. The third prong, intentional interference, requires some acts that were per se wrongful, lawful but with malice or unjustified in law. In the BullsEye case the Court found that the allegation that Licensor used the Licensee's confidential pricing information for the customer was per se wrongful and a sufficient basis to permit the case to continue.
    So what can you learn from this case? Keep your subscribers under contract. That for starters. You're going to have no luck in court without written unexpired contracts. Make sure your relationship with your vendors and subcontractors are subject to written contract that contains provisions for confidential information and competition. Dispute resolution provision would also be a good idea.
    Keeping my number handy is another good idea. 

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
516 747 6700