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England v. Swift Transportation Co.

Supreme Court of Utah

February 27, 2019

C.R. England, Plaintiff-Appellant,
v.
Swift Transportation Company; Swift Transportation Company of Arizona; and Swift Transportation Services, Defendants-Appellees.

          On Certification from the United States District Court for the District of Utah The Honorable Dee V. Benson Case No. 2:14-CV-781-DB

          Scott A. Hagen, Robert O. Rice, Michael K. Erickson, Salt Lake City, for appellant

          Stephen E. Hale, Bryan S. Johansen, Rachel L. Wertheimer, Salt Lake City, for appellees

          Chief Justice Durrant authored the opinion of the Court, in which Associate Chief Justice Lee, Justice Himonas, Justice Pearce and Justice Petersen joined.

          OPINION

          DURRANT CHIEF JUSTICE.

         Introduction

         ¶1 In this case[1] we are asked to interpret, and ultimately overturn, a rule we established in St. Benedict's Development Co. v. St. Benedict's Hospital.[2] In St. Benedict's we held that to prevail on a claim for intentional interference with contract, the plaintiff must show that the defendant interfered through "improper means."[3] C.R. England, Inc. (England) argues that St. Benedict's was wrongly decided and should, therefore, be overruled.

         ¶2 In so arguing, England asserts that the factors for overruling precedent we established in Eldridge v. Johndrow[4]-(1) the persuasiveness of the authority and (2) how firmly the precedent has become established in law-weigh in England's favor. We disagree. Because the "improper means" element has become firmly embedded in Utah law since St. Benedict's was decided, and because it remains a good rule, we decline to overturn it.

         ¶3 Additionally, we are asked to clarify what constitutes improper means for the purposes of a claim for intentional interference with contract. In Leigh, we explained that the element of "improper means is satisfied where the means used to interfere with a party's economic relations are contrary to law, such as violations of statutes, regulations, or recognized common-law rules," or if "they violate an established standard of a trade or profession."[5] And in St. Benedict's we applied this definition of improper means to claims involving existing contracts.[6] We reaffirm this definition[7] and clarify that to constitute an "established standard of a trade or profession," the standard or rule must be an objective one accepted throughout the relevant industry.

         Background[8]

         ¶4 England is a trucking company. As part of its business, it trains and hires individuals to work as truck drivers. To protect its investment in training individuals to work as truck drivers, England enters into employment contracts wherein the truck drivers agree to work exclusively for England for a nine-month period.[9] England alleges that it has previously provided notice of these agreements to other trucking companies, and that it also provides notice on an ongoing basis when competing companies seek to hire England drivers who are still within the nine-month period.

         ¶5 Swift Transportation Company (Swift) is also a trucking company. England alleges that Swift regularly and knowingly induces England's truck drivers to breach their employment contracts with England by offering higher wages and better benefits.

         ¶6 In response to this activity, England filed suit against Swift, alleging that Swift intentionally interfered with England's contracts with its employees. Swift filed a motion for summary judgment against England on the ground that England failed to provide proof of "improper means"-an allegedly essential element of the tort-to support its claim.[10] In its opposition, England argued that "improper means" is not an element of the tort of intentional interference with contract in Utah. Instead, it maintained that it must prove only that (1) Swift had knowledge of England's employment agreements with its truck drivers, (2) Swift recruited the drivers, (3) the drivers went to work with Swift, and (4) England suffered damages as a result, unless the "action causing the breach was done with just cause of excuse."[11]

         ¶7 Noting conflicting holdings in the federal district court of Utah regarding the elements of the tort of intentional interference with contract, the federal court requested supplemental briefing from the parties. Upon reviewing the briefing, the court concluded that there appears to be no "clear, controlling Utah law" regarding whether "improper means" is required as part of the tort. Additionally, the court concluded that if improper means is required, there is no clear law regarding what would constitute improper means.

         Standard of Review

         ¶8 This case comes to us by certified question from the federal district court. "A certified question from the federal district court does not present us with a decision to affirm or reverse a lower court's decision; as such, traditional standards of review do not apply."[12] Instead, we merely answer the question presented without resolving the underlying dispute.[13] We have jurisdiction pursuant to Utah Code section 78A-3-102(1) and article VIII, section 3 of the Utah Constitution.

         Analysis

         ¶9 This case requires us to answer two questions. First, does the tort of intentional interference with contract require proof of "improper means"? And second, if it is required, what constitutes "improper means" in the context of tortious interference with contract?

         ¶10 England argues that the elements of the tort of intentional interference with contract come from our opinion in Bunnell v. Bills.[14] In Bunnell, we adopted the rule that "one who persuades another or conspires with another to breach a contract is guilty of an actionable tort, unless such persuasion or other action causing the breach was done with just cause of excuse."[15] England argues that this should still be the law in Utah, and, to the extent subsequent cases have stated a different rule, we should overrule them under the factors for overturning precedent we articulated in Eldridge v. Johndrow.[16]

         ¶11 Swift, on the other hand, argues that our decisions in Leigh Furniture & Carpet Co. v. Isom[17] and St. Benedict's Development Co. v. St. Benedict's Hospital[18] govern. According to Swift, Leigh established a three-part test for the tort of intentional interference with economic relations, which includes interference with both existing and prospective contracts. We agree with Swift.

         ¶12 Although the court in Leigh did not clearly state whether its three-part test applied to the tort of intentional interference with contract, the court in St. Benedict's later interpreted Leigh as having done so.[19] And following St. Benedict's, Utah courts have regularly stated that the element of "improper means" is part of the prima facie case for intentional interference with contracts.[20] Because the rule established in St. Benedict's has become firmly established in Utah caselaw, and the reasoning behind it remains persuasive, we decline to overturn it.

         I. We Decline to Overturn St. Benedict's and We Hold that "Improper Means" is an Element of the Tort of Intentional Interference with Contract

         ¶13 We first consider whether "improper means" is an element of the tort of intentional interference with contract. England argues that we should disavow any language from our decision in St. Benedict's Development Co. v. St. Benedict's Hospital[21] that includes the element of "improper means" as part of the tort of intentional interference with contract. The court in St. Benedict's based its decision on language in Leigh Furniture & Carpet Co. v. Isom.[22] But, according to England, the language in Leigh applied only to the related, but distinct, tort of intentional interference with prospective economic relations. For this reason, England argues that St. Benedict's interpretation of Leigh-as including the "improper means" element in the torts of intentional interference with contracts and prospective contracts-is incorrect.

         ¶14 Swift disagrees with England's reading of our caselaw. According to Swift, our decision in Leigh established elements for the tort of interference with economic relations, which "protects both existing contractual relationships and those not yet reduced to formal contract or not expected to be."

         ¶15 Although Leigh is best read as having applied only to the tort of intentional interference with prospective contracts, St. Benedict's clearly extended the Leigh test so that it applied to claims involving existing contracts as well as prospective ones. Because this resulted in a sound rule that has become firmly embedded in Utah law, we decline to overturn it.[23]

         A. Before Leigh, the tort of intentional interference with contract required some showing of improper or unprivileged conduct by defendant

         ¶16 Due to the debate surrounding the development of the tort of intentional interference with economic relations, we first consider the origins of the legal theory in Utah. Specifically, it should be noted that Utah's caselaw has always held that a defendant could not be found liable for intentionally interfering with an existing contract absent proof that the interference was unexcused or unjustified. And, based on a review of the caselaw from other jurisdictions, it appears that an unexcused or unjustified interference is widely viewed as the functional equivalent of interference by an "improper means" or an "improper purpose."[24]

         ¶17 In Utah, the tort of intentional interference with contract has always required some proof that the alleged interference was done with some level of impropriety. In Bunnell v. Bills, the case on which England's entire argument relies, the court held that "one who persuades another or conspires with another to breach a contract is guilty of an actionable tort, unless such persuasion or other action causing the breach was done with just cause of excuse."[25] It also explained that "even though a defendant's action brings about a breach of contract, he is not liable where the breach was caused by the doing of an act which he had a legal right to do."[26] The court then explained that "[w]here persons have merely pursued their own ends without any desire or intention of causing another to breach his contract, they should not be held liable for the other's breach."[27] So under Bunnell, a person could be held liable for the tort of intentional interference with contract only if the person interfered in a way in which the person was not legally entitled to have interfered. Bunnell's inclusion of an "unexcused conduct" component was consistent with the approach followed in other jurisdictions at that time and since.

         ¶18 The court in Bunnell purported to ground its decision in "generally recognized [law] in a majority of jurisdictions."[28] Because Bunnell was decided in 1962-twenty-three years after the first Restatement was published and seventeen years before the second Restatement was published, the first and second Restatements act as helpful bookends in our survey of the "generally recognized [law] in a majority of jurisdictions" at the time.[29] Accordingly, we look to the Restatements of Torts, and cases in other jurisdictions that have interpreted the Restatements' language, as persuasive authority.

         ¶19 These sources suggest that the unexcused or unjustified conduct element discussed in Bunnell is synonymous with the "improper" interference element adopted in Leigh and St. Benedict's. For example, even though the first Restatement describes the tort as an interference done by "one . . . without a privilege to do so"[30] and the second Restatement describes it as an interference done by "[o]ne who intentionally and improperly interferes, "[31] the factors provided by the first and second Restatements for determining whether an interference was actionable-i.e. lacked privilege or was improper- are substantially similar.[32] So between the first and second Restatements there is no substantive difference between an unexcused interference and an improper one.[33]

         ¶20 The same is true in other jurisdictions.[34] For example, in RAN Corp. v. Hudesman, the Supreme Court of Alaska noted a discrepancy in the terminology used in previous cases.[35] Alaska's prima facie intentional interference with contract case required the plaintiff to prove that "the defendant's conduct was not privileged or justified."[36] On the other hand, it noted that the second Restatement "speaks not in terms of 'privilege,' but requires that the actor's conduct not be 'improper, '" while "[o]ther authorities use the catch word 'malice.'"[37] Ultimately, the court concluded that "[r]egardless of the phrase that is used, the critical question is what conduct is not 'privileged' or 'improper' or 'malicious.'"[38] In other words, the Hudesman court concluded that even though different authorities use different terms, each authority is attempting to identify certain conduct that is improper in the context of the tort of intentional interference with contract.

         ¶21 As these additional authorities suggest, there is little substantive difference between requiring the plaintiff to prove that an intentional interference with a contract was without justification and requiring the plaintiff to prove that it was improper. So even though the court in Bunnell used the "without justification" terminology in describing the elements of the tort, it is clear that even under that decision some intentional interferences with a contract do not rise to the level of tortious conduct. So before a plaintiff prevails on an intentional interference with contract claim, the trial court must decide whether the interference was unexcused or improper.

         B. It is unclear if Bunnell decided the question of whether a showing of improper conduct is part of the prima facie case or whether the lack of improper conduct is an affirmative defense

         ¶22 Although it is clear that Bunnell included an unexcused or improper conduct component in the tort of intentional interference with contract, this does not answer the key question in this case. This is so because it is unclear whether Bunnell placed the burden for showing that an alleged interference occurred without an excuse on the plaintiff, as part of the prima facie case, or on the defendant, as an affirmative defense. In other words, although Bunnell suggests that a defendant is not liable for intentionally interfering with a contract unless the defendant's conduct was unexcused or improper, this does not necessarily mean that "improper means" is an element of a plaintiff's prima facie case. Instead, Bunnell could be interpreted as adopting what is called the prima facie approach. Under this approach, "the plaintiff need only prove . . . that the defendant intentionally interfered with his [contractual] relations and caused him injury."[39] Once this is proven, "the burden . . . then shifts to the defendant to demonstrate as an affirmative defense that under the circumstances his conduct, otherwise culpable, was justified and therefore privileged."[40]

         ¶23 Even though Bunnell does not clearly state who has the burden of showing that an interference was improper (or proper in the case of the defendant), dicta in Leigh suggests that Bunnell placed the burden on the defendant.[41] While the court in Leigh considered which elements to include in the related tort of intentional interference with prospective economic relations, it mentioned that Bunnell had "assumed" the prima facie approach in the context of the tort of intentional interference with contract. But the Leigh court does not explain why it believed that Bunnell followed the prima facie approach, and the court in Leigh may have erred on this point.[42]

         ¶24 After stating that Bunnell assumed the prima facie approach for the tort of intentional interference with contract, the court in Leigh declined to apply the prima facie approach for the tort of interference with prospective economic relations because it "requires too little of the plaintiff."[43] And after considering and rejecting a second approach to the tort, [44] the Leigh court decided to adopt a third approach that had been established in Oregon.

         ¶25 Under this third approach, the plaintiff "must prove (1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) for an improper purpose or by improper means, (3) causing injury to the plaintiff."[45] Significantly, the court announced this test as part of what it considered to be Utah's first instance of formally recognizing the "common-law cause of action for intentional interference with prospective economic relations."[46] For this reason, it appears the Leigh court's standard was meant to apply only to the tort of intentional interference with prospective economic relations, and not to the already-existing tort of intentional interference with contract.

         C. St. Benedict's interpreted Leigh as holding that a showing of improper means is part of the plaintiff's prima facie case for claims involving existing contracts as well as prospective ones

         ¶26 Although it appears that the court in Leigh was not attempting to alter the elements for the tort of intentional interference with contract, this court later interpreted Leigh as if it had.[47] In St. Benedict's Development Co. v. St. Benedict's Hospital, we noted that Leigh was the first case to "recognize[] the tort of intentional interference with economic relations."[48] And we explained that the "tort protects both existing contractual relationships and prospective relationships of economic advantage not yet reduced to a formal contract."[49] We then announced that the three-part test first articulated in Leigh, including the improper means element, applied to situations involving existing contracts.[50]So following St. Benedict's, a showing of improper means became part of the plaintiff's prima facie case for claims involving existing contracts as well as prospective ones. This rule has never been questioned by a Utah state court.

         D. Under the factors established in Eldridge, we decline to overrule St. Benedict's

         ¶27 Because St. Benedict's clearly extended Leigh's three-part test to claims involving existing contracts, England asks us to overrule it. England argues that the court in St. Benedict's misread Leigh, and therefore the rule set out in St. Benedict's should be disavowed. Although we agree that the court in St. Benedict's misread Leigh, we do not believe-under the test for overturning precedent we established in Eldridge-that this error warrants overturning the law St. Benedict's established.

         ¶28 In Eldridge, [51] we established two factors to consider before overturning an earlier case: "(1) the persuasiveness of the authority and reasoning on which the precedent was originally based, and (2) how firmly the precedent has become established in the law since it was handed down." Neither of these factors weighs in favor of overturning the rule established in St. Benedict's.

         ¶29 First, the rule St. Benedict's established rests on a firm legal footing. Although St. Benedict's application of Leigh's three-part test to alleged interferences with existing contracts appears to have been the result of a misreading of the Leigh opinion, England fails to present a compelling reason for getting rid of it.

         ¶30 As our discussion of Bunnell illustrates, even before Leigh and St. Benedict's, Utah law most likely required a plaintiff to show that a defendant had interfered in an improper or inexcusable way to prevail on a claim for intentional interference with contract. So even if the St. Benedict's court erred by attributing the inclusion of the "improper means" element to Leigh, it was nevertheless correct in requiring the plaintiff to prove that the defendant had interfered with the contract through something akin to improper means.

         ¶31 What is more, by requiring a plaintiff to prove some form of improper, wrongful, unexcused, or unjustified conduct as part of its prima facie case, St. Benedict's merely adopted the approach followed in the vast majority of jurisdictions that recognize the tort of intentional interference with contract.[52] So even if the court in St. Benedict's based its rule on an incorrect reading of Leigh, it nevertheless articulated a sound rule[53] with which the majority of other jurisdictions agree.[54]

         ¶32 The second Eldridge factor also weighs in favor of reaffirming St. Benedict's. In determining how firmly precedent has become established in the law, we typically consider "the age of the precedent, how well it has worked in practice, its consistency with other legal principles, and the extent to which people's reliance on the precedent would create injustice or hardship if it were overturned."[55] These factors support reaffirming St. Benedict's.

         ¶33 First, we decided St. Benedict's approximately twenty-eight years ago, and since that time, Utah appellate courts have consistently noted that "improper means" is an element of a ...


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