White Plains Coat & Apron Co., Inc. v. Cintas Corp. - 2007 NY Slip Op 3591, 8 N.Y.3d 422, 835 N.Y.S.2d 530, 867 N.E.2d 381

Rule:

A defendant who is simply a plaintiff's competitor and knowingly solicits its contract customers is not economically justified in procuring the breach of contract. In other words, mere status as plaintiff's competitor is not a legal or financial stake in the breaching party's business that permits defendant's inducement of a breach of contract.

Facts:

Plaintiff, White Plains Coat & Apron Co., Inc., a New York-based linen rental business, alleged that it had five-year exclusive service contracts with customers and that, knowing of these arrangements, its competitor, defendant Cintas Corp., nonetheless induced dozens of White Plains' customers to breach their contracts and enter into rental agreements with Cintas. Plaintiff alleged that it demanded Cintas to desist solicitation and discontinue servicing White Plains' contract customers, enclosing a list of customers allegedly solicited improperly. Cintas denied knowledge of any contracts and continued its solicitation. Plaintiff sued defendant for tortious interference with existing customer contracts. After discovery, Cintas sought summary judgment, arguing that it had no knowledge of contracts with White Plains and had not induced any breach. The district court granted summary judgment and dismissed the complaint, ruling orally that Cintas' legitimate interest as a competitor to solicit business and make a profit alone triggered the defense of economic justification. On White Plain’s appeal, the Court of Appeals for the Second Circuit certified a potentially dispositive question to the New York Court of Appeals regarding defenses to such a claim.

Issue:

Did a generalized economic interest in soliciting business for profit constitute a defense to a claim of tortious interference with an existing contract for an alleged tortfeasor with no previous economic relationship with the breaching party?

Answer:

No.

Conclusion:

The court answered the certificated question in the negative, holding that when the alleged tortfeasor was a competitor of the alleged injured party seeking prospective customers and the alleged injured party had a customer under contract for a definite period, the alleged tortfeasor's interest did not equal that of the alleged injured party and did not justify inducing the customer to breach an existing contract. To find otherwise would blur the distinction between tortious interference with existing, enforceable contracts and tortious interference with prospective contractual relations, where the balance of interests was different. According to the court, mere status as the alleged injured party's competitor was not a legal or financial stake in the breaching party's business permitting the alleged tortfeasor's inducement of a breach of contract.