Pleading the Element of Inducement for Tortious Interference With Contract Claims

In 1980, the New York Court of Appeals adopted §766 of the Restatement (Second) of Torts as the standard for a cause of action for tortious interference with contract in New York. Guard-Life v. S. Parker Hardware Mfg., 50 N.Y.2d 183, 189-90 (1980); see Alken Indus. v. Toxey Leonard & Assocs., 2013 N.Y. Slip Op. 31864(U), at *5 (Suffolk Co. Aug. 2, 2013). The Restatement defines tortious interference with contract as “intentionally and improperly interfer[ing] with the performance of a contract … between another and a third person by inducing or otherwise causing the third person not to perform the contract.” Restatement (Second) of Torts §766 (Am. L. Inst. 1977). The requirement in this definition of “inducing or otherwise causing” the third person not to perform its contract has been extensively litigated in New York courts, which have required a somewhat heightened pleading standard for that element.

The Standard

New York courts generally apply the following five elements to a claim for tortious interference with contract: (1) existence of a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s intentional procurement of the third party’s breach of the contract without justification; (4) actual breach of the contract; and (5) damages resulting therefrom. Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 424 (1996). The third element of intentional procurement of the breach has been found satisfied in either of two circumstances, first where the defendant has caused through inducement the third party to breach its contract with the plaintiff, known as “but for” causation, or second where the defendant has otherwise rendered the third party’s performance of that contract impossible. Alken Indus., 2013 N.Y. Slip Op. 31864(U), at *5 (quoting Kronos v. AVX, 81 N.Y.2d 90, 94 (1993)). This interpretation can be sourced to the definition of “inducing or otherwise causing” found in Comment h to Restatement §766:

The word “inducing” refers to the situations in which A causes B to choose one course of conduct rather than another. Whether A causes the choice by persuasion or by intimidation, B is free to choose the other course if he is willing to suffer the consequences.

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The phrase “otherwise causing” refers to the situations in which A leaves B no choice, as, for example, when A imprisons or commits such a battery upon B that he cannot perform his contract with C, or when A destroys the goods that B is about to deliver to C.