Principal and Agent Are Not Separate Persons for Purposes of Tortious Interference Claim

To state a claim for tortious interference with a business expectancy (as opposed to a realized contract), a plaintiff must allege: (1) the existence of a valid business relationship or expectancy “with a probability of future economic benefit”; (2) knowledge of the relationship or expectancy; (3) reasonable certainty that, absent intentional misconduct, “the claimant would have continued in the relationship or realized the expectancy”; and (4) damage as a result of the interference. (See Glass v. Glass, 321 S.E.2d 69, 77 (Va. 1984)). The intentional, interfering misconduct must involve “improper methods” such as unfair competition, unethical conduct, sharp dealing, misuse of confidential information, or breach of fiduciary duty. Only strangers to the relationship can be held liable for interfering with it. Tortious interference requires interference in a plaintiff’s relationship with another, rather than in plaintiff’s relationship with the defendant or his principal.

Where the party interfered with and the alleged interferor are in a principal-agent relationship, the interferor is not considered a third party. Agents, for example, can’t be liable for tortiously interfering with business expectancies to which their principals are parties. (See Livia Prop., LLC v. Jones Lang LaSalle Americas, Inc., No. 5:14cv53, 2015 WL 4711585, at *6-7 (W.D. Va. Aug. 7, 2015). Think of it this way: if your answer to the second element of tortious interference (whether the defendant had knowledge of the existence of the business expectancy) is “of course the defendant had knowledge–he was part of it!”, that would be a good sign that the defendant is not a stranger to the relationship and can’t be sued for tortious interference.

There is, however, an exception to this general rule. Under Virginia law, if the employee claimed to be interfering was acting outside the scope of his employment, he may be held liable for tortiously interfering with another employee’s business expectancy. In other words, agents and their principals are regarded as one and the same when the agent (i.e., the employee) is just doing his job, but if the agent goes outside the scope of that job to engage in some kind of wrongful interference, liability may arise.

Virginia courts define “scope of employment” very broadly. The Supreme Court of Virginia has held that an employee’s act falls within the scope of his employment if (1) the act “was expressly or impliedly directed by the employer, or is naturally incident to the business, and (2) it was performed…with the intent to further the employer’s interest.” Kensington Assocs. v. West, 234 Va. 430, 432 (1987). As Virginia’s highest court put it in 1948 (quoting from an old treatise):

[I]n general terms, it may be said that an act is within the scope of the employment if (1) it be something fairly and naturally incident to the business, and (2) if it be done while the servant was engaged upon the master’s business and be done, although mistakenly or ill-advisedly, with a view to further the master’s interests, or from some impulse or emotion which naturally grew out of or was incident to the attempt to perform the master’s business, and did not arise wholly from some external, independent, and personal motive on the part of the servant to do the act upon his own account.

(See Tri-State Coach Corp. v. Walsh, 188 Va. 299, 307 (1948)).

This means that even if the agent commits an intentional tort, it may still be considered within the scope of employment. This isn’t because the employee’s job duties necessarily included the commission of torts, but rather because the law focuses on the nature of the acts being performed by the employee rather than on the employee’s personal motive or state of mind. If an employee commits a tort in the process of furthering an Linked-People-300x120employer’s interests, or if the tort can be fairly and reasonably traced to the employee’s workplace responsibilities, the employee’s actions will likely be found to be within the scope of employment. (See Gina Chin & Assocs., Inc. v. First Union Bank, 260 Va. 533, 542 (2000)). A bank teller who knowingly deposits fraudulent checks is likely acting within the scope of employment because depositing checks is what bank tellers do. (See id. at 578-79).

Suppose an employee gets fired from his job due to an unfair performance review from his boss. Can the employee sue the boss for tortiously interfering with the employee’s relationship with the company that both the employee and the boss work for? The answer will usually be no, as performance reviews are within the scope of the boss’s employment duties, and the boss is not a stranger to the relationship between the company and the employee.

Let’s take a quick look at the facts of Daniel L. Smith v. Kelvin L. Wright and the City of Chesapeake, where the plaintiff tried unsuccessfully to pursue a tortious interference claim against his former boss and the city they both worked for.

Daniel Smith was hired as a police officer in 1996. In 2014, Kelvin Wright, the Chief of Police, initiated a criminal and administrative investigation into Smith’s handling of certain timekeeping records. In 2015, Wright demanded that Smith turn over his badge and weapon. Smith filed a grievance and eventually succeeded in having the disciplinary action overturned. Rather than restore all of Smith’s privileges, however, Wright placed Smith on “restricted duty” and did not re-issue his badge, gun, or uniform. As a result, Smith claimed in his complaint, he became a police officer “in name only.” Smith sued Wright and the City, claiming (among other things) that Wright tortiously interfered with Smith’s business expectancy in his employment as a police officer with the CPD.

The Magistrate Judge recommended dismissal of the tortious interference claim, and the District Judge accepted the recommendation and dismissed the claim. The court reasoned that all of the activities Wright had been accused of engaging in (e.g., assigning duties, determining eligibility for overtime and promotions, directing criminal and administrative investigations, etc.) were among the tasks expected to be performed by the chief law enforcement officer of a city. Even if Wright’s motives were “intentional, willful, and malicious” as the plaintiff had claimed, and even if Wright was hoping Smith would lose his job, it wouldn’t matter as everything Wright was accused of doing fell squarely within the scope of his employment. Therefore, Smith operated as an agent of Wright, and both he and Wright worked as agents for the same principal–the City of Chesapeake. As such, Smith was not permitted to pursue a claim against Wright for tortious interference.

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