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l~ Takes Three to Tango: Arizona's ln~entional
Interference with Contract Tort and lndi~idual
Supervisor Liability in the Employment Setting
John Alan Doran
,~~,
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Volume 3j
•
Number 2
•
Summer 2003
L
~T TAKES THREE TO TANGO: Arizona's
Intentional rn~erference with Contract Tort and
Individual Supervisor Liability in the
Employment Setting
John Alan Doran*
In the ordinary course of a wrongfizl discharge or discrimination lawsuit,
one can expect to see a wide array o~ legal claims beyond tine standard
wrongful discharge or discrimination claims that form tl~e gravamen of the
action. In Arizona, it is common to see "tag-along" claims such as breach
of con~:ract,l breach of the implied covenant of good faith and fair dealing,2
intentional infliction of emotional distress,3 negligent infliction a~ emotional
distress,4 c~efamation,s invasion of privacy,6 negligent hix:ing,~ negligent
supervision,$ and more.9
Perhaps the mast ubiquitous of #hese additional claims is the claim for
intentional interference with contract.~0 Typically, a plaintiff will assert this
claim against an izxdividual manager, supervisor, or co-worker of the
employer, arguing that this individual improperly caused the employer to
*
Mz~. Doran is a partner in the Appellate and Labor &Employment groups in the
Phoenix office of Bryan Cave LLP. He graduated magna cum laude from Loyola Marymount
University in 1985, and Order ofthe Coiffrom Vanderbilt University Law School in 1988. The
author fatefully acknowledges the assistance of Christine M. 'Thompson, University of
Arizona, lames E. Rogers College of Law, Class of 2001, for her assissance with this article.
The author dedicates the article to the memory of Teresa Brosnan, who did not dance but
managed to tango every day of her life.
~. E.g., Demasse v. ITT Corp., 984 P.2d 1138, 1141 (Ariz. 1999).
2. E.g,, Mack v. McDonnell Douglas Helicopter Co., 880 P.2d 1173, 1173 (Ariz. Ct.
App. 1994).
3. E.g., Ford v. Revlon,Ina,734 P2d 580, 5$1 (Ariz. 1987).
4. E.g., Irvin Investors, Inc. v. Supex~or Court, $00 P.2d 979, 980(Ariz. Ct. App. 1990).
5, E.g., Glaze v. Marcus,729 P.2d 342, 343(Ariz, Ct, App. 1986j.
5. E.g., Hart v. Seven Resorts, Tna,947 P.2d 846, $48 (Ariz. Ct. App. 1997).
7. E.g., Pruitt v. PaveIin, 685 P.2d 1347, 1350 (Ariz. Ct. App. 1984).
8.
E.g., RESTATEME?~IT ~SECOAFd~ OF AGENCY § 213 (200a~.
9. ''his is not to say that all these claims are actually cognizable under Arizona law. See,
e.g., Irvin Investors, S00 P.2d at 9$i-82 (holding that negligent infliction of emotional distress
claim was barred by the exclusive remedy provisions of Arizona's workers' compensation
scheme).
1.0. One commentator has referred to such claizx~s as "The Other White Meat" of
employment law. A]ex B. song, Tortioars Interference with Business Relations: "The Other
White Meat" ofEmploymentLaw,4 Mme.L. REV. 863(2000}.
478
ARIZONA STA~'ELAWJDURNAL
[Ariz. St. L.J.
discharge the plaintiff. There are a variety of strategic reasons for asserting
this claim. Tn many instances, the claim will defeat removal jwzsdiction by
adding anon-diverse defez~c~ant in a case that would otherwise be subject to
removal based on diversity jurisdictional Assertion of this claim also
paces unique pressure on the individual defendant to settle quickly with the
plaintiff by admitting to the asserted misconducE and letting judgment be
entered against her in exchange for the piainti~'~s promise not to execute on
the judgmer~t.32 Mare Machiavellian ~ractztioners might also conclude That
assertion of the claim could ford the employer to pay for separate legal
counsel for the individual defendant, the cost of which would provide even
more financial incentive for the employer to set~~e the case.13
Whatever reason one might conjure up far asserting an intentional
interference claim in an emp~oyrnent case, it begs the question of whe~er
such a claim can be asserted as a matter of Arizona law in the first place.
Some authorities~~ maintain that the Axizona Supreme Court answered this
question in the affirmative in Wagenseller v. Scottsdale Memorial
Hospital.~5 However, the text of the Wagensellet- decision, ids adoption of
the Restatement (Second) of Torts formulation, and other complementary
Arizona authority belie this seemingly common assume#ion.
The controversy revolves around the "third party" element of the
intentional interference tart. If an individual is acting within the course and
scope of employment, the individual is necessarily acting on behalf of the
employer. ~f tk~e individual and the employer are one and the same, many
courts have conclnd~d that there is no "third party" ghat could be interfering
with the employment contract.16 The Arizona Cvurt of Appeals noted a
seemingly intractable contradiction in host-Wagenseller case law on this
issue, but chose not to resolve the conflict in Mintz v. Bell Atlantic Systems
lI. See Caterpillar Inc. v. Lewis, 519 U.S. 6I, 678 (1996) {diversity removal
jurisdiction limited to stances where all of the defendants az~e diverse from each plaintiff.
12. For a general discussion o#' such agreements, see Michael L. Burke, Between Scylla
and Charybdis: United Services Automobile Association v. Morris, 154 ~Iriz. 113, 74.1 P.2d 246
(1987), and Reservation ofRights Defenses,22 ARIZ. ST. L.J. 527,52$-33 (1990).
13. There are also strategic risks in asserting the claim. Chief among these is the
possibility that the erriployer will distance itself completely from the individual defendant, argue
that it cannot be held legally responsible for the individuaPs behavior, and provide the jury a
chance to award damages against the impecunious individual defendant without awarding
damages against the employer itself.
14. See, e.g., BernsEein v. Aetna Life & Cas., 843 F.2d 359, 367 (9th Cir. 1988); W. 1°AGE
TC~Ero~r, PROSSeIt & KsATON oN ToRrs 989-90 {Stn ed. 1984 & Supp. 1988).
1S. 710 P.2d 1025 (Aziz. 1985).
lb. See cases cited infra, notes 127-135 and accompanying text.
IT TAKES THREE TO TANGO
479
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34:0477]
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Leasing International, Inc.17 This article endeavors to do what the court of
appeals elected not to do in Mintz.
This article will first recount the history of the inte~.tional interference
tort in Arizona employment law. The article will then discuss varying
approaches to the third party question in other jurisdictions. The article will
then analyze Wagenselle~- and the Restatement and explain why, as a matter
a~ Arizona Iaw, the intentional interference tort cannot be asserted against
supervisors in Arizona employment cases when the supervisors are acting
within the course and scope of their employment. The article then
concludes with a practical anakysis of the third party eleme~xt of the tort in
Arizona employment litigation.
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THE HISTORICAL DEVELOPMENT OF THE INTENTIONAL INTERFERENCE
TORT IN ARIZONA EMPLOYMENT LAW
I.
In oz'der to understand and fu11y resolve ti~~ third party question in the
employment setting, one must give careful attention to the historical
evolution of the intentional interference tort in Arizona employment law.
That evolution can be segregated into three categories: (1) the Payne and
Wagenseller decisions; (2) the post~Wagenseller confusion; and (3) Mintz
and its progeny.
A.
The Third Party Question Appears on the Arizona Scene
The Arizona Court of Appeals first addressed the intentional inte:r~'erence
tort in an employment case in Payne w. Pennzoil Corp.l$ Payne brought suit
against his employer and the employer's labor relations supervisor, senior
safety supervisor, and industrial rela#ions superintendent.lg Payne asserted
that he was discharged in violation of ~ubiic policy for filing a workers'
compensation claim against the employer.20 Payne asserted a separate
intentional interference claim against the three individual defendants,
alleging that these three individuals unlawfii~ly interfered with his
employment by performing secret surveillance of his activities after his
workplace injuzy, which allegedly resulted in his discharge.21 The trial
court dismissed the intentional interference ciairri.22 The court assumed
17.
18.
J.9.
20
21.
22.
905 P.2d 559,Sb4-65 (.Ariz. Ct. App. f995).
672 P.2d 1322(Ariz. Ct. App. 1983).
Id.
Id.
Yd. at 1324.
Id.
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ARIZONA STATE LAWJOURNAL
[Ariz. St. L.J.
that, because the same counsel represented tb.e individual defendants and
the employer, the three individuals must have been acting within the course
and scope of their employment and therefore could nat be held individually
ifable for intentional interference23
The court of appeals affirmed this ruling, bit for a slightly different
reason.24 Based on the undisputed affidavit testimony and certain
allegations contained in the complaint, th.e court held ghat it was uzxdisputed
that the three individuals acted within the course and scope of their
employment at all times.25 The court then noted that the existence of a third
party rEiationship constituted an essential element of the intentional
interference tort.26 The court concluded that the third party element could
not be established because the individual defendants, acting within the
course and scope of their employme;~t, could not be held liable for
intentional interference ~uvith what was effectively their own cantract.27
The Arizona Supreme Court then addressed the intentional inter~'erence
tort in the employment setting in YYagenseller.28 Thy case arose out of the
rather peculiar odyssey of Catherine Sue Wagenseller. WagenseIler took a
business trip dovvzl the Coloz'ado River with her supervisor, Kay Smith, and
personnel from other haspitals.29 Vahile Wagenseller and Smith previously
enjoyed a professional working relationship, Wagenseller alleged that she
beca~x~e very uneasy with Smith as a result of Smith's behavior dwring the
trip, which allegedly included "public urination, defecation and bathing,
heavy drinking, and grouping up with other rafters."30 Wagenseller alleged
ghat she did not engage in such pursuits, and furtk~er refused to participate in
a parody off' "Moon River," which ended with tine group "mooning" the
audience.31 Wagenseller further claimed that she refitsed to participate in
the skit on two Iater occaszans when it was performed at the hospita1.32
Wagenseller was subsequently discharged, and she sued for wrangfu~
tezmination, alleging ghat her refusal to engage in such activities led to her
discharge.33
23. Id.
24. Id. at 1327. On appaal, the individual defendants did not seek affirmance based on the
trial court's reasoning. Id. at 1326-27.
25. Id. at X327.
26. Id.
27. Icl.
28. 710 P.2c! 1025, 1041---44 (Ariz. 1985).
29. Id. at 1629.
30. Id.
31. Id. The Court candidly aclznitted that it possessed little experience in this particular
area of frivolity: "Wa have Iittle expertise in the tec~uuques of mooning." .Id. at 1035 n.5.
32. Id. at 1029.
33. Id.
vacs
Cot
IT TAKES THREE TO TANGO
481
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34:0477]
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Wagenseller asserted a separate claim a~ainst Smith for intentional
interference with her employment contract. 4 The trial court granted
summary judgment in favor of Smith on this claim.35 The court of appeals
reversed and remanded the case, finding that disguted facts prevented such
an award, and establishing a broad rule of "~arivilege" for super~isars to
znterfere in most employment contracts.36 The court of appeals delimited
the scope of the privilege as follows:
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~. If a supervisor has t.~.e absolute authority to fire an employee
without consulting superiors the discharged employee has no
cause of action.
2. If a supervisor(not having absolute authority to fire) acts solely
to further his private advantage and not to fiirther the in#erests of
the employer, the privilege does not apply ....
3. If a supervisor (not having the sole authority to fire) acts purely
out of malice and ill will with no interest of the corporation in
mind, the privilege does not apply ....
4. Where the statements of the supervisor that caused tie
employee's ternunataon ire false and defamatory and made with
actual malice the privilege does not apply ....37
While the Supz'eme Court affirmed the remand of the intentional
interference claim,38 it specifically xejected the rule of privilege as
formulated by the court of a~peals.34 The Supreme Court first noted that
the contours of any possible privilege for a s~pervisoz' az'e not subject to
such easy rules o~ law.~0 Instead, the court considered three possible
approaches to the issue of privilege asserted by the supervisor.41 The court
first briefly considered and implicitly rejected a rule of law that would
pez7mit supervisory liability only upon a showing of malice, or intent to
commit a wrongfi~ act.~2
he
ar
34. Id. at 1041.
35. Id.
36. Wagenseller v. Scottsdale Mem'1 Hosp., 71 4 P2d 412, 421-23 (Ariz. Ct. App. 1984},
vacated by 710 P.2d 1025 (Ariz. 1985).
37. Id. at 42~22(citations onnitted).
38. Wagenseller, 710 P.2d at 1044.
39. Id. at 1042.
40. Id.
41. Id.
42. Id. The Court did not unequivocally state that it rejected this rule of law. Instead, tine
Court considered three possible options, and specifically adopted the third option.
482
ARIZONA STATE LAWJ4URNAL
[Ariz. St. L.J.
3
The court next considezed a n~~e of ~avcr that imposes liability "for any
intentional and unjustified interference resulting in harm to the plaintiff."43
This approach places the burden of proving justification on the defendant,
"an approach criticized for its imposition of liability on tk~e defendant
`without frst describing to him what was forbidden and what was
permitted."'44
The court .found the greatest reason and Iogic in the third formu~atzon,
which can be found in the Restatement (Second) of ToYts.~s Under this
formulation, a party faces potential liability for intentional interference only
when one "improperly" interferes with the performance o~ a contract4b To
determine whether conduct is "improper," the court adopted the
Restatement's seven-factor test:
(a}
the nature of the actor's conduct,
(b)
the actor's motive,
(c)
the interests of the otter with which the actor's conduct
interferes,
(d.)
the interests sought to be advanced by the attar,
(e)
the social interests in protecting the freedom of action o~
the actor and the contractual interests of the other,
e
c
s
(~
the pra~mity or remoteness of the actoz's conduct to the
interference and
(g}
the relations between the parties47
As a result, the court rejected a "prima facie tort-privilege
characterization."48 The court stated succinctly hover the Restatement
approach is intended to operate:
We believe the Restatement approach most accurately reflects the
tort of interference with contractual relations as it exists today.
We concur in the Restatement's rejection of the formalistic
43. 1'd.; see supra note 42.
44. Wagenseller, 7I0 P.2d at 1042 (quoting PROSSER & Ke,ETOIV oN ToRrs § 129, at 983
(5th ed. 1984)).
45.
I~.(Clung RESTATEMENT ~SECONJ~~ OF TORTS § 766 (~ 977~~.
46. Id.
47. td. at 1042-43 (q~otir3g RESTArE~~N~r {SECOrrD)of Toxrs § 767(1977)).
48. Id. at I043.
c
F
IT TAKES THREE TO 2'A~VGO
3:0477]
4S3
privilege concept in favor of a requirement that an interference be
"improper" for liability to attach. It is difficult to see anything
defensible, in a free society, in a rule that would impose liability
on one who honestly persuades another to alter a contractual
rela#ionship.
We find n.othi~g inherently wrongful in
"interference" itself. If the interferer is to be held liable for
connmitting a wrong, his liability must be based on mare than the
act of interference alone. Thus, there is ordinarily no liability
absent a showing that defendant's actions revere improper as to
m,otave or means.
We therefore adopt the Restatement's required showing of an
"improper" iz~.terference. In addition to proving the four elements
stated in Antwerp, the plaintiff bringing a tortious interference
action must show that the defendant acted ir~aproperly. The factors
enumerated in § 767 of the Restatement will form tk~e basis for
consideration of this element of the tort. ~f the plaintiff is unable
to show thy; impropriety of the defendant's con3uct based on an
exarxlination of these factors, the conduct is not tortious49
The court applied this test to the facts presented and found sufficient
evidence proving (or at least presenting factual disputes as to) each element
of the tort.5° As a result, the court reversed the trial court's award of
summary judgment in Favor of Smith,tl~e supervisor.5~
B.
Courts Struggle to Understand Wagenseller
Three years after Wagenseller, the Arizona Court of Appeals again
discussed the intentional interference tort in Lindsey v. Dempsey.52 Lindsey
was the women's basketball coach at the University of Arizona.53 When he
was discharged, he sued the University for bz'each of an implied contract.s4
He also sued Dempsey, the University's athletic director, and Koffler,
president o~ the University, in their official and individual capacities for
intentional inte~Ference as well as intentional infliction of emotional
49. Id. (citation omitted).
50. Id. at 1043-44.
51. Id.
52. 735 P.2d 84Q 842-43 (Ariz. Ct. App. 1987).
53. Id. at 842.
5~. Univ. of Ariz. v. County of Pima, 722 P.2d 352, 353 (Ariz. Ct. App. 1985){affirming
trial court's denial of summaryjudgement).
484
ARIZONA STATELAWJDURNAL
[Ariz. St. L,J.
distress.55 The trzal court awarded summazy judgment to the individual
defendants, and the court of appeals affirmed this decision.56
Lindsey alleged that the individual defendants hoped to simply use him
as a temporary coach until the U~i~ersity could lure a "big-name" coach,
and thus the individual defendants acted with an improper motive.s~ The
individual defendants responded that they were privileged nat to renew
Dempsey's contract.58 The court of appeals first summarily disposed of the
individual defendants' claim of privzIege, holding that Wagenseller directly
precludes such arbuznents.59 The co~zrt then distinguished the result in
YYagenseller, observing tk~at thew was evidence supporting an improper
motive by Wagenseller's supervisor, while Dempsey could point to no such
evidence in this cas~.6D Al~haugh the court noted that ordinarily the
"improper purpose" element presents a question of fact for the trier of fact,
the issue may be c~ECided by a court as a matter of law when no evidence
appears in the record supporting this element of the intentional interference
tort.b1 Absent the slightest evidence of improper motive, ~e court affirmed
the award of s~munary judgment in favor of tl-ie individual defendants.62
The Lindsey court did n.ot discuss the third party element of the intentional
interference tart.
Only a year after Lindsey, the Arizona Court of Appeals again discussed
the intentional interference tort in the employment context in Barrow v.
Arizona Board ofRegents.b3 Barrow, a tenured professor at the University
of Arizona, was suspended from his professorship far 180 days after an
administrative tribunal found him guilty of possessing a naz-cotic dt~g and
otherwise violating state or federal criminal laws.64 Barrow brought suit to
challenge the administrative determination, and added clauns for breach of
contract against the University, for intentional interference against several
officers of the University,6S and ~'or violations of his civil rights under 42
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55. Lindsey, 735 P.2d at $42.
56. Id. at 842-43.
57. Id, at 843.
58. Icl. at 842.
59. Id.
60. Id. at 843.
61. Id.
62. Id.
b3. 761 P.2d 145, 151-52(Ariz. Ct. App. 1988).
64. Id. at I48. The matter ongina~ly arose out of complaints by several students that
Barrow served cookies containing marijuana to two of his classes. Id.
65. Barrow named the University's pxesident, executive vice president, provost for
graduate studies, dean of tie College of Liberal Arts, and the head of the Departanent of Spanish
and Portugese. Id. at IS1.
IT TAKES THREE TO TA1VG0
4S5
L.J.
34:0477]
dual
U.S.C. ~ 1983.66 The trial court granted stzmrnary judgfnent on the
intentional interference claim in favor of the individual defendants.67 The
court of appeals affirmed this ruling.6$
Barrow alleged that the individual defendants took steps to er~sare tYzat
Barrow could not use appropriate administrative review procedures, and
fiirther alleged that the individual defendants were drying to dischar~e him
"because of personal animosities and/or pedagogical differences."6 The
court of appeals first listed the elements of the intentional interfezence tort,
relying solely an Wagenseller. In doing so, the court made clear that there
must be "a contact between the plaintiff and a third party."70 The court
then noted that Barrow failed to come fozward with anything in the record
suggesting either that the individual defendants acted improperly in the
administrative proceeding or that the Board of Regents breached any
contract with Biz row in the first place.71 The court found the facts
remarkably similar to Payne v. Pennzoil72 ~ecanse the individual defendants
were all acting within the course azid scope of their employment and thus
were the Board of Regents for all practical purposes, thus defeating the
necessary third party element ofthe tort.73
Barrow disputed the similarity between his case and Payne.74 Barrow
argued that the individual defendants calXed for an investigation, conducted
an investigation, and initiated certain administrative proceedings, the
ultimate result of which was Barrow's suspension.~s Barxow argued that
because the individual defendants were not the individuals who actually
ordered his suspension at the end oaf the day, they could not possibly be
acting as the Board of Regents.76 The couz# summarily rejected this
argument finding that, by engaging in conduct that eventually led to
Barrow's suspension, the individual defendants were, by definition, acting
as the Board of Regents.~~
In a paxadigm example of bad tirriing, in Bernstein v. Aetna Life c~c
Casualty,78 the Nin~i Circuit weighed in on the intentional interference tort
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Id.
Id.
Id.
Id. (citing Wagenseller, 710 P.2d 1025 (Ariz. 1985)).
Id.
See supra notes 18-27 and accompanying text.
Barrow,761 P.2d at 152.
Id.
Id.
Id.
1'd. (citing Lindsey v. Dempsey,735 P.2d 840(Ariz. Ct. App. 1957)).
843 F.2d 359 (9t4i Cir. 19$8).
486
ARIZONA STATELAWJOURIVAL
Ariz. St. L.J.
in tl~e emp~oyrr~ent setting under .Arizona law a mere seven days after
Barrow. As explained in greater detail below, it is thzs unfortunate timing
that has fed to much ofthe confusion with respect to the third party element
ofthe intentional interference tort in the employment setting.79
Aetna discharged Bernstein after twenty-four years of service.SO
Bernstein sued Aetna for a host of discrinunation and wrongful discharge
claims.81 Bernstein named his direct supervisor, Fischer, as an individual
defendant on all counts, including a claim for intentional interference.82
The trial couxt granted Fischer summary judgment an all counts.83 The
Ninth Circuit reversed the award of summary jnc~gment with respect to the
intentional interference claim.g4
Aetna argued that Fischer could not be liable for intentional interference
because he was a supervisar acting within the course and scope of his
authority at all times, which would destroy the third party element of the
tort.85 The Ninth Circuit z-ejected this argument, relying on Wagenseller.8~
According to the Ninth Circuit, Wagenseller stands for the proposition that
one mush look to whether the in~er~erence was "improper," rather than
whether i~ arose within the course and scope of the acto:r's authority.$
Because material fact~ai dzsputes existed with respect to whether Fischer
harbored improper motives, the court reversed the trial cotu-~'s decision and
remanded the clai~x~., and others,$$ for irrial.89 Bernstein thus stands in stark
contrast to Payne and Barrow.
Notwithstanding the seemingly unEqufvocal holding in Bernstein, one
subsequent decision ira the United States District Court for the District of
79. See infra, section III.
S0. Berstein, 843 P.2d at 361.
81. Id.
82. .ld.
83. Id.
84. Id. at 366-67.
85. Id, at 367.
86. Icl.
87. fee id. One other court applying Arizona law has endorsed this broad categorical
reading of Wagenseller. See Tempesta v. Motorola, Tne., 92 F. Supp. 2d 973, 987 (D. Ariz.
2000). The 7'empesta court seemed to take as a given that Wagenseller stands for the
proposition that "an employee caz~ bring an intentional interference with employment claim
against a supervisor for maliciously causing the plaintiff to be terminated." Id. T'he court
distinguished Wagenseller, however, because same of the conduct alleged in Wagenseller
involved offduty conduct (such as mooning), while Tempesta alleged only that his supervisor
engaged in certain supervisory tasks that allegedly cost him his job, ana 'Fampesta failed to
prove that the supervisor's conduct was an actual cause of his discharge in any event. Id.
88. The court also remanded claims for age discrimination, religious discrimination,
wrongful discharge, and breach of implied contract. Berstein, 843 F.2d at 367.
89. Id.
34:0477]
IT TAKE'S` TH.R.~E TO TANGO
487
Arizona followed the Payne rationale. Jn Kelley v. City ofMesa,90 K~Iley
alleged that the city and several members of the Mesa Police Department's
executive team engaged in a series of acts that led to Kelley's ~wrportedly
unlawful dismzssal.91 Kelley individually named the City Manager, Chzef
a~ Police, Captair3., and C.I.D. Records Supervisor, and specifically alleged
an intentional inter~'erence claim (among others} against these individuals.92
The Kelley Court cited Payne for the proposition that "when an employer's
employees are acting within the scope of their employment, they cannot be
liable for interference with another employee's relationship with the
employer."93 Because Kelley alleged in the complaint that the individual
defendants were acting under solar of law and wiled to adduce any Facts
suggesting that the defendants were acting outside the course and scope o~
their employment, the court awarded summary judgment to the individual
defendants ors the antenfional interference claim.9~ The decision does not
cite Bernstein in the intentiana.l interference discussion.
C
The Mintz Decision Faces the Issue, and More Confusion Follows
The Arizona Court of Appeals finally appeared to take on the third pa y
issue directly in Mintz v. Bell Atlantic Systems Leasing .International, Inc.95
Mintz alleged that she suffered severe emotional and psychological
problems after not being promoted, and was allegedly hospitalized for those
problems.96 After some time had passed, Bell Atlantic ordered Mintz to
return to work.97 Mintz returned for a day but was promptly hospitalized
once again the following day due to stress.9$ Two days later, `Bell Atlantic
delivered a letter to Mintz in the hospital informing her that her jab duties
were being z'eassigned."g9 Mintz sued her employer for purported wrongful
failure to promote, unlawfiil retaliation, gender discrimination, and
intentional infliction o~ emotional distress.~0° Mintz named her super~+isor
as atl individual defendant for intentional interference with contract.101 The
90. 873 F. Supp. 320(D. Ariz. 1994).
91. Id, at 324-25.
92. 1'd. at 320,333.
93. Id. at 333 {cztir~g Payne v. Pennzoil, Corp., 672 P.2d 1322, 1.327 (Ariz. Ct. App.
1983)).
94. Id.
95. 905 P.2d 559(Ariz. Ct. App. 1995).
96. Id. at 561.
97. Id.
98. Id.
99. Id.
100. Id.
101. Id.
ARIZONA STATE LAWJ4URNAL
488
[Ariz. St. L.J.
trial court dismissed the intentional interference claim because Mintz
alleged that her supervisor acted within the course and scope of his
employment and therefore could not interfere with his own contxact.102 The
court of appeals affirfned this dismissal, but for a very different reason.
The court of appeals first analyzed Mintz' claims a~ainst the employer
and affirmed the dismissal of each of these clai~ns.10 Having affirmed
dismissal of all claims against the employer, the court found -that Mintz'
continued pursuit of a~ individual defendant acting within the cauzse and
scope of his employment would create too troublesome an anomaly when
itself.loa
"If Bell Atlantic cannot be liable in
the employer faced no liability
to
pror~ote Mintz, neither can [thy
tort for [the supervisor's] failure
"los
supervisor.
~n reaching this conclusion, the court emphasized that
Mintz alleged that her s~pezvisor was acting within the course and scope of
his employment and was, therefore, acting as the employer, not as a third
hol~ing.lo~
patty.~ 6 The court relied on BarYOw and Payne in support of its
While the Mintz court's emphasis on the course and scope question
would seenn to confrm the necessity of a third party element to the tort in
the e~nployrnent setting, the court's ensuing language raised the specter of
tie Payne/Bernstein dichotoany once again. The cout~ specifically limited
ids holding to instances where, unlike Wagenseller, no underlying tort claim
can lie asserted against the employer directly.108 The court then recognized
the obvious contradiction between the Payne line of cases ~.nd Bernstein,
but chose rat to directly resolve it beyond the confines o~ its very narrow
ruling:
We understand Mintz's argument float the Payne-Barrow rationale
is of questionable va~idiry in discharge cases because Bernstein
fond this rationale both "meri~less" and specifcally rejected by
Wagenseller. Bernstein stated that the issue was not whether the
agent was acting for the employer: "The issue that the
Wagenseller Court emphasized is whethar the interfering party's
action was improper." We agree wzth this reading of Wagenseller
and can reconcile it with our holding. Mintz alleged that
Schoenlack was acting in the course and scope of his employztxent
iaz..rd.
103. 1'd. at 561-64.
104. Id. at 564-65.
105. Id. at 565.
106. Id.
107. Id. The court of appeals reaffirmed this analytical approach in Wallace v. Casa
Grande Union High School District No. 82 Board of Governors, 909 P.2d 486, 4995 {Ariz.
Ct. App. 1995).
I08. Mintz, 905 P2d at 564--65.
34:0477]
1'T TAKES THREE 2'O TANGO
~S9
when he failed to promote her. Because Bell Atlantic carm.ot be
litable in tort for Schaenlack's failure to promote Mintz,
~choeniack did nothing "improper" and cannot himself be liable in
tort for intentional interference with Mintz's employment
contract.109
The .Axizana Court of Appeals once again faced the issue in Wallace v.
Casa Grande Union High School District No. 82 Board of Governors.~~0
Charie Wallace worked for the School District as a school
administrator/teacher.r ~ ~ During most of her em~layment, she served under
successive one-year employment contracts.l ~Z Wallace experienced a series
of conflicts and personal at~uimosity with the new superintendent, Adams,r 1~
The school district ultimately offered Wallace a probationary teaching
contract at a substantially lower salary.114 Wallace accepted the contract
and sued for defamation, wage violations, wrongful tenure denial,
intentional infliction of emotional distress, violations of 42 U.S.C. § 1983,
and an intentional interference claim against Adams.~~5 The trial court
awarded summary judgment in favor o~ .Adams on the int~ntianal
interference claun.~ 16
The court of appeals affirmed, and in doing so, followed Mintz to the
letter. The court first noted that the school district did not breach any
contractual duty to Wallace, and ~ez'efo:re Wallace herself could not be
liable for intentional interference.11~ Like Mintz, the court next noted that
the supervisor was acting at all times within the course and scope of his
employment, and xt would be anomalous to allow liability for the supervisor
when no liability could be asserted against the employer.11$ The court made
no mention ofPayne or Barrow.
Finally, a postMintz decision from another district court brought the
Payne/Bernstein dichotomy to its ultimate, illogical conclusion. ~n Sprott v.
Northern Automotive CoYp.,119 Sprott sued her employer and her district
manager, Meza, for her discharge and certain events leading up to hex
149. Id. at 565 (internal citations omitted).
110. 909 P.2d at 486.
1 I1. Id. at 490.
112, Id.
113. Id.
114. Id. at 491.
115. Id. at 490-91.
116. Id.
117. Id. at 494-95.
118. Id.
119. 95$ F. Supp.456(D. Ariz. 1996).
490
ARIZONA ,STATE LAW JOURNAL
[Ariz. St. L:~.
dischaxge.12° Spratt alleged that 1V.[eza harassed her and retaliated against
her because of her gender a~.d her pregnancy, and allegedly "headed a
smear campaign to get rid" of Spratt, who was subsequently discharged for
alleged theft, failure to follow company policies, and failure to report a coworker's falsified timecard.121 The court awarded s~arrunary judgment to the
i~adividual defendant on the intentional interference claim.122 The cotu-t first
appeared to follow Payne, balding that because Spratt alleged that Meza
acted on behalf of the employez, there was no third party, and Meza could
not interfere with his own contract,lz3 The court then reasoned that, even
absent a third party, YYagenseller teaches that an individual supervisor can.
still be liable for intentional interference if the conduct is improper.12a
Finding no factual support for the assertion that Meza was "acting
improperly rather than legitimately for the benefit of the employer]," tkae
court held that the individual supervisor was entitled to summary judgment
on the intentional interference ciaim.125 In other words, the court applied
the mutually exclusive approaches ofPayne and Bernstein together.
Tlae Arizona supreme Court has yet to resolve the clear conflict between
the Payne line of cases and the Bernstein line of cases. As a result,
plaintiffs continue to sue indf~idual supervisors, managers, and bosses for
in#entional interference, with all of the strategic and procedural
complications that arise from such claims, not to mention the anxie#y and
uncertainty these individual defendants must endure for yeax's while these
suits are pending against #hem. Other courts have answered the question in
some detail, as explained in the following section of this article. Further,
the Axizona Supreme Court itself answered this question in Wagenseller,
notwithstanding the Bernstein decision, as explained in section III of this
article.
120. Id. at 459.
121. Id.
122. Icl. at 464 -65.
123. Id. {citing Mintz v Bell Atl. Sys. Leasing Int'1, Inc., 905 I'.2d 559, 564-66 (Ariz. Ct.
App. 1995)).
124. Id. at 465.
125. Id.
34:0477]
II.
IT TAKES THREE TO TANGO
491
THE THIRD PARTY ELEMENT OF THE INTENTIONAL INTERFERENCE
JURISDIC'~IONS126
TORT 1N OTHER
As might be expected,jurisdictions differ greatly in their approach to the
third party element of tl~e intentional interference tort. The tort and its
elements have become horribly confused over time.127 The Restatement
echoes this concern, noting that there is a great deal of confusion in this
axea.12$ As a result of this confusion, courts often mix and match otherwise
ill-suited elemen#s, or misapply labels such as "privilege" to concepts
otherwise not properly described in this manner. 29 Still, some basic
approaches are worth mentioning to provide some contrast to Arizona Iaw
and perhaps a bettez understanding of how the third party element ofthe tort
is viewed in otY~er jurisdictions and should be viewed in Arizona.
126. Because the point of tF~is article is one of Arizona law, this discussion of other
approaches to the third party issue in tine employment setting is not intended to be a!1-inclusive.
examples are pxo~ided from other jurisdictions to provide abetter understanding of
Wagenseller and what it held and perhaps did nok hold. For miore coFnprehensive discussions of
the state of the intentional interference tort in other jurisdictions, see generally Alex Long, The
Disconnect Between At-Will Employment and Tortiaus Interference with Business Relations:
Rethinking Tortious Interference Clazms zn the Employment Context, 33 ARiz. S'r. L.J. A9I
(2001); Alex B. Long, Tortiaus Interference with Business Relrttions: "The Other White Meai"
ofEmployment Law,$4 Mmml. L. REV. $63(2000); 45 AM.JuR. 2fl Interference § 3-19(1999).
127. Sae Della Penna v. Toyota Motor Sales, Inc., 902 P.2d 74b, 753-60 (Cal. App. 5995)
(Mork, J., concurring){discussing massiva confusion associated with related tort of interference
with prospective business relations). Part of this confusion undoubtedly arises out of the
intersection and overlap of the intentional interference tort with other types of claims. See, e.g.,
Haddle v. Gamson, 525 U.S. 121, 122-23 (1998) {addressing the use of as intentional
interference claim as a vehicle for asserting a claim under 42 U.S.C. § 1985(2) for retaliating
against a party subject to a grand jury subpoena); Albert v. I,olcsen, 239 F.3d 256, 274-75 (2d
Cir. 2001)(adhering strictly to the third party requirement, but holding that the requirement
might be met when a co-worker commits a separate tort against the plaintiff that heads to an
interference wzth plaintiff's contract); Lutz v. Royal Ins. Co. of Am., 5$6 A.2d 278, 289 (N.J.
Super. Ct. App. Div. 1991)(dismissing intentional interference claim because it was subsumed
by a defamation claim).
~2$. RESTATEMENT{SECOND OF TbRIS, Ch. 37, introductory cmt.
129. See, e.g., Ulrich v. City of Crosby,848 F, Supp. 861, 874(D. Minn. 1994)(referring to
the course and scope issue as the "scope of employment privilege"}; Springer v. Weeks &Leo
Co., 475 N.W.2d b30, 632-33 (Iowa 1991)(discussing history of confusion caused by Iowa
courts labeling wrongful discharge claims as intentional interference claims); Nix v. Temple
Univ., 596 A.2d 1132, 1137 (Pa. Super. Ct. 1991) {recognizing the third party eIernent of the
tort but describing the improper conduct element as a privilege).
492
ARIZONA STATELAWJOURNAL
[Ariz. St. L.J.
A.
When .a SupeYVisorActs Within the Course and Scope of
Employment, the Absence ofa Third Parry Automatically Precludes
Liability
Some courts have categorically refused to permit an intentional
interference tort against a supervisor when the supervisor was acting within
the course and scope of employment because this defeats the third party
element ofthe tort. Some courts express this rule of law as one of privilege,
while others specifically identify the existence of a third party as an
essential element ofthe tort.
In Fletcher v. Wesley Medical Center,33a a United States District Court in
Kansas applied Kansas law and held that plaintiff failed to state a claim
against leer supervisor for intentional interference because the supervisor
acted within the scope of her supervisory power, e~ren if conducted out of
personal Ei]I111~~7,133 The Alabama Supreme Court z'eached a similar
conclusion in Harrell v. Reynolds Metals Co.,132 as did a Maryland
appellate court in Continental Casualty Co. v. Mirabile.133 The Maryland
court's analysis, adopted wholesale by the Alabama Supreme Court, best
sums up this approach:
A third parCy vvho, without Iegal justification, intentionally
interferes with the rights of a party to a contract, or induces a
breach thereof, is liable in tart to the injured contracting party.
Recovery is not pernutted, however, where the deFendant is a party
to the contract. The tart contemplates the inter~'erence of two
parties' contractual relations by a third party. Appellee [plaintiffJ,
in the sanne dEClaration in which he alleges r~ongful interference
with contractual relations, alleges that [tae co-employees] "were
acting as the agent(s), servants) and employees}" of [the
employer]. jThe co-employees] cannot be Continental's agents
for the purposes of the first three counts and not for the purposEs
of the fourth count. Because they were acting as Continental's
agents, they cannot be considered third parties and the claim must
fa11.134
130. SS5 F. 5upp. 1260, 1252(D. Kan. 1984}.
131. Id.
132. 495 So. 2d 1381, 1388 (Ala. 1986).
133. 449 A.2d 1175, I1$5 (Md. Ct, Spec. App. 1982); see also Pope v. Bd. of Sch,
Commis,665 A.2d 7I3, 719-20(Md. Ct. Spec. App. 1995).
134. Cont'l Cas. Co., 449 A,2d at 1185 (citations omitted); see also Albert v. Loksen, 239
F.3d 256, 274--76 (2d Cir. 2001)(applying New York T.aw); Finley v. Giacobbe, 79 F.3d 1285,
1295 {2d Cir. 1996} (applying New York law}; Nelson v. Fleet Nat'1 Bank, 949 F. Supp, 254,
262-63 (D. Del. 1996) (applying Delaware law); Alexander v. Fujitsu Bus. Communication
Sys., Inc., 818 F. Sapp 462, 469-7D {D. N.H. 1993)(applying New Hampshire law); Haigh v.
34:0477]
IT TAKES THREE TO TANGO
493
This insistence on a third party element in this setting is fundamentally
sound. This appz'oach permits employers to take action through its agents,
without allowing the undue intxusiar~ of tort law into dzsputes that are
otherwise purely contractual in nature. As the Minnesota Supreme Court
has recogr~zzed:
Tf a corporation's officer or agent acting pursuant to his companq
duties terminates or causes to be ternlinated an e3nployee, the
actions are those o~the corporation; the employee's dispute is with
the company employer fox breach of contract, not the agent
individually for a tort. To allow the officer or agent to be sued and
to be personally liable vvouJ.d chill corporate personnel from
perfornung heir duties and would be contrary to the lirmuted
liability accorded incorporarion.13s
B.
When a Supet-visor Acts in Any Way to Beneft the Employer There
Can Be No Liability Under the "Mixed Motive"Rule
Some courts have limited supervisor liability through a ":mixed motive"
rule.136 This rule requires tl~e court to determine whether there is tzuly a
third party against whom a claim can be asserted. A supervisor, manager,
oz other co-worker will not stand in the position of a third party as Iong as
the individual defendaryt possessed at least some partial motive to serve the
employer.13~
Matsushita Elec. Corp. of Am., 676 F. Supp. 1332, 1349 (E.D. Va. 19$7)(applying Virginia
law, court held that co-workers involved in illegal scheme to get rid of plaintiff were not third
parties because scheme was conducted at ttae instniction of the employer); Na~orro-Monzo v.
Hughes, 763 S.W2d 635, 636 (Ark. 1989)(applying Arkansas law}; Curran v. Children's Serv.
Ctr., 57& A.2d 8, 13 {Pa. Super. Ct. 1990}(where co-employee lied to get plaintiff fired, there
was no third party, so no intentional interference claim would Iie); Bear v. Volwnteers of Am.,
Wyo., Inc., 9b4 P.2d 1.245, 1254(Wyo. 199$}(holding that when the challenged conduct arises
witk~in the course and scope of employment, tb.e interference claim xnezges into the contract
claim); 45 AM. JUR. 2D Interference § 6 (1994) (describing third patty element as
"fundamental").
135. Nordling v. N. States Power Co.,478 N.W.2d 498, 505—Qb (Minn. 1991}.
136. See, e.g., Malik v. Carrier Corp., 202 Fad 97, 169 (2d Cir. 2000) {applying
Connecticut law); T,.A. Airways, Inc. v. Davis, 687 F.2d 321, 325 (9tY~. Cir. 1982) (applying
California law}; McGanty v. Staudenraus, 901 P.2d 841, 845 (Or. 1995); see also Presto v.
Sequoia Sys., Inc., 633 F. Supp. I117, I122(D. Mass. 1986)(without explicitly following the
rule, the court noted that, under Massachusetts law, there is no third party showing unless
malice is the only reason far the interference: "I hold that malice will not suffice to destroy a
privilege unless it is shown [to be] the sole motive."}(quoting Tye v. Ficilcelstein, 160 F. Supp.
566(D. Mass. 1958)).
137. See cases cited supra note 136.
494
ARIZONA STATELAWJOURIVAL
[Ariz. St. L.J.
The Oregon Supreme Court provided an excellent example of how the
mixed motive theory operates in McGanty v. Staudenraus.138 McGanty
sued her prior supErvisor for intentional interference with economic
relations, alleging that the supervisor's sexual harassFnent ultimately
resulted in McGanty's discharge.~3g After a Iez~gthy analysis, the Oregon
supreme Court held that "when an employee acts within the scope of
employment, that employee is not a third party to a contract between the
employer and another for the purpose of the tart of intentional interference
with economic relations."14o Based on this conclusion, the court upheld the
lower court's award ofsummary judgment in favor of the supervisor.l`~~
The McGanty court began rts analysis with traditional agency principles:
The long-established doctrine of respondeat superior provides the
apgropxiate guidance Ito address this issue]. T7nder that doctrine,
"an employer is liable far an employee's torts when the employee
acts within the scope of employment." The xationaie behind the
doctrine is that "[when one employs a servant or agent to do his
work, the employer is, in the eyes of the law, the actox. The
damages caused by the activity are the master's responsibility, so
ling as it is t~.e master's business that is being done." [T]t follows
that, when an employee is acting in the scope of the employee's
employment, the employee is acting as the employer, and not as an
independent entity. Accordingly, when an er►~ployee is acting
within the scope of tine employee's ennployment, and tb.e
employer, as a result, breaches a contract with another party, that
employee is not a third party for the tort of intentional interference
with economic xelations.142
The court then identified the three requirerrients for determining whether
a party has acted within the scope of employment: "(1) whether the act
occurred substantially within the time and space limits authorized by the
employment;(2) whether the employee was motivated, at least partially, by
a purpose to serve the employer; and (3} whether the act ~$ of a kind which
the employee was hired to perform."143 After acl~owledging that the
course and scope issue is ordinarily a question of fact, the court found that
McGanty's complaint contained admissions to the effect that hez- supervisoz
was acting within tY~e course and scope of employment at all times. The
count held that McGanty's admission established that the defendant "was
138. 901 P.2d at 84b.
139. Id. at 843.
140. Id. at 849.
141. Id.
142. Icl. at 846(citations omitted)(citing ChesterEnan v. Harmon,753 P.2d 404(Dr. 1988)).
1.43. Id. at 846 n3(quoting Ci~estex~nan v. Barn;ion, 753 P.2d 404(Or. 1988)).
34:0~77~
IT 2'AKES THREE TO TANGO
495
not a third party to the contract between plaintiff and [her employer]."144
Ultimately, the plaintiff failed to satisfy the thzrd party element of the tort,
and therefore her prior supervisor could not be liable for in#entional
interference.~4s
The Oregon Court did not end its analysis with this conclusion.
McGanty asserted that her prior supervisor engaged in a pattern of sexual
harassment and used "irr~proper means" while acting on behalf of the
employer.146 McGanty argued that this behavior gave rise to a "mimed
motive," which necessarily genera#ed a jury question as to whether her
supervisor was operating within the scope of his employment. The court
concisely restated Oregon's Wile: "Whether a party has acted by either an
improper rneaz~s or with an improper putpase is z'ele~ant, under the fourth
element ofthe tort, only fthat partyfrst meets the thr°eshold test of being a
third party to tie contractual relationship with which the interference
allegedly has occurred."~a~ In Oregon, the status of the allegedly interfering
employee is evaluated be~are her behavior. As bong as a manager is
motivated, at least in part, by serving her employer, and is operating within
the scope of her employment, she cannot be held liable fox tortious
intezference with a subordinate's employment can~ract.
In reality, the Oregon approach reflects something of a compromise
between the rule of law recognized in Payne and the Ninth Circuit's reading
of Wagenseller in Bernstein. The approach recognizes that the plaintiff
must, as a necessary element of the tort, establish the existence of the ~d
party relationsl~zp. That showing depends on whether the supervisor was
acting within the cawrse and scope of the employment relationship, and that
question turns an whether the individual intended, in any way,to benefit the
employer. I~'the individual intended to ber~e~it the employer, by definition,
she was acting as the employer, and there is no third party undez' O~'egon
law.
C.
Bad Motive as the Sine Qua Nonfor.intentional Interference
Some courts take the mixed motive theory a step further. These courts
hold that a supervisor may be held liable for intentional inter~exence when
1~4, Id. at 847.
145. Id.
146. Id.
147. Id. (emphasis added).
496
.AR1~ZD.IITA STATELAWJDURNAL
[Ariz. St. L.7.
her acts are motivated by ill will, even i~ the supervisor is motivated, ire part,
by a desire to serve tk~e emplayer.l~$
These cases provide classic examples of the blurring distinctions that
continue to unduly expand the intentional interference tort and add to the
confusia~ of courts throughout the country. The Restatement takes motive
into account in its treatment o~ unpropez'conduct.149 But this does not mean
that the Restatement recognizes a rule of liability any time a party to a
contzact breaches that contract for anything other tY~an a business reason.
There must still be a threshold determination of third party status, or all
contract breaches would constitute potential torts regardless of the existence
oz non-existence of a third party interferer. As the California Supreme
Court recognized in an analogous context:
The fundamental differences between contract azxd tort are
obscured by tl~e imposition of tort li.abiliry on a contracting party
fort conspiracy to interfrere with contract. Whether oz nod a
stranger to the contract induces its breach, the essential character
of a contracting party's conduct remains the sanne—an unjustified
failure or refusal to perform. ~n economic terms, the impact is
identical—plaintiff has lost the benefit of a bargazn and is entitled
to zeco~er caznpensation in the form of contract damages. Yn
ethical terms, the mere entry of a stranger onto the scene does not
render the contracting party's breach. more socially or morally
reprehensible. A party may breach a contract without az~y third
party inducement because of personal, racial, ar ethnic animus, or
for other nefarious or unethical reasons. In contrast, a breach may
be the pxoduct of naive or innocent misunderstanding or
misperception created by the aggressive solicitation of an outsider.
In az~y case, motivation is irrelevant. Regardless of the presence
or absence of ~hit'd parry involvement, the contracting party has
done nothing more socially opprobrious than to fall short in
meeting a contractual comrriitrnent. Onlq contract damages are
due.Aso
The "bad motzve" cases are also troubling because they diverge so
greatly wzth respect to which bad motives will suffice to s~ppart such a
claim. Same courts hold that only true malice, as in spite or ill will, suffices
148. See, e.g., Daley v. Aetna Life & Cas. Co.,734 A.2d 112, 135 (Coru~. 1999); Mathias v.
Beatrice Foods Co., 500 N.~.2d 812, 815 (Mass. App. Ct. 1986); Nordling v. N. States Power
Co., 478 N.W.2d 498, 506 (Minn. 1991); Lutz v, Royal Tns. Co. of Axn., 586 A.2d 278, 289
(N.3. Super. App. Div. 1991).
I49. RES~iASet~Erl'r (SECOr~n) of ToR~'s § 767 (1979) {identifying actor's purpose as a
factor to be considered whey deciding if conduct is unproper).
150. Applied Equip. Corp. v. Litton Saudi Arabia I.td., 869 P.2d X54,4b1 (1994).
34:0477]
IT TAKES THREE TO TANGO
497
to support an interference claim.151 Some courts look to malice as it is used
to define "unpropez' pwtpose" ~.tn.der the Restatement, which is ~e intent to
interfere without justification, but not necessarily the intent ~o do harm.152
Other courts refer to "malice" as an element of the tort but provide no
guidance as to the meaning of fine term in this context.ls3 As a general
proposition, these decisions appear to stumble aver the inescapable fact that
intent cor~sti~xtes both an element o~ the course and scope inquiry under the
Restatement (Second) ofAgency1S4 and the "improper conduct" element of
the intentional interference tort.lss However, it is clear from the
Restatement (Second) of Tarts that the malice or bad motive described
therein is nat identical or even very similar to the "intent to serve the
master" underlying the course and scope issue under tY~e Restatement
(Second) ofAgency.lss
D.
Courts Looking to Rank and .Its Privileges
Many decisions turn, either explicitly or implicitly, on the position held
by the supervisor.ls~ These cases break down into essentially three
analytical categories: (1) the highest level executives o~ an organization
cannot be held liable because the organization can only operate through
tYiem in the first place;15$ (2) a supervisor with absolute authority to hire,
fire, ar to perForm whatever the challenged conduct might be, p055E5SE5 a
privilege to make such decisions;ls9 oz (3) a supezvisor enjoys a privilege
when providing the emptvyer truthful information or honest advice when
151. See, e.g., Mathias, S00 N.E.2d at 815 (describing necessary malice as "malice of an
aggravated kind, actual rather than merely implied, amounting to nnalevolence or spite or ill
will"); Nordling, 478 N.W.2d at 50b {adopting an actual malice standard in the context of the
"course and scope" issue).
152. See, e.g., Daley, 734 A.2d at 135; see also RESTATEMENT ~SECOND~ TdR'TS § 766
cmt. s.
153. See, e.g.,Lutz, 586 A.2d at 2$9.
154. See RESTASEMENT(SECOND} OF AGENCY § 232 Cmt. C(1958.
ASS. RESTATEMENT ~SECOND~ OF'FpRTS § ~C~.
156. See id. § 766 cmt. s; RESTATEMENT(SECOND} OF AGE1~fCY ~ 235 C117C1t. a.
157. See, e.g., Donohoe v. Watt, 546 F. Supp. 753(D.D.C. 1982)(finding no liability where
defendants were CEO and President of company); Hill v. Winnebago Indus., Inc., 522 N.W.2d
32d, 32$ (Iowa App. 1994) (recognizing a "qualified pri~+ilege" for officers and directors of
corparation).
158. ,See, e.g., Donohoe, 5~6 F. Supp. at 756; Paul v. Howard Univ., 754 A.2d 297, 309
(D.C. 2000)(officers of university could not be held liable}; Fellhauer v. City of Geneva, 568
N.B.2d 870, 87$--79 (Ill. 1991)(corporate officers or their functional equivalent cannot be held
liable for interference as long as the conduct in any way benefits the ennployer).
159. See, e.g., Wagenseller v. Scottsdale Mem'1 Hosp., 714 P2d 412, 421-22 (Ariz. Ct.
App. 1984), vacated by Wagenseller v. Scottsdale Mem'1 Hosp., 710 P.2d 1025 {Ariz. 1985).
[.Ariz, St. L.J.
AR2'ZONA STATELAWJOURNAL
requested to do so.I6o The first category simply recognizes that a party
should not be allowed to sue the very individuals wko comprise the
operating core ofthe business entity, because to do so would allow the party
to abtazn tort damages for nothing more than a breach of contract. If a
business organization could be sued in tart every time its executives chose
to breach a coxztract, tort liability would expand far beyond its intended
confines and smother contract liability.lb~
The second formulation, endorsed by the Arizona Court of Appeals in
Wagenseller16z and specifically rejected by the Arizona Supreme Co~.ut in
Wagenseller1~3 creates an artificial distinction. There is no reason in law oz
logic why a supervisor with ultimate responsibility to hire and fire should
enjoy a privilege, while a supervisor whose decisions must go through the
Human Resources Department or some executive oftficez would not enjoy
the p~vilege.lb~ In many instances, liability would tuz~ on corporate
structure rather than the need to protect any particular social interests
through the recognition of a privilege. As the Florida Court of Appeals held
inDoyal v. School Board ofLiberty County:~6s
498
Tn the present case, the supezintendent did not induce the school
board to breach the employment contract with appellant, it was the
superrintez~dent's own conduct, in refusing to sign a~pe~lant's
salary warrants, whirch cons#ituted the breach of the contract.
[A]lthough the superintendent may not have technically been a
party to the employment contract, we agree with the trial court in
its determination that the superintendent could nat be considered a
third party to the employment relationship for the purposes of the
tort of malicious interference with a contractual relationship.t66
The third category is recognized specifically in the Restatement, which
provides:
One who intentionally cases a third person not to perform a
contract or not to enter into a prospective contractual relation with
another does not interfere inapxoperly with the other's contract~ial
1b0. See RESTATEMENT(SECOND) OF TORTS § 772.
161. Cf. Applied Equip. Corp. v. Litton Saudi Arabia Ltd, 869 P.2d 454,461 {Cal, 1994).
162. 714 P.2d at 42122.
163. 710 P.2d at 1042.
164. ~'ee Barrow v. Bd. of Regents, 761 P.2d 145, 152 (Ariz. Ct, App. 1988) (specifically
reject~g argument that supervisor could be held liable because he was not the ultimate
decision-maker); cf. Bear v. Volunteers of Am., Wyo., Ix~c., 964 P.2d 1245, 1254(Wyo. 1998).
165. 415 So. 2d79J., 793 (Fla. Dist. Ct. App. 1982}.
166. Id.
34:077]
IT TAKES THREE TO TANGO
499
relation, by giving the third pErson {a) truthful information, or (b)
honest advice within the scope of a request for the advi~ce.lb'
This particular privilege fornlulation, which is not mentioned in
YYagenseller, merely canes o~xt certain conduct from the defuutian of
"improper." It says nothing about the gird party question.16s
E.
Many Alternatives to ChoosefYOm
As this discussion should make clear, the widespread confiisio~
surrounding the third party element of the in~ez~ez'ence tort thraughaut the
country provides counts with many, many alternative theories on which to
recognize or reject supervisor liability. The confusion obviously arises, in
large part, from casual and imprecise use of terms such as privilege and the
tro~xblesome potential collision between tort and contract Iaw. This should
not pose a problem in Arizona. As explained in the following section of
t~iis article, existing }precedent, logic, and sound public policy compel
Arizona coverts fo follow the lead of Alabama, Kansas, Maryland,
Minnesota, and others,j69 and reject super~isar liability for intentional
interference in the employment setting when the supervisor acts within the
course and scope of employment.
III.
THE EXISTENCE OF A THIRI3PARTY RELATIONSH~'IS AN ESSENTIAL
ELEMENT OF THE INTENTIONAL INTERFERENCE TORT IN ARIZONA,EVEN IN
THE EMPLOYMENT SETTING
While the Arizona Court of Appeals found the state of the law unclear in
Mintz, and called into question the continued viability ofPayne and Barrow
in light of Bernstein,~70 the court pz'ovided little explanation for this
conclusion.~~l There is sunilax'ly precious lit~Ie justification in the Bernstein
decision fox the Ninth Circuit's interpretation of Wagenseller.172 A careful
reading of Wagenseller suggests only two possibly explanations for the
Bernstein court's approach to the third party element o~ the tort in the
employment context: (1} the Bernstein court misread WagenselleY's
treatment of the intentional interference tort; or (2) the Bernstein Court
IC)7. RESTATEMENT ~SECONI?~ OF~'OR75 ~ ~~~. ~I9~9}.
168. See znfra notes 178—I88 and accompanying text for a detailed discussion of the
structure of tl~e Restatement anc~ how that structure bears on the third party question.
169. See supra notes 127-132 and accompanying text,
170. Mintz v. Bell Atl. Sys. Leasing Intern., Inc., 905 P.2d 559, 565(Ariz. Ct. App. 1993).
171. See id.
172. See Bernstein v. Aetna Life & Cas., 843 F.2d 359,36Cr67 {9th Cir. 1988}.
500
ARIZONA STATELAWJOUR1VtIL
[Ariz. St. L.J.
misapprehended the contours of the intentional interference tort as delimited
by the Restatement, which Wagenseller intended to ~o11ow. Each of these
conclusions is discussed below.
A.
~
~
The Ninth Circuit Misread Wagenseller
In Bernstein, Aetzaa at'gued that its supervisor acted within the course and
scope of his employment at all times and therefore could not be held liable
for interfering with what was effectively his own contz'act.173 The court
described this az'gurnent as "meritless" and claimed that it was "specifically
rejected in Wagenseller."~~~ With all due respect, this is mistaken for a
variety ofreasons.
First, there is no suggestion az~.y~vhere in Y~agenseller that the individual
defendant so much as mentioned the third party issue, let alone sought
reversal on this issue.l~s Rather than focus on this issue, the supervisar
argued that she was entztied to a privilege as a supervisor.176 It is this
no#ion o~ privilege that Wagenseller rejected, without ever addressing the
third party element of the tort.
Second, the Wagenseller court discussed the elements of the intentional
interference tort, and specifically referred to "third party" interference as an.
element o£ the tort.177 If the court intended to do away with that element of
the tort, or to whittle away at it in same z'espects, logic dictates that the court
would have said it was doing so. Tt did not.
Third, the Wagenseller court made very cleat that it intended to adopt the
rule of law described in section 766 of the Restatement.~78 Section 766
unequivocally states that the tort requires the existence o~ a third party.179
Section 766A contains the identical language.~80 It is simply too fantastic to
assurr~~ that the Wagenseller Court intended to adopt the Restatement
approach, sans the "third party" element, without a single suggestion that it
was doing so.
173. Id. at 367.
I74. 1'd.
I75. See Wagenseller v. Scottsdale Mem'1 Hosp.,710 P.2d 1025 (Ariz. 1989}.
176. Id. at 1042. "~'he Wagenseller court did not explain the source of ttie privilege that was
being urged. As noted in section. II of this article, some courts have recognized a general
common law privilege for managers in such instances without regard for the gird party element
oFthe tort. See supra notes 157-165 and accompanying texE.
177. 710 P.2d at 1Q41-42.
17$. Id.
179. RESTATEMEN"F (SECOND) OF TORTS § 766 (1979)("[ojne who intentionally and
improperly interferes with the performance of a contract between another and a third person")
(emphasis added}.
180. Id. § 766A.
1'T TAKES THREE TO TANGO
501
~•r•
3:0477]
ted
ese
Fourth, the Arizona Supre;ne Court is not in tl~e business of ove~~turning
precedent silently or through veiled innuendo.181 The court was and is
undoubtedly aware of Payne v. Pennzoil.~82 If the court truly intended to
undo the rule of Iaw established in Payne, it most assuredly would have said
it was doing so. More to the point, one would expect the court to at least
mentzon its own case law in which it refers to the third party element o~ the
tort,183 and explain how its holding rendered such references meaningless.
No such discussion appears in YYagenseller.
Fifth, the procedural outcome of the intentional interference claim in
Wagenselle~ does not suggest that the court rejected the thixd party element
of tine tort sub silentia. One might argue that the Wagenseller court
effectively nullified the third party element because it reversed the award of
summary judgment in favor of tk~.e inclividual defendant and remanded the
claim for trial. Yf the third party element precludes supervisor liability, why
would the court remand the claun? There axe logzcal reasons for this
:remand that do not support this conclusion, some of which appear in the
court's description of the facts and the law, while others undoubtedly
appeax in the record below. Once again, the parties do not appear to have
argued the third party issue directly, so remand of the claim suggests
nothing. Further, much of the supervisor's conduct in Wagenseller
arguably occwtx'ed outside the course and scope of her own employment,
such as tie "mooning" behavior an the rafting trip. For all one can glean
from the decision, there was other evidence fz'om which one could argue
that the supervisor's interference fe11 outside the course and scope of h.er
employment, and she was, in those res~ects, a third party to the con#ract
between Wagenseller and her employer. 4
The only way one can conclude that Wagenseller categorically rejected
the thzrd party defense for supervisors in intentional interference claims
would be to ignore all of the signs above, and to treat as legally identical
both the "third party" element of the tort and the "improper int~rfer~nce"
element of the tort. However, as discussed in the following section, the
Wagenseller court could not have intended this result because it undermines
the Restatement framework and imp:ropex'ly intrudes on the law of contract.
and
able
curt
ally
~r a
lual
~ght
isor
this
the
anal
s an
it of
ourt
the
766
y.i79
'tc to
vent
.at it
t was
:neral
;ment
r and
son")
18i. See, e.g., Pace v. Pace, 262 P2d b19, b21 {Ariz. Ct. App. 19$1)(holding the covert
does not overtun~z precedent by implication unless implication is clear and compelling).
182. 672 P.2d 1322(Ariz. Ct. App. 1983}.
183. See, e.g., Antwerp Diamond Exch, v. Better Bus. Btaxeau, 637 P.2d 733, 740 (Ariz.
1981)(de~niug intentional interference as causing a "third person" not to enter into or coxztinue
a business relation}.
184. Cf. Tempests v. Motorola, Inc., 92 F. Supp. 2d 973, 987 (D. Ariz. 2001)
(distinguishing Wagenseller, in part, because the supervisor's conduct in Wagenseller occurred
in many respects outside the course and scope of employment).
502
B.
ARIZONA STATE LAYVJOURNAL
[Ariz. St. L.J.
The Bernstein Court Misapplied the Restatement Rule ofLaw
The Bernstein Court treated the "improper" element ofthe tort as though
it were synonymous with the "third party" element of the tort. This
approach conflates tvvo legally distinct concepts under the Restatement and
impermissibly inserts an element of tort law into what should otherwise be
contractual disputes.
The structure ofthe Restatement provides the first clue that the Bernstein
cow misunderstood Wagenseller and the Restatement. Section 766 of the
Restatement defines the applicable rule oflaw and its component parts:
One who intentionaIly and improperly interferes with the
perfozmance of a contract (except a contract to many} between
another and a #bird person by inducing or otherwise ca~zsing the
third person not to perform the contract, is subject to liability to
the o#her for the pecuniary loss resulting to tl~e other from the
failure of the third person to pe~'orm the contract.185
Section 7fi6(A) contains virtually identical language:
One who intentionally and improperly interferes with the
performance of a contract (except a contract to marry) bei~veen
another and a third person, by preventing the other fra~n
performing the contract or causing his perfonx~ance to be more
expensive or burdensome, is subject to liabiIaty to the other for the
pecuniary loss resttltin.g to him.18fi
After stating these rules of law, th.e Restatement undertakes to define one
of the central concepts underlying the tort, describing in section 767 #hose
dorms of interference that can be described as "improper."387 This is the
seven-factor test discussed in some detail in Wagenseller.ls8
It is readily apparent from the commentary in the Restatement that
section 767 was intended to explain one of tk~e elements of the intentional
interference tort, not to supplant other elements.189 Notwithstanding the
185. RESTATEMEI~'T ~SECOND~ OF TORTS ~ 766.
186. Id. § 766A.
187. 1'd. § 767. For a discussion of why the "improper" factor so permeates the rule of law,
see Restatement (Second) of Torts ch. 37, introductory emt. As the Wagenseller court
explained, there is nothing inhexently unlawful about interfering with contractual zelationships
between others. It is only when that interference is "improper," as dafined by saction 767 of the
Restatement, that a claim for intentional interference will lie. 5'ee Wagenseller, 710 P.2d at
1042-43.
188. Id. at 104113.
1$9. RESTATEtvIENT (SECOND) OF TORTS ch. 37, introductory cmf.; see also United Tz~Flck
Leasing Corp. v. Geltman, 551 N.E.2d 20, 21-23 (Mass. 1990) (recognizing that intentional
interference as defined by sections 7b6 and 765A, standing alone, does zxot give rise to the tarE;
34:0477]
IT TAKES THREE TO TANGD
503
i~npartance of the "improper" element of the tort, the Restatement is still
riddled with references to the third party element o~ Elie tort.140 If"improper
conduct" were the sine qua non for the interference to~~, thEn most of
unnecessary.191 Why
sections 766 and 766{A) would be wholly
would the
if
Restatement
use
party"
at
all
the
~errz7
"third
it
is
irrelevant
drafters o~
xhe
?192
any time conduct is "improper'" under section 767
One must also consider the practical effects of the Bernstein court's
reading of Wagenseller to reach an educated judgment on its validity or
invalidity. The elimination of the t~a.~rd party element of tie tort in phis
context prarnises to chill managerial ingenuity and to convert Arizona
courts into human resources departments of last resort. Consider the
following possible scenarios under the Bernstein formulation:
,5'cenario 1: Supervisor learns that Employee has been
having ara affair with Supervisor's wife foY three yeas.
Saspervisor vows to get Employee. Supervisor begins
enforcing every company policy and practice to the lettetagainst Employee, where Supef-visor allowed Employee to
get by in the past. After several violations of company
policy, meticulously documented by Supervisor, Company
Supervisor would not have
discharges Employee.
documented these violations hutfof~ knowledge ofthe affair.
Scenario 1 reflects the practical dif~ezences between the Bernstein
approach and the Payne approach. Everything Supervisor did appears to
have occt~zred within the course and scope of his employment. ~nde~d,
Supez-visor enforced the employer's wishes to the letter. Under Payne,
Supervisor could not be held liable for st;rict~y adhering to the employer's
it is only when the added element of improper conduct is considered that one can be held
liable}.
I9O. RESTATEMENT(SECOND OF TORTS Ch. 37, introductory crnt.; § 766, cents. b, c, f, g, k,
n, o, p, v.
191. Cf. State v. Pitts, 874 P.2d 962, 964 {Ariz. 1994}(When interpreting statutes, Arizona
courts first attempt to interpret tiie statutes in a manner 4hat gives meaning to each and every
term.).
192. Cf. Trimble v. City &County of Denver, 697 P.2d 716, 726 (Colo. 1985)(Court first
applies third party test, then moves on to separate question of improper conduct.); Huff v.
Swartz, 606 N.W.2d 461, 467 (Neb. 2000) (Court holds that before looking to "unjustifed"
element of tort, it must first determine "at what point does the coemployee become a third
person subject to liability for tortious interference with the at-will employment relationship of
another."); McGinty v. Staudenraus, 901 P.2d 841, $47 {Or. 1995)(Court must first Iook to
threshold third party question, and then look to "improper conduct" element of tort.).
504
ARIZONA STATE LAWJOURIVAL
[Ariz. St. L.J.
policies—there can be no better example of acting vcrithin the course and
scope of supervisory employment.193
Under Bernstein, however, Supervisor's conduct arose out of his ill will
for Employee, which could arguably support an intentional interference
claim. The cornmenfs to secfian 767 of the Restatement kighlight this point.
According to the Restatement, if the supervzsor's sole motive zs to "vent
one's ill will," then the interference "is almost certain to be held
improper."~~a The result is truly striking; a supervisor acting within the
course and scope o~ his employment can be held Iiable for intentionally
interfezing with an employee's contract by enforcing the employer's rules
of conduct. This cannot be what Wagenseller intended.
Scenario 2: Employee and Supervisor are close friends
outside work but they then have, a massive argument during
a round ofgolf. Supervisor is required tofll out Employee's
perfoYmance evaluation soon thereafter and rates Employee
poorly, which adversely affects Employee's raise to a very
small degree.
This scenario reflects the intrusion of the tort into even the most minute
employment disputes under Bernstein. The Bernstein approach guarantees
that the smallest o~ internal employment squabbles ar~d personal disputes
will rise to the level of potential liability. W~aefher the performance
evaluation in scenario 2 criticizes Employee fairly or due to ill will
ordinarily presents a factual dispute, promising a potential trial on an
intentional interference claim sim~ly because Employe did not get as
substantial a raise as she expected.l s
The intrusion does not stop at raises. Supervisors could find themselves
potentially liable any time an employee is denied a bonus, an award, an
perks.196
overtime assignxx~ent, a vacation day, oz any host of de minimis
One can even conceive of a claim by a supervisor against a subordinate who
is acting within the course and scope, but whose dilatory performance costs
193. See, e.g., Singleton v. Itson, 383 S.E.2d 598, 599-600(Ga. Ct. App. 1989)(noting that
employer and supervisor possessed a right to enfozce policies).
194. RESTATEMENT(SECOND)OF TORTS § 767 Cri3t. d.
195. See, e.g., Levee v. Seething, 729 N.E.2d 215,2i9(Ind. Ct. App, 2000)(Plaintiff sued
subordinates and union for creating a year of tmmoi1 that resulted in her 1.5% raise as opposed
to her expected 3%raise.).
19b. See, e.g., Joyce v. Gezz. Motozs Corp., 551 N.E.2d 172, 178, reh g denied, 553
N.E,2d 691 (Qhio 1990) (Employee sued supervisor For allegedly taking credit for a
sugges#ion employee submitted.).
34:0477]
.IT TAKES THREE TO TA1VG0
505
the supervisor a merit bonus.197 Nor does the intrusion end with existing
employmen# relationships. While Arizona law does nab z'ecognize claims
for wrongful refiisal to h~re,19$ a supervisor- might still be said to
intentionally interfere with a prospect of fixture employment under section
772 of the Restatement. Arizona courts would become the ultimate referee
of countless, o#herwise minor, workplace squabbles and effectively replace
human resources managers throughout the state.199
Scenario 3: Employee applies for a promotion within
Supervisor's organization. Supervisor's Best Friend also
applies for the job from outside the Company. Although
Employee is more qualifed in all respects, S'uper-visor hires
BestFriendfor thejob.
Scenario 3 confirms that the Bernstein approach reaches £a~ beyond the
"social interests" the Restatement seeks to protecf.2°0 The act described in
this scenario is one of pure favoritism. As distasteful as it might be viewed,
favoritism is an everyday part of life and business life. No social interest of
any kind fs bolstered by the intrusion of tort law concepts into phis
o~ie:rwise private decision to help a friend instead off' axe incumbent
candida#e for a position.20~ There is simply na reason ~o allow tort recovery
in this instance when Supervisor acts within the course and scope of his
employment.
Scenario 4: Employee is a rabid Arizona Diamondbacks
fan. Employee comes to work every day dressed in some
form ofDiamondbacks regalia. Employee posts pictures of
Randy Johnson and Curt Schilling throughout her cubicle.
The Executive Management Team of Small Company
consists of a lifetime St. Louis Cardinals fan, a lifetime
Atlanta Braves fan, and a lifetime New York Yankees fan.
'
.t
d
d
3
a
197. Cf. Stiles v. Chrysler Motors Corp., 624 N.E.2d 238, 243 (Ohio Ct. App. 1993}
(Supervisor sued subordinate for filing a grievance against him.).
198. Burris v. City of Phoenix, 875 P.2d 1340, 1348 {Ariz. Ct. App. 1993} {dealing with
refusal to hire a fire fighter because of family histozy ofcancer}.
199. Cf. Kornegay v. Mundy, 379 5.E.2d 14 (Ga. Ct. App. 1989) (noting that conflicts
between employees shotild be resolved by employer, not courts); Eserhut v. Heister, 762 P.2d 6,
8(Wash. Ct. App. 1988)(holding co-workers liable where Betty jealousy led to friction between
co-workers and plaintiff, thus convincing plaintiff to quit).
200. The Restatement makes repeated references to the need to protect social interests
through the intentional interference tort, and the social interests to be protected constitute one
element of the "improper conduct" inquiry under section 767. fee RESTATEMENT(SECOND) QF
Tott~'s § 767 & cmt. g (1965).
201. Cf. Womack v. Runyon, I47 Fad 1298, 1304(1lth Cir. 1998)(recognizing that mere
favoritism does not constitute unlawful discrimination).
506
ARIZONA STATE LAWJOURNAL
[Ariz. St. L.J.
The GED has pictures ofDerek Deter stylishlyframed on her
offce wall. As the 2001 baseball playoffs progress, the
Executive Management Team tivatches in growing rage as
Employee quietly and tastefully revels in the Diamondbacks'
playoff victories against the Cardinals and the Braves. Luis
Gonzales' dramatic game-winning single in the seventh
game of the World Series against the Yankees is the coup de
grace for the members of the Executive Management Team,
who pf~omptly discharge Employee, telling hey "we don't
need any Johnny-come-lately fans like you around here."
Employee was employed at will.
Scenario 4 reflects the illogic o~ the Bernstein rule when one considers
the employer's potential liability with the supervisor's liability. Painful as
it is foz phis author to ac~nit, there is simply na conceivable wrongful
discY~arge tort for Employee to assert against the Company under this
scenario.2°~ Because Employee r~vas employed at will, and. zoo genuine
public policy is o~'~'ez~d~d by a discharge for team spirit, there is no
co~izable cause of action against the Company. However, undez'
Bernstein, Employee might enjoy the functional equivalent of such an
action by suing members of t1~e Executive Managern~nt Team individually
for intentional interference. The Bernstein approach allows Employee to
usurp the Arizona Legislatere's stated pz'erogative against such actions, as
stated in the Arizona Employment Protection Act,203 by suing individually
the very m~agers who are tl~e Company. ~t is difficult to believe that the
Wagenseller court intended this result, and it is clear that the Arizona
Legislature did not intend this result when it enacted the Employment
Act.Z°4
Protection
The Arizona Court of Appeals attempted to argue around this conundrurr~
zn Mintz.2°5 The plaintiff in Mintz could not asse~:t any cognizable claim
against the employer because Arizona haw does not recognize a claim for
wron.gfixl failure to prorr~ofe, nor were the acts of the employer su~'ficiently
outrageous to support an intentional infliction of emotional distress
claim.20b The court recognized the anomaly created by exposing the
202. See Arizona Employment Pro#ection Acf, AFUZ. Rev. S7'nT. ANN. § 23-1501 {West
2000)(delimiting the circumstances under which an employee may assert a wrongfi.~l discharge
or breach o~'contract claim).
2Q3. Id.
204. Id.
205. 905 P.2d 559, 564-65 (Ariz. Ct. App. 1995}.
206. Yd. at 561—(s4. A detailed discussion of the facts in the Mintz case appears at supra
notes 95-107 and accompanying texk
34:0477]
.IT TAKES THREE TD TANGO
507
supervisor to individual liability in tort for failure to promote the plaintiff
whin the employer itself could not be held liable far the promotion
denial.207 The court purported to dis#anguish Wagenseller and Bernstein
because those cases were "grounded in the existing tort of wrongfiil
discharge, wile Mintz's case is grotanded in the non-existent tort of
wrongfiil failure to promote."208 While this rationale itself calls for some
criticism, tie court went on to state that fide rationale made sense because
the individual defendant was acting at all times within the course and scope
of his employment and thus could not be a third party to the con#ract
between the employee and the employer.20g .
It is difficult to understand why the existence or non-existence of some
underlying tort claim against the employer, itself, will define the existence
of an intentional interference claim against a supen+isor; one does not
necessarily anchor the other. There are any number of examples that belie
the court's rationale. For example, an employer might discl~arge an
employee because the employee was arrested an felony drug charges.
Certainly in the private sector, this would not ordinarily support a claim for
wrongful discba;rge or bxeach of contract. However, if the employee's
supervisor got the employee arrested in the first place by making a false
report to the police out of personal animosity while on personal time, the
supervisor would be acting outside the course and scope of his employment,
and would be directly andunproperly intez-~'ering with the employee's
employment. While the employer would .not be liable, the supervisor
should be liable. The right to assert an intEntional interference claim
against a supervisor simply does not hirn on whe#her it can be anchored to
same offer tort claim against the employer.
It zs the Nfintz court's retreat to the third party question that is most
telling, however. At the end o~ the day,the court felt compelled to note that
the supervisor could not be a third party to the employment relationship
because he acted within ~e course and scope o~his employment.21° Try as
the court might, it simply could not argue around the thixd party element
without creating what it found to be a truly anomalous situation. Mintz
reasoned that the supervisor's conduct could not be "impropez" because the
employer's conduct was not unlawfu1.2j1 As the example in the preceding
paragraph proves, this is not a given. A supervisor can unIawfuliy interfere
with a contract while acting outside the co~.arse and scope of his
207. Mzntz, 90S P,2d at 564-65.
208. Id.
209. Id.
zro. ra.
211. See Icl. at 565.
508
ARIZONA STATE LAWJOURNAL
[Ariz. St. L.J.
employment, and tine only axzalytical construct that prevents the true
anomaly Mzntz feared is the insistence on a third party element as part of the
intentional interference tort.
The comments to section 767 of the Restatement confirm this criticism
of Mintz. Under the Restatement, the intent to interfere with one's contract
need not be the only rriotive; the primary motive, or even a casual motive in
order for the conduct to be improper.212 Its any circumstance where a
supervisor wants to discharge an employee, or cause an employee to be
dischaxged, there is, by definition, an intention to interfere with tYae
employee's contract.213 Without the protection of the third party element of
tie tort, virtually every supervisory decision affecting employ~n.ent status
would be subject ~o judicial challenge through the Trojan horse of the
intentional interference tort.
Looking past these scenarios, the most likely legal battleground under
Bernstein, however, will be in the unlawful harassment area. If an
employee, acting within the course and scope of her en:iployment,
complains about unlawful harassment, oz discharges a subordinate for
un.law~ul harassment of a coworker, that employee faces potential tort
liability for intentional interference. The harasser might conjure up any
number of "improper" motives for the employee who reports the
harassment or for the supervisor who discharges the harasser. Certainly
Arizona public policy favors the reporting of unlawful harassment of any
kind in the workplace,2~4 yet the chilling effect of the Bernstein approach on
such reporting is readily apparent.2~5
's
~
'!
~~
''
',
212. RESTATEMENT(SECOND)OF SORTS § 767 cmt. d (1965).
213. The same would hold true for myriad supervisory decisions, such as pay cuts,
demotions,job reassignments, disciplinary suspensions, written warnings, ad infinitum.
214. See Miller v. Servicemaster by Rees, 851 P.2d 143, 145 (Ariz. Ct App. 1992)
(recognizing societal value of such reports axed establishing a qualified privilege for such reports
in the defamation area).
215. One might suggest thaE this argument proves too much because its inverse calls out for
liability. Tn other words, Arizona Iaw shoed recognize an intentional interference tort claim
against an alleged haz~asser for interfering with the employment relationship of a subordinate by
making unlawful harassment past of the work environmenE. One need only Zook to the
disturbing facts of two Arizona cases iri~olving empSoyee rapes by supervisors for sympatheric
support. See State v. Schalloc~C, 941 P.2d 1275 (Ariz. 1997)(addressing ten-year history of
amployer's direc#ox sexually harassing #'emales, culm~izxating in sexual assault and rape of
twenty-three-year-old law student); Smith v. Arn. Express Travel Related Sere. Co., 876 P2d
1166 (Ariz. Ct. App. 199) (addressing multiple rapes by supervisor}. However, tort law
afforded the victims in both of these cases with other tort claims that provided remedies to the
victims. Absent a showing that currently existing tort Iaw failed these ~ici~ms somehow, the
disturbing facts of these cases axed the concept of supervisor rape do not warrant expanding the
scope of the intentional interference tort to include such behavior. Further, in many of these
insEances, it is likely that violent acts such as sexual assault and rape will not be found to have
34:0477]
IT TAKES THREE TO TANGO
509
Tae practical risks of the Bernstein reading of WagenselleY expand
beyond these hypotheticals, existing case law, and. even employment law.
If improper conduct is the hest, to the exclusifln of a third party element,
t1Len every breach of contract would expose t1;e breaching party #o potential
tort liability.236 As long.as any argtunent can be made that a party to a
contract breached that contract for an irriproper purpose or through improper
means as defined by section 767 of the Restatement, then there will be
potential tort exposure. To date, Arizona courts have been more than
reluctant to expand the scope of tort law into contract law.217 If the Arizona
Supz'eme Court intended to paint with such a broad stroke in Wagenseller,
one can be sw-e that it would have made this point obvious. Yt did not, and
Bepnstein's interpretation of YYagenseller is simply insupportable.
N.
THE RULE OF LAW UNDER THE RESTATEMENT AND WAGENSELLER,
AND STS PRACTICAL EFFECTS FOR ARIZONA PRACTITIONERS
Having resolved the Payne/Bernstein conflict, the methodology for
asserting and defending against an intentional interference claim in ~e
employment setting is £ai~~y straightforwaxd. A few practical suggestions
are nonetheless in order.
As an initial matter, the plaintiff 3nust prove the foundation elements of
the tort as established by section 766 of the Restatement: (1) intentional
conduct; (2) improper conduct; and (3) conduct that interferes with the
occurred within the course anal scope of employment, thus opening 4he door for intentional
interference liabili#y. Cf. Schallock, 941 P.2d at 1282-83 (Court's opinion appears to be driven
in large part by the fact that the employer was well aware of the offensive conduct for many
years yet tolerated it, suggesting that it became course and scope activity because the employer
could reasonably expect it to occur in this seft~ing.).
216. Arizona courts have recognized the inter~'erence tort in a wide variety of coutaxts
beyond the employment setting. See, e.g., Antwerp Diamond Exch. v. Better Bus. Bureau of
Maricopa County, 673 P.2d 733, 730 (Ariz. 1981} (interference with a professional business
relataonskup}; Chanay v. Chzttenden, S63 ~,2d 2$7 {Ariz. 1977) (interference with agency
contract); McNutt Oil &Ref. Co. v. D'Ascoli, 281 P.2d 966 {Aziz, 1955) (inteirference with
restrictive covenant); Tipton v. Burson, 238 P.2d 1098 (Ariz. 1951} (interference with a lease
agreement); Meason v. Ralston Purina Co., 107 P.2d 224 (tlriz. 1940)(interference with a sales
contract).
217. See, e.g., YYagenseller, 710 P.2d 10 5, 1.Q40 {1985)(declining to expand tt~e implied
covenant of good faith and fair dealing to the level of tort in the employment setting}; see also
Applied Equip. Corp. v. Litton 5audia Arabia Ltd., 869 P.2d 454, 459-63 (Cal. 199 )
(discussing the importance of keeping tort and contract concepts distinct and refusing to allow
"conspiracy to iupterfere" tort against company that was party to contract).
510
ARIZONA STATE LAWJOURNAL
[Ariz. St. L.7.
performance of a contract between another and a third person by inducing
or otherwise causing the third person not to p~rform.2rg~
The first element of the tort, "intentional" conduct, is broac~y defined
under the Restatement, and a. detailed explanation o~ the requisite showing
is beyond the scope of this article. However, in sununa:ry, the Restatement
describes intentional conduct as:(1) a primary purpose to interfere with the
performance of the contract; (2} a mixed propose both to interfere witk~ fb.e
performance of the contract in addition to some othEr purpose; or (3)
knowledge that the conduct is certain or substantially certain to interfere
wi#h the performance of a con~'ac~ even if the actor does nod act for the
purpose of interfering.2~9
The second element of the tort, i~npropez conduct, has been discussed at
length in this artic1e.220 It is separately defined in section 767 of the
Restatement. It presents a factar-balancing appz'oach, rather than a strict
rule of law, when evaluating the alleged impropriety of the challenged
conduct.221 Thy Restatement warns that no hard and fast rule has developed
with respect to who bears the burden of raising the "improper" conduct
question,z2z and there is no real guidance from Arizona courts on this issue.
for this reason, it is wise for a plaintiff to specifically allege in the
complaint that the challenged cond~zct was undertaken through improper
meaYxs and/or for improper purposes, ar run the risk of losing a motion to
dis3niss. By ~e same token, the defendant s~iould take care to asse~-~ in the
answer the absence of any improper means andlor purposes, or run the risk
oflosing the opportunity to make the argurrient.
The third element of the tort has several subparts to it, with the "third
part' element being most relevant for this article. From a pXeading
perspective, plainti£~'s should take care before pleading that an individual
defendant acted at all times within the course and scope of employment if
asserting an intentional interference claim. Several reported decisions
applying Arizona law have ruled that such allegations constitute admissions
that potentially defeat the third party element ofthe tort.2z3 To presezve the
218. R~.S~'.4TEMENT(SECOND) OF TO~trs § 766. The elements vary minimally under section
7b6A, which governs interFerenee that causes another to breach his or her contract with a third
party. See id.
219. RESTA"i'EM6NT(SECp1VD~ OF TORTS § 7b6 CITIt, j.
220. See supra notes 185-2i7 and accompanying text.
22]. RESTATEMENT(S~COND~ OF TORTS § 767 cmt. a.
222. Id. cmt. k,
223. E.g., Sprott v. N. Auto. Corp., 958 F. Sapp. 456 (D. Ariz. 1946}; Kelley v. City of
Mesa, 873 F. Supp. 320 (D. Ariz. 1994}; see also Nix v. Temple Univ., 596 A.2d 1132, 1137
(Pa. Suge~. Ct. 1991) (Plaintiff must plead #fat conduct arose outside course and scope, and
must plead specific facts supporting that allegaUion..). But see Presto v. Sequoia Syss., Tr~c., 633
34:0477]
1'T TAKES THREE TO TANGO
511
option, plaintiffs are wise to plead the course and scope issue in the
alternative.z24 Defendazats are similarly wise to carefully consider how to
go about admitting or~denying allegations concerning the course and scope.
Of ca~:rse, all pleading strategies are guided by zule 1 ~ offhe Arizona Rules
of Civil Pracedure.225
The third party issue will usually reach critical mass at summary
judgment. Although one may plead course and scope in the alternative
under rule S, one would be hard-pressed to argue both sides of the third
party issue at the summary judgment stage. A plaintiff will have to decide
in the face of a summary judgment motion whether it is better to pursue the
intentional interference tort against the individual, or to tar the employex
with the individual defendant's brush by arguing that the conduct was
within the course and scope, and even ratifiEd by the employer.
While a detailed analysis of what constitutes course and scope activity
under Arizona law goes beyond the scope of this article, Arizona
practitioners wild find many of the answers in the Arizcna Supreme Court's
decision in State v. Schallock.226 Schallack involved a truly shocking set of
facts involving the Director ofthe Arizona Prosecuting Attorneys' Advisory
Council("APAAC"), who was found to have repeatedly sexually harassed
his female subordinates over aten-year period, ultimately culminating in his
rape of a young law student who was clerking for APAAC.227 The court
ultimately concluded that these acts could have occurred within the course
and scope of the hat'asser's employment and remanded the case to a ju~ry.2z8
F. Supp. 1117, 1I22 (D. Mass. 1986} (Where plaintiff ali~ged that supervisors' acts were
"willful, reckless, malicious and unlawful," and plead furthaz facts suggesting that supervisors
dzd zaot possess authority to act in the manner alleged, complaint stated a claim.); Borecki v. E.
Irit'1 Mgmt. Corp., 694 F. Supp. 47, 57 (D.N..T. 1988) (holding t31at judicial admissions in
pleadings to the effect that company's officials acted in the course and scope were insuf~czent
to warrant dismissal, but zither, evidence should be adduced during discovery to resolve course
and scope issue).
224. See Ax~z. R. C~v. P. 8(e) (providin:g for alternative or hypothetical stakements of a
claim of defense in plead~gs).
225. Id. (noting that alI allegations in a pleading must comply with z~ule 11(a) of the
Arizona Rules of Civil Procedure).
226. 941 P.2d 1275 (Ariz. 1997).
227. The procedural pasture of the case is somewhat unique. The State bzought a
declaratory judgment action seeking a declaration that it possessed no duty to indemnify the
harasser for 5challock's jury verdict against him personally. Id. at 128Q. The indemnity issue
turr~ed on whether the harasser was ac#ing within the course and scope of his employment when
he engaged in acts of sexual harassment acid rape. 1'd. Thus, while the case uses the vehzcle of
Arizona public employer indemnity law, it turns in part on the common law analysis of course
and scope issues.
228. Id. at 1287.
SI2
I
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r~
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ARIZONA STATELAWJOURNAL
The Schallock Court followed the Restatement (Second) of Agency to
reach its conclusion.229 Thus, the court looked to such Factors as where the
acts took place in relation to the workplace or work assignments, the
previous relation between APAAC and the harasser and APAAC's prior
knowledge of a long history of harassing acts, whether APAAC had reason
to expect. that the harasser would engage in these acts, what purpose the
harassing acts served for APAAC (if any), -what motives the harasser
possessed, and whether the harasser's conduct z'ase to the level of criminal
activity.23° Thus, when proving ar dispz'oving the third patty element of the
tort, Arizona law appears to apply the factar-balancing test of the
Restatement (Second) of Agency, which will provide practitioners with a
blue-~rint231 for debating the existence of the third party dement of the
tort.2 2
V.
ii
,;~'!
~E. 6
~
~~
~i
'j
`~.
[Ariz. St. L.J.
CONCLUSION
The Arizona Supreme Court embz'aced the Restatement formulation of
the intentional interference tort in Wage seller v. Scottsdale Memot-ial
Hospital. In doing so, the court clid not suggest in any way that it was
overruling Payne u. Pennzoil, which held that a supervisor acting within the
course and scope of em~Ioyment cannot be held liable for intentional
interference with an employment contract because thez'e is no third party, an
essential element of ~e tort. Likewise, the Arizona Supreme Court did not
silently or inferentially overrule Payne through its Wagenseller decision.
The court's recognition of the "improper conduct" element of the tort is
completely consistent with the "thud party" .element of the tort,233 and the
229..ld. at 1281—Sb. The Court also relied on "authorization" as an alternative basis for
potentially finding vicarious liability for APAAG. Id. at 128fr87.
230. Id. at 1281-86.
231. Use of the term "blue-print" is perhaps a bit misleading because course and scope
issues are often quite difficult to resolve notwithstanding the Restatement (Second) of,4gency,
As the Minnesota 5uprezne Court has noted:
It is not always easy to determine when a corporate offcex or agent's actions
are outside the scope of his company responsibilities, i.e., when he is
engaged in a personal vendetta or excursion, Particularly is this true in a job
termination case where tie officer's duties include the evaluation and
supervision of the plaintiff employee's performance or the power to
participate in the corporate decision to Eerminate ar otkterwise discipline the
plaintiff.
Nordling v. N. States Power Co., 478 N.W.2d 498, 506 (Mites. 1991).
232. See supra note 215 and accampany~ing text for a discussion of supervisory acts such as
rape and the effect of the third party element on such claims.
233. See supra note 192 and accompanying text.
34:0477]
IT TAKES THREE TO TANGO
513
Ninth Circuit i~ Bernstein simply read more into the Wagenseller opztiion
than can actually be drawn from the decision.
While the Bernstein decision creates an element of confusion on this
issue, as does the Arizona Court of Appeals' decision in Mintz, the answer
to this confizsion lies squarely within the four corners of Wagenseller and
the Restatement. Unfortunately, only judicial correction of this confusion
will clarify the role of the supervisor in intentional interference ctazms in
the employment setting.