The legal theory of tortious interference with a contract protects a business’s relationships from tampering by others. In Metro Premium Wines v. Bogle, the District Court for the Northern District of Illinois explains how the theory is applied.
Plaintiff Metro Premium Wines, Inc. (Metro), an Illinois wine distributor, sued Bogle Vineyards, Inc. (Bogle), a California vineyard, and fellow distributor Winebow, Inc. (Winebow), alleging that Bogle and Winebow hatched an improper scheme to take away Metro’s distributorship of Bogle’s wine in Chicago in favor of Winebow.
Under the terms of an oral agreement, Metro held the exclusive rights to distribute Bogle wines in the area for roughly 20 years. Metro asserts that in 2009 a Winebow executive approached Metro about buying the company. Claiming that he needed to perform due diligence before making an offer, the executive allegedly requested that Metro provide confidential sales, pricing and financial data. The parties signed a confidentiality agreement providing that Winebow would use this information only in relation to tendering an offer. Bogle sales manager Sam Bon allegedly then made several calls to Metro, encouraging it to sell the company to Winebow.
According to Metro, Winebow had no intention of buying the company and, with Bogle’s assistance, instead allegedly hatched the ruse in order to obtain the confidential information. Shortly after allegedly receiving the information, Winebow began operating a distributorship in Chicago and offered to buy Metro for only $500,000, despite the fact that the company had been recently appraised at $2 million. 10 days after the offer, Bogle allegedly sent a letter to Metro questioning the company’s sales performance and demanding that it take action to increase sales within four months or lose its exclusive distributorship. In September 2010, Bogle terminated Metro’s distributorship and made Winebow its exclusive distributor in the area.
Metro filed suit, bringing fraud, conspiracy and tortious interference claims against both Winebow and Bogle – as well as separate breach of contract claims against Winebow – asserting that the parties conspired to improperly take Metro’s confidential information in order to jump start Winebow’s Chicago operations. Bogle and Winebow subsequently filed a motion to dismiss the fraud, conspiracy and tortious interference claims.
Although it dismissed Metro’s claim alleging that Winebow tortiously interfered with the distributor contract between the parties, the district court denied the motion to dismiss the fraud and conspiracy claims against both Bogle and Winebow as well as a claim alleging that they tortiously interfered with Metro’s relationship with customers for non-Bogle wine by scheming to get the confidential information, which Winebow then used to earn business with Metro’s customers. According to the court, Bogle was free to end its relationship with Metro in favor of one with Winebow, but not to conspire with Winebow to obtain Metro’s confidential information for competitive purposes. Furthermore, contrary to the Defendants’ assertion, the remaining claims were not merely a “dressed up breach of contract dispute,” but rather “based on the scheme to improperly take and use its confidential information.”
A tortious interference claim can be a valuable tool in a business dispute for a person or entity who believes that a client or competitor is interfering with a valuable relationship. At DiTommaso Lubin Austermuehle, our business litigation attorneys represent business owners and professionals in this and other claims throughout the Chicagoland area including Cook, DuPage, Lake, Kane, McHenry and Will Counties and in the Mid-West region including Indiana, Wisconsin and Iowa.
Related blog posts: