Sixth Circuit Affirms Dismissal of Tortious Interference Claim Against Goldman Sachs

This is a pretty neat, short case for those interested in teaching intentional interference with business relations (IIBR), but as the tort specifically excludes liability for interference with contractual relations, perhaps it is best suited for a case on business torts.

Ruby Tuesday had a long-term lease on the property.  It also had a loan from Goldman Sachs (Goldman) that prohibited it from transferring the property without Goldman’s consent.  Ruby Tuesday fell on hard times and decided to unload the property to BNA Associates (BNA), a real estate developer.  The contract between Ruby Tuesday and BNA referenced (in BOLD AND ALLCAPS) the requirement that Goldman approve the transaction.  Goldman refused, and, as illustrated below, it later acquired the lease on the property after Ruby Tuesday’s bankruptcy.

Goldman Sachs, Artist’s Representation

BNA sued, alleging IIBR.  The key hurdle that BNA needed to overcome was that it had to allege that Goldman had an improper motive or improper means.  BNA alleged no improper motive, and Goldman argued that simply exercising its contractual rights to withhold consent could not be improper means.  The District Court agreed with Goldman.

On appeal, the Sixth Circuit took a different route.  The court first noted that Tennessee’s IIBR cause of action does not reach cases such as this one involving relationships reduced to contractual form, whether current or prior.  There was no allegation that Goldman has interfered with a prospective business relationship.  In short, BNA relied on the wrong Tennessee tort; it should have alleged inducement of breach of contract.  

Beyond that, the Sixth Circuit signaled its agreement with the District Court’s finding that BNA had not adequately alleged an improper means.  Citing prior case law, the court noted that IIBR ought not to be construed to permit a plaintiff to “undermine the ability to contract freely and engage in competition.”  Goldman may have been playing hardball, but its contract with Ruby Tuesday permitted it to do just that.  Faced with such permissible hardball tactics, the complaint is a swing and a miss.