EDIFECS INC v. WELLTOK INC (2021)

United States Court of Appeals, Ninth Circuit.2021-03-16No. No. 20-35102

Summary · law.co

Holding. The court affirmed the district court's grant of summary judgment because Edifecs failed to present evidence of damages with sufficient certainty to allow a trier of fact to estimate loss without resorting to speculation or conjecture.

Edifecs sued Welltok for tortious interference with contractual relations, claiming that Welltok improperly induced a former Edifecs executive and five sales employees to leave the company in breach of their employment obligations. The district court granted summary judgment in Welltok's favor, and Edifecs appealed. The appellate court affirmed, finding that Edifecs failed to establish damages as required under Washington law. Edifecs argued that the departing employees themselves possessed pecuniary value to the company, but the court rejected this theory as unsupported by case authority. The court also found insufficient evidence linking the employee departures to any actual financial loss, characterizing Edifecs' damage theory as speculative rather than based on concrete proof of lost revenues or profits.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether pecuniary value exists in employee relationships themselves
Whether circumstantial evidence of crisis mode and lowered expectations suffices to establish causation between employee departure and financial loss
Standard for proving damages in tortious interference claims under Washington law

Procedural posture

Edifecs appealed the district court's grant of summary judgment in favor of Welltok and an accompanying sanctions order in a diversity action alleging tortious interference with contractual relations.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM ***

Edifecs, Inc. (Edifecs) appeals the district courts grant of summary judgment in favor of Welltok, Inc., (Welltok) and its sanctions order, in a diversity action alleging tortious interference with contractual relations. Edifecs alleged that Welltok wrongfully induced and assisted former Edifecs Senior Vice President David Profant to recruit five Edifecs sales executives to join Welltok, in violation of Profants contractual obligations. Reviewing de novo, we affirm. See Bravo v. City of Santa Maria, 665 F.3d 1076, 1083 (9th Cir. 2011).

Under Washington, State law:

To prove tortious interference, the plaintiff must produce evidence sufficient to support all the following findings: (1) the existence of a valid contractual relationship or business expectancy; (2) the defendants knowledge of and intentional interference with that relationship or expectancy; (3) a breach or termination of that relationship or expectancy induced or caused by the interference; (4) an improper purpose or the use of improper means by the defendant that caused the interference; and (5) resultant damage.

Tamosaitis v. Bechtel Natl, Inc., 182 Wash.App. 241, 327 P.3d 1309, 1313 (2014) (citation omitted).

The only issue on appeal involves the damages element. The existence of pecuniary loss is a “threshold element for recovery under the tort of interference with a business relationship just as it is for the tort of interference with a contract.” Tamosaitis, 327 P.3d at 1314. And “a party must prove a claim of damages with reasonable certainty.” Greensun Grp., LLC v. City of Bellevue, 7 Wash.App.2d 754, 436 P.3d 397, 409 (2019) (citation omitted). “Evidence of damage is sufficient if it affords a reasonable basis for estimating loss and does not subject the trier of fact to mere speculation or conjecture․” Clayton v. Wilson, 168 Wash.2d 57, 227 P.3d 278, 285 (2010) (en banc) (citation omitted).

Edifecs first asserts that it produced evidence of damages based on the notion that there is pecuniary value in employee relationships. It is true that “[a] valid business expectancy includes any prospective contractual or business relationship that would be of pecuniary value.” Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Grp., Inc., 114 Wash.App. 151, 52 P.3d 30, 33 (2002), as amended (footnote reference omitted). However, Edifecs failed to produce any evidence that the relationships cultivated by Profant or by the departed employees were harmed by their departure. Rather, Edifecs contends that the pecuniary value was in the employees themselves. However, Edifecs cites no case authority to support this proposition.

Next, Edifecs points to its CEOs deposition testimony that “once the Dave Profant crisis happened, we lowered our expectations because we were in a crisis mode to rebuild everything.” Edifecs contends that this testimony alone is sufficient to create a triable issue on the fact of damages. Not so. “Where inferences from the facts are remote or unreasonable, as here, factual causation is not established as a matter of law.” Walters v. Hampton, 14 Wash.App. 548, 543 P.2d 648, 652 (1975). Without evidence showing a causal link between the employees’ departures and lost revenues or profits, Edifecs’ theory of pecuniary loss amounts to nothing more than speculation and wishful thinking. See Sea-Pac Co. v. United Food & Com. Workers Loc. Union 44, 103 Wash.2d 800, 699 P.2d 217, 220 (1985) (en banc) (“The plaintiff must show that the future opportunities and profits are a reasonable expectation and not based on merely wishful thinking.”) (citation omitted).

In sum, Edifecs failed to produce evidence of damages sufficient for a trier of fact to estimate loss without speculation or conjecture. See Clayton, 227 P.3d at 285. Therefore, Edifecs failed to carry its burden of showing a genuine dispute of material fact that it suffered pecuniary loss caused by Welltoks alleged tortious interference. See Wenzler & Ward Plumbing & Heating Co. v. Sellen, 53 Wash.2d 96, 330 P.2d 1068, 1070 (1958) (articulating that uncertainty as to the amount or quantum of damages is not fatal to a plaintiffs claim, but uncertainty as to the fact of damage is fatal).

AFFIRMED.

FOOTNOTES

. Having determined that Edifecs failed to carry its burden of showing a genuine dispute of material fact that it suffered pecuniary loss caused by Welltoks alleged tortious interference, we need not address any remaining issues. Smith v. Noonan, 992 F.2d 987, 989 (9th Cir. 1993).