Borowski v. DePuy, Inc.
850 F.2d 297 (1988)
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Rule of Law:
A corporate officer is protected by a qualified privilege from liability for tortious interference with a subordinate's at-will employment contract, unless the plaintiff can prove the officer's actions were taken for personal gain and were contrary to the corporation's best interests. Furthermore, a claim for unjust enrichment or quasi-contract cannot be used to add terms, such as termination payments, to an existing express contract that is silent on the matter.
Facts:
- In August 1977, Chester A. Borowski entered into an oral contract of unspecified duration to serve as a sales representative for DePuy, Inc., on a commission basis.
- In 1979, Stephen Bales, DePuy's national sales manager, identified managerial problems with Borowski's performance and instructed him to improve.
- Borowski promised to address the low sales levels and issues with his sales associates' morale.
- By the summer of 1984, the problems with Borowski's performance had become critical, and in 1985, three of his sales associates sent a letter to Bales complaining of Borowski's mismanagement.
- After conducting an independent review of the situation, Bales fired Borowski on August 13, 1985, for failing to rectify his performance issues.
- DePuy approved Borowski's discharge as well as Bales's request to take over as the distributor for Borowski's former territory.
- After Borowski's termination, DePuy withheld his final sales commission check pending the resolution of an inventory shortage.
Procedural Posture:
- Chester A. Borowski filed a four-count complaint against DePuy, Inc. and Stephen Bales in federal district court, alleging breach of implied contract and tortious interference with contractual relations.
- DePuy filed a counterclaim for the value of an inventory shortage.
- Defendants moved for summary judgment on all of Borowski's claims.
- A magistrate judge reviewed the motions and recommended that summary judgment be granted for the defendants and that they be awarded attorney's fees and costs as a sanction under Rule 11.
- The district court judge conducted a de novo review, adopted the magistrate's recommendation, and modified the sanctions to be imposed solely on Borowski's lead counsel, Mitchell A. Kramer.
- The district court entered judgment of $2,882.73 in favor of DePuy on its counterclaim.
- Borowski, the plaintiff-appellant, appealed the district court's grant of summary judgment and the imposition of sanctions to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Does a corporate national sales manager tortiously interfere with a sales representative's at-will employment contract by recommending and carrying out his termination, when such actions are within the scope of the manager's duties and there is no evidence he acted solely for personal gain contrary to the company's interests?
Opinions:
Majority - Cummings, J.
No, a corporate manager does not tortiously interfere with a subordinate's contract when acting within the scope of their employment for the benefit of the corporation. Corporate employees possess a qualified privilege to influence their employer's contractual relations, and to overcome this privilege, a plaintiff must prove the employee acted both for their own personal gain and contrary to the corporation's best interests. Here, Borowski failed to show that Bales's decision to terminate him was contrary to DePuy's interests; the record of Borowski's poor performance and mismanagement supported the conclusion that the termination was a justified business decision. Borowski's quasi-contract claims also fail because Illinois law does not permit a claim for unjust enrichment when an express contract governs the parties' relationship, even if that contract does not cover the specific subject matter at issue (like a termination 'override' payment).
Analysis:
This decision reinforces the strength of the at-will employment doctrine and the significant protection afforded to corporate officers under the qualified privilege for tortious interference. It clarifies that to defeat this privilege, a plaintiff bears a heavy burden to show the officer's actions were motivated by pure self-interest and were also detrimental to the company. The case also solidifies the principle that quasi-contract cannot be used as a tool to rewrite or supplement the terms of an existing express contract. Finally, the court's imposition of severe sanctions serves as a powerful precedent regarding an attorney's duty to present claims grounded in existing law and to represent the factual record accurately.
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