Opinion
No. 04 cv 1352.
July 12, 2005
MEMORANDUM OPINION AND ORDER
I. Background Information
Plaintiff Carol J. Foxx was employed by defendant General Motors Corporation ("GM") from July 1979 until her retirement on January 1, 2003. From 2000 through 2002, Ms. Foxx was a Senior Buyer for GM's ElectroMotive Division ("EMD"). As a Senior Buyer, Ms. Foxx analyzed bids from EMD suppliers and made recommendations to the purchasing organization regarding which suppliers should be awarded additional business.
In 2000, GM implemented a policy it called "Winning With Integrity," which included a conflict of interest provision. That provision provides, in relevant part:
GM's policy is to select suppliers in a completely impartial manner on the basis of price, quality, performance, and suitability of the product or service. We are expected to avoid doing anything that could imply selection of a supplier on any basis other than the best interests of GM or which could give any supplier an improper advantage over another. (Def. Ex. 4)
According to this policy, GM former employees (retirees or those separated for any other reasons) who occupied positions in which they could influence purchasing decisions should not be received as a representative of a supplier by their former employing group, platform, division, staff or activity for a period of two years following their separation. (Def. Ex. 3). On February 9, 2001, Ms. Foxx signed a document asserting that she had "received and read the Winning With Integrity series of publications." (Def. Ex. 3).
In December 2002, GM offered eligible salaried employees, including Ms. Foxx, an opportunity for early retirement under a Window Retirement Program. GM provided information to eligible employees in the form of documents and group meetings. At a group meeting, Ms. Foxx received a document entitled "EMD Window Retirement Questions and Answers." In response to the question "[c]an I work for a GM supplier," the document highlighted the content and purpose of the Winning With Integrity conflict of interest policy, then explained:
[a]ny exception to [the conflict of interest] policy must receive advance written approval from the GM Vice President for your operation or your Operating Personnel Director and should specify the nature and duration of the working arrangement. Such approval should be granted only in situations where there is a significant business need for an exception to the existing GM policy. (Def. Ex. 4).
Ms. Foxx accepted retirement under the terms of the Window Retirement Program on December 9, 2002 and retired on January 1, 2003. According to her deposition, Ms. Foxx read through the document entitled "EMD Window Retirement Questions and Answers" and understood, at the time of her retirement, that GM had a policy prohibiting her employment with a GM supplier for a two-year period following the termination of her employment. (Foxx Dep., 31).
In February 2003, Progress Rail Services, a GM supplier, asked Ms. Foxx if she would be interested in a position as its EMD Account Representative. Just after learning of this opportunity, Ms. Foxx requested another copy of the "EMD Window Retirement Questions and Answers" from Ken Ford, EMD's Director of Personnel. Ms. Foxx also met with Tom Burke, EMD's Purchasing Director responsible for granting or denying exceptions to the conflict of interest policy. Burke requested a letter from Progress Rail describing the position offered to Ms. Foxx. Jim Hartwell, Progress Rail's Vice President, wrote a letter to Burke explaining that he wanted "to hire, with EMD approval, [Ms. Foxx]" and outlining the position. On February 17, Burke informed Hartwell that he would not grant an exception to the conflict of interest policy. Because EMD would not grant the exception, Progress Rail chose not to hire Ms. Foxx.
II. Analysis
As a result of this series of events, Ms. Foxx filed this suit, claiming intentional interference with a prospective business advantage. EMD has moved for summary judgment. Summary judgment is proper if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317,322-33 (1986). A genuine issue of material fact exists when there is evidence on the basis of which a reasonable jury could find in Plaintiff's favor, allowing for all reasonable inferences drawn in a light most favorable to Plaintiffs. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A genuine issue of material fact exists when a reasonable jury could find for the non-movant based on the entire record. Roger v. Yellow Freight Sys., 21 F.3d 146, 149 (7th Cir. 1994).
This tort is known alternatively as tortious interference with a prospective business advantage, intentional interference with a prospective economic advantage, and tortious interference with a prospective economic advantage.
To establish a claim for intentional interference with a prospective business advantage, Foxx must show: "(1) a reasonable expectancy of entering into a valid business relationship, (2) the defendant's knowledge of the expectancy, (3) an intentional and unjustified interference by the defendant that induced or caused a breach or termination of the expectancy, and (4) damage to the plaintiff resulting from the defendant's interference." Anderson v. Vanden Dorpel, 667 N.E.2d 1296, 1299 (Ill. 1996) (citing Fellhauer v. Geneva, 568 N.E.2d 870 (Ill. 1991)).
GM contests Ms. Foxx's ability to prove the first and third elements of intentional interference with a prospective business advantage. I turn first to the third element — whether EMD's interference with Ms. Foxx's prospective employment with Progress Rail was unjustified. Illinois courts have applied two distinct but related standards to determine whether an interference is justified. I will deal with each individually. Under the first of these standards, a defendant may assert that its actions were privileged. Cromeens, Holloman, Sibert Inc. v. AB Volvo, 349 F.3d 376, 398 (7th Cir. 2003) (citing Soderlund Bros. Inc. v. Carrier Corp., 663 N.E.2d 1, 8 (Ill.App.Ct. 1995)). If the defendant establishes that its actions were privileged, then the burden shifts to the plaintiff to prove that the defendant's actions were either malicious or unjustifiable. Williams v. Shell Oil Co., 18 F.3d 396, 402-03 (7th Cir. 1994) (citing HPI Health Care v. Mt. Vernon Hosp., 545 N.E.2d 672, 677 (Ill. 1989)).
GM claims that its actions fall under two established privileges: the privilege of a business to protect its financial interests, see e.g., IK Corp. v. One Fin. Place P'ship, 558 N.E.2d 161, 172 (Ill.App.Ct. 1990), and the privilege of competition, see e.g., Soderlund, 663 N.E.2d at 8 (explaining that "[t]he privilege to engage in business and to compete allows one to divert business from one's competitors generally as well as from one's particular competitors provided one's intent is, at least in part, to further one's business and is not solely motivated by spite or ill will"). GM's conflict of interest policy falls under both privileges because the policy fostered productive competition between suppliers and enhanced GM's ability to select suppliers "on the basis of price, quality, performance, and suitability of the product or service," thereby protecting its financial interests. (Def. Ex. 3). Furthermore, when Mr. Burke enforced the policy in place, he acted to foster productive competition among EMD's suppliers and to protect its financial interests by encouraging competition among them. If EMD agreed to receive Ms. Foxx as a representative of Progress Rail, her personal contacts in EMD's purchasing department, specialized knowledge regarding purchasing decisions, and knowledge regarding competing suppliers could have given Progress Rail an advantage that would have decreased competition among EMD suppliers and threatened EMD's financial interests.
Since GM can show that its actions were privileged, the burden shifts back to Ms. Foxx to show that GM's actions were malicious or unjust. In furtherance of this argument, Ms. Foxx claims that GM's conflict of interest policy is unjustified both on its face and as applied. First, Ms. Foxx erroneously claims that GM's policy is unjustified on its face because it is not limited geographically or in duration. She also claims that GM's conflict of interest policy is unjustified on its face because it only applies to retirees (as opposed to those who leave GM on other terms), and is therefore an unreasonable restraint on trade. However, GM is justified in taking action to protect its financial interests and foster competition among its suppliers. Ms. Foxx's claim that GM's conflict of interest policy is unjustified on its face therefore fails.
Ms. Foxx has cited no authority to show that a two-year window is an improper time limitation. Moreover, GM's policy is considered an "activity restraint" since it only bans former employees from performing certain activities, such as representing GM suppliers at GM. Activity restraints are held to "less stringent test of reasonableness than . . . geographical restraints." Corroon Black, Inc. v. Magner, 494 N.E.2d 785, 793 (Ill.App.Ct. 1986). See also Grand Vehicle Works Holdings Corp. v. Frey, No. 03 C 7948, 2005 U.S. Dist. LEXIS 9509 (N.D. Ill. May 11, 2005). Thus, I find that GM's conflict of interest policy is reasonable because it is limited in time and scope.
Alternatively, Ms. Foxx claims that GM's conflict of interest policy is not applied uniformly and is therefore unjustified for two reasons. First, Ms. Foxx seems to contend that GM's conflict of interest policy, as applied, fails to protect its financial interests or foster competition among suppliers and is therefore unjustified. Aside from the fact that she has produced no evidence to support this contention, GM was free to apply the conflict of interest policy strategically to protect its own financial interests and encourage competition among its suppliers, as it clearly was a discretionary policy. Second, Ms. Foxx claims that GM's conflict of interest policy is unjustified because GM failed to treat her the way it treated similarly situated employees. However, Ms. Foxx has failed to identify similarly situated, former employees who were treated differently.
Ms. Foxx identifies seven former EMD employees whom she claims were similarly situated. To show that two people are similarly situated, a plaintiff must "demonstrating that another employee is `similarly situated,' a plaintiff must show that there is someone who is directly comparable to her in all material respects." Patterson v. Avery Dennison Corp., 281 F.3d 676, 680 (7th Cir. 2002). All of the former EMD employees identified were in positions that were materially distinct from hers.
Under the second of the two standards for determining whether a defendant has unjustifiably interfered with a prospective business advantage, the plaintiff bears the burden of proving that the "defendant acted without legal justification or with malice in preventing the plaintiff's expectancy from ripening into a valid business relationship" regardless of whether or not the defendant establishes that its actions were privileged. Cromeens, 349 F.3d at 398; see IK Corp., 558 N.E.2d at 172 (dismissing a claim for intentional interference with a prospective business expectancy because the plaintiff failed to allege that the defendant did anything other than exercise "rights that it otherwise possessed"); see also Hi-Tek Consulting, Services, Inc. v. Bar-Nahum, 578 N.E.2d 993, 997 (Ill.App.Ct. 1991) ("lack of legal justification for the conduct of the defendant is essential in establishing a claim for tortious interference with contractual relations"). Since GM's actions were neither malicious nor unjustified (see discussion above), Ms. Foxx cannot prove the third element of her claim. For this reason, I find that summary judgment is appropriate.
I now turn to the first element of intentional interference with a prospective business advantage: whether Ms. Foxx had a reasonable expectation of employment with Progress Rail. GM argues that Ms. Foxx had no reasonable expectation of employment with Progress Rail because she knew that GM's conflict of interest policy applied to her and barred her from representing an EMD supplier (such as Progress Rail) at EMD for two years following her retirement. Ms. Foxx knew that Progress Rail was only interested in hiring her if she was granted an exception to the conflict of interest policy. Because Progress Rail would not employ Ms. Foxx without her being granted an exception to GM's conflict of interest policy, she had no reasonable expectation of employment at Progress Rail unless she had a reasonable expectation of being granted an exception to the policy.
Ms. Foxx impliedly tries to create an issue of fact regarding her awareness of the conflict of interest policy. Ms. Foxx posits that she may have never actually received the conflict of interest policy. However, this claim is unsubstantiated and contradicts the facts in the record. (Def. Ex. 3). Ms. Foxx stated in her deposition that she understood, at the time of her retirement, that GM's conflict of interest policy existed and limited her potential employment with EMD suppliers for two years following her retirement. (Foxx Dep., 31). Ms. Foxx's behavior following her initial awareness of a potential opening at Progress Rail also belies her claim of ignorance. She immediately called Mr. Ford and asked for another copy of the "EMD Window Retirement Questions and Answers" packet. (Foxx Dep., 38-39, 54).
Ms. Foxx argues that even if she was aware of GM's conflict of interest policy, she was not contractually bound by it. However, whether or not Ms. Foxx was contractually bound by the conflict of interest policy is immaterial. Even if she was not contractually bound by GM's conflict of interest policy, the policy remains relevant to her expectation of employment with Progress Rail because Progress Rail was only interested in hiring her on the condition that she was granted an exception to the policy.
GM argues that Ms. Foxx cannot claim a reasonable expectation of employment with Progress Rail because she had no contract with Progress Rail. GM cites Derby Meadows Utility Co. v. Inter-Continental Real Estate for this proposition. 559 N.E.2d 986, 993 (Ill.App.Ct. 1990). However GM's reliance is misplaced since Derby dealt with tortious interference with a contract, which, unlike tortious interference with a prospective business advantage, requires a valid, enforceable contract. Lanigan v. Resolution Trust, No. 91 C 7216, 1994 U.S. Dist. LEXIS 158, *7 (N.D. Ill. Jan. 7, 1994) (noting that a contract was unnecessary for a claim of tortious interference with a prospective economic advantage).
GM also argues that Ms. Foxx had no reasonable expectation of employment with Progress Rail because Progress Rail never "actually contemplated" hiring her. To support this argument, GM mistakenly relies on language from Shuler v. Abbott Lab. 639 N.E.2d 144, 148 (Ill.App.Ct. 1993). Schuler stands for the proposition that a defendant may only be liable for tortious interference with a prospective business advantage if the defendant takes action toward a third party with whom the plaintiff had a reasonable expectancy of a valid business relationship. Id. at 147-48. In Schuler, the plaintiff's claim failed because the defendant merely told the plaintiff that it would enforce an agreement the defendant had with the plaintiff; the defendant never shared that information with third parties. Id. The present case is distinguishable because Burke, EMD's Purchasing Director, informed Progress Rail that he would not approve Ms. Foxx's employment with Progress Rail as an EMD Account Representative. (Burke Dep., 25-26).
Ms. Foxx argues that she had a reasonable expectation of being granted an exception to GM's conflict of interest policy because other retired EMD employees had been given exceptions. Ms. Foxx identifies seven former EMD employees she claims were granted exceptions to the policy or were employed in violation of the policy. They are Bob Grajek, John Gable, John Strayer, Dave Perillo, Ted King, Frank Boatwright, and Scott Ripper. GM rebuts this by arguing that Ms. Foxx could not have reasonably relied on the experiences of these seven former EMD employees because her situation was materially distinct from each of theirs. Of the seven employees Ms. Foxx identified, only the experiences of Ripper and Boatwright could have plausibly led her to believe that she would be granted an exception to the conflict of interest policy.
After leaving EMD, Grajek, Gable, Strayer, Perillo, and King were all employed in positions that were materially distinct from Ms. Foxx's potential employment with Progress Rail. Grajek worked for a distributor and Gable, Strayer, Perillo, and King did not make sales calls on EMD. Therefore, their experiences do not create grounds on which Ms. Foxx could reasonably expect to be granted an exception to the conflict of interest policy.
Ms. Foxx's situation is most similar to Mr. Ripper, a retired employee who went to work for an EMD supplier and who eventually became an EMD account representative. Upon learning of Mr. Ripper's employment at an EMD supplier, EMD told his new employer that the conflict of interest policy prohibited him from discussing commercial issues with EMD for two years following his retirement. (Def. Ex. 9). During the two year period, Mr. Ripper did not make sales calls on EMD; he was only responsible for service calls. (Burke Dep., 58). Since Ripper was not responsible for the supplier's EMD account during the two years following his employment with EMD, he was not acting in violation of GM's conflict of interest policy. Progress Rail, on the other hand, wanted Ms. Foxx to begin working immediately as its EMD sales representative. EMD asserts it did not oppose Ms. Foxx's employment at Progress Rail solely because it was a supplier, but because she would have had a position where she would discuss commercial issues with EMD during the two years following her retirement. (Burke Dep., 25-27).
The other relevant employment situation is that of Mr. Boatwright. Ms. Foxx claims that on one occasion Mr. Boatwright asked her if EMD had any engines that needed repair. (Foxx Dep., 69). Other than that single incident, Ms. Foxx admits that she has no knowledge of Mr. Boatwright's responsibilities during the two years after he left EMD. (Id., 71-72). While Mr. Boatwright's question concerning engines needing repair may have violated the conflict of interest policy, there is no evidence that this contact was condoned by EMD, was part of his official job responsibilities, or that he was granted an exception to the conflict of interest policy to contact Ms. Foxx.
Regardless of the distinctions between the employment of former EMD employees and the position Ms. Foxx sought at Progress Rail, Ms. Foxx probably came to believe that she would be granted an exception to the conflict of interest policy. At the very least a reasonable jury could find that Ms. Foxx had a genuine belief that she would be granted an exception to the policy. While it is very unlikely that a jury would go so far as to conclude that Ms. Foxx had a reasonable expectation of being granted an exception, it is possible that her knowledge of Mr. Ripper's and possibly Mr. Boatwright's experiences making service calls at EMD on behalf of an EMD supplier could sway a jury in her favor. Accordingly, I decline to grant summary judgment on this particular ground.
For the reasons stated herein, defendant's motion for summary judgment is GRANTED.