A February 7 Appeals Court decision gave a "walk" to an amateur baseball association's recruiting tactics, including operating at a loss to entice/take another association's teams/managers. A lawsuit was filed claiming that it was unlawful interference. The court said that unless there is some showing of fraud or extremely questionable activity, it was OK.
The parties to the lawsuit were private amateur baseball leagues. The lower court struck out the claim of the league that sued, which claimed that numerous operators and managers of its teams defected to the other league because of aggressive recruitment tactics.
The first league, started in 2002, currently operates the state's largest recreational baseball league, with nearly 80 teams. Two individuals who were sued teamed up to start a league of their own in 2012. As part of their recruitment strategy, they targeted rosters on team sites on the Internet. They also managed to get the first league's roster list "which included the email addresses of all the team managers, and used it to contact the managers about switching leagues."
The new league also discounted joiner/membership fees to teams willing to make the switch. And they continued to target teams that had already refused to switch and were committed to plaintiff's league. It succeeded in recruiting fifty-two teams for their league's first season. Of those, nineteen previously played in the first team's league.
"[The first league claimed that] it [had] 'verbal commitments' from each of those nineteen teams for the 2013 season, but concedes none of those teams had paid deposits." [It] also never issues written agreements, rather choosing to keep them verbal with team managers. Teams are free to join different leagues from season to season. They argued that they were forced to spend more than $10,000 to "stem the loss of teams to defendant and to recruit players to create ten new teams for the 2013 season."
The lower court judge "found plaintiff had not established a protectable right in its relationship with the teams that had defected to defendant's league and could not establish malice because defendants' acts were justified by competition." In order to win on a tortious interference a claim, a plaintiff must show that a defendant's malicious interference was a direct cause of loss of an economic advantage that was reasonably expected.
"Malice is not judged from its ordinary sense of 'ill will' but requires harm intentionally inflicted without the justification or excuse of the competition we expect of business rivals." For example, if the loss of business is merely an incident of healthy competition, there is no tort injury. In this case, targeting Plaintiff's teams/managers prior to their paying the next season's security deposit, and their willingness to aggressively cut costs at a loss to entice other teams/managers to join is simply not enough to establish malice. This is a perfect example of why written contracts can be extremely helpful in situations where a "team" otherwise has the right to move between leagues in the off-season. Evan Xavier Bakhet is a J.D. Candidate at Rutgers School of Law-Newark with a scheduled graduation date in 2017. He collaborated with me on this blog.