Tortious Interference Claims in Minnesota

What is tortious interference under Minnesota law?

Tortious interference is a “triangular tort.” It involves three parties: you, the person you have a contract or business relationship with, and a third-party outsider who disrupts that relationship and causes you economic harm. Minnesota recognizes two versions. One protects an existing contract; the other protects a prospective economic advantage you reasonably expected to gain. Neither is codified. Minnesota courts have built the tort from common-law principles, drawing on the Restatement (Second) of Torts.

The two versions guard different interests. As the Minnesota Supreme Court put it in Gieseke v. IDCA, Inc., 844 N.W.2d 210 (Minn. 2014), a claim for “interference with a contract protects an interest in the security of contractual relationships,” while a claim for “interference with business relationships protects an interest in the reasonable expectation of economic advantage.” That distinction matters because the law gives an existing, signed contract more protection than a relationship you merely hoped to form. The same court noted that “[g]reater protection is given to the interest in an existing contract than to the interest in acquiring prospective contractual relations.”

Choosing the right version is the first decision in any interference matter. If a competitor pulled a counterparty out of a contract you can produce, you are usually in the contract-interference lane. If the competitor took business you expected but had not yet signed, you are in the prospective-advantage lane, and the proof you must assemble is harder. Getting that classification right early shapes which documents you gather and which standard you have to meet.

What are the elements of tortious interference with a contract in Minnesota?

To win a tortious interference with contract claim in Minnesota, you must prove five elements. The Minnesota Supreme Court in Kjesbo v. Ricks, 517 N.W.2d 585 (Minn. 1994) stated that a claim “requires: ‘(1) the existence of a contract; (2) the alleged wrongdoer’s knowledge of the contract; (3) intentional procurement of its breach; (4) without justification; and (5) damages.’” The court reaffirmed that same five-element formulation two decades later in Sysdyne Corp. v. Rousslang, 860 N.W.2d 347 (Minn. 2015).

Read those elements in order, because each is a place a claim can fail. There must be an actual contract, not a loose understanding. A deal that was never formed gives you nothing to protect: in Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895 (Minn. 1982), a purchase offer “expressly provided it would be void if mortgage financing was not obtained,” the financing never came through, and the court held, “Here, however, there was no contract.” A contract that was formed but cannot be enforced only because it was never put in a signed writing is different. The same court stated, “Even if a contract is void because it fails to meet the requirements of the Statute of Frauds, the interfering party may still be liable for inducing the breach of the contract.” The third party must have known the contract existed before acting. The defendant must have intentionally procured the breach, meaning the defendant set out to cause it, not merely competed nearby. The interference must have been without justification, an element that becomes the central battleground in most cases. And the breach must have caused you measurable damages. In my experience, most contract-interference disputes turn on elements three and four: did the outsider actually induce the breach, and did the outsider have a legitimate reason for what it did. A civil conspiracy claim sometimes accompanies these facts when two outsiders acted together.

How is tortious interference with prospective economic advantage different?

Tortious interference with prospective economic advantage protects a business relationship you expected but had not yet locked into a contract. In Gieseke v. IDCA, Inc., 844 N.W.2d 210 (Minn. 2014), the Minnesota Supreme Court held that a plaintiff must prove “the following five elements: 1) The existence of a reasonable expectation of economic advantage; 2) Defendant’s knowledge of that expectation of economic advantage; 3) That defendant intentionally interfered with plaintiff’s reasonable expectation of economic advantage, and the intentional interference is either independently tortious or in violation of a state or federal statute or regulation; 4) That in the absence of the wrongful act of defendant, it is reasonably probable that plaintiff would have realized his economic advantage or benefit; and 5) That plaintiff sustained damages.”

The decisive difference sits in the third element. Interference with a signed contract is actionable when it is “without justification.” Interference with a prospective relationship is actionable only when it is “independently tortious or in violation of a state or federal statute or regulation,” a noticeably higher bar. Gieseke also added a practical hurdle: the plaintiff there lost because it “failed to specifically identify any third parties with whom it had a reasonable expectation of a future economic relationship.” A general claim that you would have won business in the market is not enough. You must point to identifiable customers or partners.

What does “improper means” or wrongful interference require?

For interference with a prospective relationship, the conduct must be independently wrongful. Gieseke limits the tort “to those circumstances in which the interference is intentional and independently tortious or unlawful, rather than merely unfair.” In plain terms: the competitor’s act has to be wrongful by some separate legal measure, such as a distinct tort like fraud or business defamation, or a violation of a statute or regulation. Conduct that is sharp-elbowed but lawful does not qualify, no matter how much business it costs you.

For interference with an existing contract, the standard is framed differently. The question is whether the interference was “without justification,” which Minnesota treats as a reasonableness inquiry into the defendant’s conduct under the circumstances. That is a lower bar for the plaintiff than the prospective-advantage tort, because a signed contract earns more legal protection than an unformed relationship. The reason behind both standards is the same: Minnesota courts will not let an interference claim punish ordinary lawful competition. Businesses are expected to compete hard for the same customers and employees, and doing so is not a tort.

What factors decide whether the interference was improper?

Minnesota courts look at the whole picture rather than a checklist. In Gieseke, the Minnesota Supreme Court noted that the Restatement (Second) of Torts § 767 “examines seven factors to determine whether the claimed interference is wrongful,” and listed them:

1. “the nature of the actor’s conduct”
2. “the actor’s motive”
3. “the interests of the other with which the actor’s conduct interferes”
4. “the interests sought to be advanced by the actor”
5. “the societal interests in protecting the freedom of action of the actor and the contractual interests of the other”
6. “the proximity or remoteness of the actor’s conduct to the interference”
7. “the relations between the parties”

The court added that “examination of each of the seven factors may not be necessary in every case,” but that “the factors provide a useful means for assessing the impact of the defendant’s conduct, if any, on valid competition interests.” Gieseke was a prospective-advantage case, and it then required independently wrongful conduct for that tort. For an existing contract, the governing standard is the one stated in Johnson v. Radde, 293 Minn. 409, 196 N.W.2d 478 (1972): “the reasonableness of the defendant’s conduct under all the circumstances of the case.” The same considerations (the means used, the interests at stake, the relationship between the parties) drive that reasonableness question in practice.

Three of those considerations do most of the work in Minnesota cases:

1. The nature of the conduct. Deceptive or unlawful means defeat justification. In Kjesbo v. Ricks, the defendants routed farmland through a straw buyer to get around a statutory first-refusal right, and the court held that “the use of the conduit deed to Randy Ricks as the straw-man was improper and impermissible under the statute, so that, as a matter of law, there was no justification for respondents’ interference with the Kjesbo contract.”
2. Motive. You do not have to prove spite. Johnson v. Radde quoted an earlier decision holding that “[w]hether a wrongdoer’s motive in interfering is to benefit himself, or to gratify his spite by working mischief to another, is immaterial, malice in the sense of ill-will or spite not being essential.” Bad motive also does not turn lawful conduct into a tort when the defendant has its own stake, as the Harman case below shows.
3. The interests the defendant was protecting. A defendant with a real business stake in the contract gets more room to act, discussed under defenses below.

Which defendant faces which claim: the breaching counterparty or the interfering competitor?

You may have claims against both, on different theories. The contracting party who walked away from your deal is a breach-of-contract defendant. The outside competitor who induced that breach is the tortious-interference defendant. As the Minnesota Supreme Court put it in Nordling v. Northern States Power Co., 478 N.W.2d 498 (Minn. 1991), “[t]he general rule is that a party cannot interfere with its own contract,” so the interference claim runs only against the third-party outsider, never against the party who simply breached. The same case explains that when a company officer acting within the officer’s duties fires an employee or causes the employee to be fired, “the actions are those of the corporation,” so the employee’s claim is ordinarily against the company for breach of contract. If a customer leaves you mid-contract because a rival talked the customer into it, the customer owes you for breach, and the rival may owe you in tort.

This is why tortious interference and breach of contract are usually pleaded together. In one lawsuit, you can name the breaching counterparty on a breach-of-contract count and the interfering outsider on a tortious-interference count. The two counts seek overlapping but distinct recoveries. Sorting out which conduct belongs to which defendant early matters, because it determines who you name and what you must prove against each.

Can I sue a competitor that hires away an employee or customer under contract?

Yes, when a valid agreement was in place, the competitor knew about it, and the competitor induced the breach. In Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998), the Minnesota Supreme Court held that if a restrictive covenant “is deemed valid and if the elements of tortious interference are established, interference with the noncompete agreement by a third party is a tort for which damages are recoverable.” The competitor there had recruited an employee into a job that breached his noncompete, and the court held the competitor liable.

One change since Kallok matters. As a general rule, the 2023 Minnesota noncompete statute provides that “any covenant not to compete contained in a contract or agreement is void and unenforceable” under Minn. Stat. § 181.988. A void noncompete cannot be the agreement a competitor interferes with. The statute has limits, though. The 2023 law that enacted it “applies to contracts and agreements entered into on or after” July 1, 2023, so an otherwise valid noncompete signed before that date can still support a claim. The statute also keeps a noncompete “valid and enforceable” when it is “agreed upon during the sale of a business” or “in anticipation of the dissolution of a business.” And the same statute preserves other agreements: it states that a covenant not to compete “does not include a nonsolicitation agreement, or agreement restricting the ability to use client or contact lists, or solicit customers of the employer,” and likewise “does not include a nondisclosure agreement, or agreement designed to protect trade secrets or confidential information.” When a competitor induces an employee to breach a still-enforceable noncompete agreement, the Kallok rule still applies. My overview of no-poach agreements between Minnesota employers covers a related restriction.

What defenses can the other side raise?

The central defense to a contract-interference claim is justification, and the defendant carries the burden of proving it. Kjesbo v. Ricks, 517 N.W.2d 585 (Minn. 1994) states that “the burden of proving justification is on the defendants,” and that “whether interference is justified is an issue of fact, and the test is what is reasonable conduct under the circumstances.” So once you prove the first three elements, the competitor must come forward with a legitimate reason for what it did. Johnson v. Radde calls justification “the most common affirmative defense to an action for interference.” One recognized justification, drawn from the Restatement, is that the defendant acted to protect a legally protected interest of its own.

A defendant with its own business stake in the contract is hard to hold liable. In Harman v. Heartland Food Co., 614 N.W.2d 236 (Minn. Ct. App. 2000), a turkey processor that was losing money on its grower’s flocks asked that the grower’s production manager no longer raise turkeys for it, the grower moved the manager to a lower-paid job, and the manager sued. The Court of Appeals applied the rule that an interference action “does not lie where the alleged interferer has a legitimate interest, economic or otherwise, in the contract or expectancy sought to be protected and employs no improper means,” and described improper means as those “that are independently wrongful such as threats, violence, trespass, defamation, misrepresentation of fact, restraint of trade or any other wrongful act recognized by statute or the common law.” Even a showing of some malice did not change the result: with a legitimate economic interest in play, the plaintiff had to show the breach “resulted at least in part from the defendant’s commission of an independent tort or other illegality.” The court held that the manager’s interference claim failed as a matter of law.

A defendant can also point to advice of counsel. In Sysdyne Corp. v. Rousslang, 860 N.W.2d 347 (Minn. 2015), the Minnesota Supreme Court held that the justification defense may be satisfied by a defendant’s reasonable reliance on advice of outside counsel. A competitor who hired your former employee after a lawyer told it the noncompete was unenforceable may rely on that advice, if the reliance was reasonable. For the prospective-advantage tort, the strongest defense is simply lawful competition: because that tort requires independently wrongful conduct, a defendant who competed within legal limits has not committed the tort at all. When interference is ongoing, a court order halting the conduct is sometimes pursued before the defenses are ever tested at trial.

What is the statute of limitations for tortious interference in Minnesota?

For most claims, you have six years. The deadline comes from Minnesota’s general limitations statutes, as the courts have applied them to interference claims. In Wild v. Rarig, 302 Minn. 419, 234 N.W.2d 775 (1975), the Minnesota Supreme Court concluded that “wrongful interference with business relationships is generally included in Minn. St. 541.05, the 6-year statute of limitations.” Under Minn. Stat. § 541.05, the actions it covers “shall be commenced within six years.” Your breach-of-contract claim against the party who walked away usually runs on the same six-year clock, because the same statute covers an action “upon a contract or other obligation, express or implied, as to which no other limitation is expressly prescribed.”

The major exception is interference carried out by defamation. In Wild, the court held that “Dr. Wild’s claim of wrongful interference with business relationships by means of defamation is essentially a part of his cause of action for defamation and consequently comes within Minn. St. 541.07, the 2-year statute of limitations.” Minn. Stat. § 541.07 requires actions “for libel, slander, assault, battery, false imprisonment, or other tort resulting in personal injury” to be “commenced within two years.” So if the competitor won your customer by spreading false statements about your business, plan around two years, not six. Wild also recognized that “[f]raudulent concealment of a defamatory publication will toll the 2-year statute of limitations until discovery or reasonable opportunity for discovery of the publication by the exercise of ordinary diligence,” but you should not count on that extension.

If your claim is governed by another state’s law, such as Colorado’s, that state’s deadline may control even when you sue in Minnesota. Under Minn. Stat. § 541.31, subject to exceptions, when a claim is substantively based “upon the law of one other state, the limitation period of that state applies.” One exception protects Minnesota residents: if the claim arose in another state and is barred there, “the action may be maintained in this state if the plaintiff is a resident of this state who has owned the cause of action since it accrued and the cause of action is not barred under the applicable statute of limitations of this state.” Because the answer turns on which state’s law governs and where you reside, the safest practice is to identify the governing deadline as soon as you learn of the interference.

What can I recover, and can I get punitive damages?

A successful plaintiff recovers the economic loss the interference caused. That typically means lost profits from the broken contract or relationship. It can also include the cost of enforcing the disrupted agreement: in Kallok, the damages award against the interfering competitor was measured by the attorney fees and other expenses the employer incurred enforcing the noncompete against its employee. A court can also order an injunction stopping a third party from continuing to interfere, which is often the most pressing remedy when a competitor is actively disrupting a live relationship. My page on what your business can recover in a tortious interference claim covers damages separately, including how lost-profit damages are proven without straying into speculation.

Punitive damages are possible because tortious interference is an intentional tort, but Minnesota sets a demanding bar. Under Minn. Stat. § 549.20, “punitive damages shall be allowed in civil actions only upon clear and convincing evidence that the acts of the defendant show deliberate disregard for the rights or safety of others.” Procedurally, you cannot ask for punitive damages in your original complaint. Minn. Stat. § 549.191 provides that “the complaint must not seek punitive damages,” and that “after filing the suit a party may make a motion to amend the pleadings to claim punitive damages,” supported by affidavits showing a factual basis. Punitive damages are realistic only where the interference was deliberate and egregious, not in an ordinary competitive dispute.

Tortious interference gives a Minnesota business a real remedy when an outsider deliberately breaks up its contracts or relationships, but the two versions of the tort demand different proof, and lawful competition is not actionable under either. The practical first step is usually to separate the conduct: identify who breached, who induced the breach, and whether the inducement was wrongful by an independent legal measure. For a fuller picture of related claims, my business torts practice area is a useful starting point. If a competitor’s conduct has cost your business a contract or a key relationship, email aaron@aaronhall.com with a brief description and any relevant agreements for a practical read on whether an interference claim fits your facts.