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Current Developments in the Commercial Divisions of the
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Posted: February 19, 2016

Manager Acting in Good Faith Not Liable for Inducing Performer to Breach Contract

On February 2, 2016, Justice Kornreich of the New York County Commercial Division issued a decision in Gottwald v. Sebert, 2016 NY Slip Op. 30198(U), holding that a talent manager could not be held liable for inducing its client to breach a contract.

In Gottwald, the plaintiffs brought an action against a performer and, among others, the company and its employee who managed her. Among the plaintiffs’ claims were tortious interference with contract against the managers. The court dismissed that claim, explaining:

It is well settled that an agent acting on behalf of its principal, within the scope of its authority, cannot be held liable for inducing its principal to breach a contract. Thus, where an agent acts within the scope of his authority, acts in good faith and does not commit independent torts or predatory acts, he cannot be held liable for inducing his principal’s breach of contract. Moreover, it is a defense to interference with contractual relations that the defendant acted to protect his financial stake in the breaching party’s business. . . .

In this case, the tortious interference claim must be dismissed against the [managers] because they are alleged to have acted in the scope of their authority for the purpose of increasing [the performer’s] income (and, thereby, their own), and it is not alleged that they committed an independent tort. There is no allegation that the [managers] acted for the benefit of anyone but their principal, [the performer]. The scope of their authority included maximizing [the performer’s] earnings. Therefore, it adds nothing to say that the [managers] were motivated by their potential stake in more lucrative recording and publishing deals, when they advised her to breach the [her agreements with the plaintiffs]. . . . Although Plaintiffs allege that [the manager] hates and is jealous of [the individual plaintiff], that is not enough. The cases require a showing that the agent acted outside the scope of his authority, in bad faith, and committed an independent tort. Even assuming hatred and jealousy amount to bad faith, they are not torts.

(Internal quotations and citations omitted) (emphasis added).

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