Minnesota's Tortious Interference Claim Is a Fee-Shifting Device — and the Cheapest Defense to It Cost Forty-Two Minutes of a Lawyer's Time

Most descriptions of tortious interference treat it as a secondary claim — something you plead alongside breach of contract to reach a defendant with deeper pockets. That undersells it in one direction and oversells it in the other.

Undersells it, because in Minnesota a successful interference claim can carry the attorney fees of the underlying contract lawsuit as damages, in a state that otherwise follows the American rule. In Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998) (No. C2-96-1598), that mechanism produced a $93,852.92 judgment consisting entirely of the fees and expenses the plaintiff had spent suing somebody else.

Oversells it, because the whole claim usually turns on a single element — justification — and in Sysdyne Corp. v. Rousslang, 860 N.W.2d 347 (Minn. 2015) (No. A13-0898), the defendant defeated it with a record consisting of an email exchange and billing records showing 0.4 hours of attorney review and 0.3 hours on the phone.

Forty-two minutes of legal advice, which turned out to be wrong, was enough.

That asymmetry is the whole subject. Below is what a Minnesota practitioner needs to know about both interference torts, from the primary sources.

What are the two torts, and how are their elements different?

Minnesota recognizes two distinct claims that are frequently — and sloppily — pleaded as one.

Tortious interference with contract. Five elements, stated in Furlev Sales & Associates, Inc. v. North American Automotive Warehouse, Inc., 325 N.W.2d 20, 25 (Minn. 1982), and quoted since in every leading case:

(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.

Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994) (Nos. C9-93-160, C5-93-365) (quoting Furlev Sales); Sysdyne, 860 N.W.2d at 351 (same).

Tortious interference with prospective economic advantage. Minnesota had recognized the tort for a century without ever listing its elements. In Gieseke ex rel. Diversified Water Diversion, Inc. v. IDCA, Inc., 844 N.W.2d 210 (Minn. 2014) (No. A12-0713), the supreme court supplied them:

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.

(Emphasis added.)

Line them up and the difference is stark. The contract tort has no wrongfulness element at all — interference plus breach plus damages makes a prima facie case, and the defendant must then prove justification. The prospective-advantage tort requires the plaintiff to prove that the interference was independently tortious or unlawful as part of its own case.

Gieseke, 844 N.W.2d at 219 (elements). Source for the “interest protected” language: Gieseke, 844 N.W.2d at 218, quoting the court’s earlier formulation.

Why does the prospective-advantage claim require “independently tortious” conduct?

Because the court decided that ordinary hard competition should not be a tort.

Gieseke explains the reasoning at length. The court noted that “the law affords greater protection to existing contractual relationships[] than to prospective business relationships,” and that Minnesota has “never allowed a recovery for negligent wrongful interference with a business relationship.” It then adopted the limiting rule:

To ensure that fair competition is not chilled, a claim for tortious interference with prospective economic advantage must be limited to those circumstances in which the interference is intentional and independently tortious or unlawful, rather than merely unfair.

Gieseke, 844 N.W.2d at 218 (emphasis added). The court added: “The requirement of independently tortious or unlawful conduct adequately apprises potential defendants of the conduct that will subject them to liability, but ensures that businesses may rigorously compete with one another without fear of liability, as long as they do so lawfully.”

The practical consequence is a pleading rule. A prospective-advantage complaint that alleges only that a competitor took the plaintiff’s expected business, however aggressively, is not merely thin — it is missing an element. The complaint has to identify the independent wrong: defamation, trade secret misappropriation, fraud, a statutory violation. This is why prospective-advantage claims most often travel attached to a Minnesota Uniform Trade Secrets Act claim or a defamation claim — the companion claim is supplying element three.

Why do most prospective-advantage claims fail before anyone reaches wrongfulness?

Because of element one, and because Gieseke made it demanding.

The plaintiff in Gieseke had won a $220,000 advisory-jury verdict. The supreme court vacated it. The reason was not that the defendant’s conduct was permissible; it was that the plaintiff never identified anyone:

We conclude that to prove the defendant tortiously interfered with plaintiff’s prospective economic advantage, a plaintiff must specifically identify a third party with whom the plaintiff had a reasonable probability of a future economic relationship. Thus, a plaintiff’s projection of future business with unidentified customers, without more, is insufficient as a matter of law.

Gieseke, 844 N.W.2d at 221 (emphasis added).

The plaintiff’s theory had been that it “had enjoyed business in the past from approximately 100 customers per year, and that it expected that level of business to continue in the future.” The court held that insufficient: the plaintiff “failed to identify a specific existing or prospective third party for whom it reasonably expected to do future drain tile or warranty work.” It also rejected reputational harm as a substitute — “general damage to [the plaintiff’s] business reputation is insufficient to establish that an expectation of economic advantage was damaged.” Id. at 222.

This is the case-killer. A lost-profits model built on historical volume is not evidence of a reasonable expectation of economic advantage under Minnesota law. Discovery in these cases has to produce names — customers, prospects, deals — and the expert damages work has to be built on those names, not on a trend line.

Who has to prove justification?

The defendant. This is the single most consequential allocation in the contract tort and it is easy to get backwards.

The burden of proving justification is on the defendants.

Kjesbo, 517 N.W.2d at 588, citing Royal Realty Co. v. Levin, 244 Minn. 288, 295 (1955) (No. 36,416). Sysdyne repeats it: “The burden of proving that interference with a contract was justified is on the defendant.” 860 N.W.2d at 351.

Two further points from the same passage:

Justification is normally a fact question. “Whether the interference is justified is normally a question of fact.” Sysdyne, 860 N.W.2d at 351, citing Kjesbo, 517 N.W.2d at 588. That is why interference claims survive summary judgment more often than defendants expect.

The standard is reasonableness, not a checklist. “[T]he test is what is reasonable conduct under the circumstances.” Kjesbo, 517 N.W.2d at 588. And there is a recognized species of justification drawn from the Restatement: “There is no wrongful interference with a contract where one asserts ‘in good faith a legally protected interest of his own … believ[ing] that his interest may otherwise be impaired or destroyed by the performance of the contract or transaction.’” Kjesbo, 517 N.W.2d at 588 (quoting Restatement (Second) of Torts § 773 (1979)).

Sysdyne was explicit that this Restatement category is not the outer boundary of the defense: “we have not indicated that interference with a contract is justified only when a defendant asserts in good faith a legally protected interest that would be impaired or destroyed by performance of the contract.” 860 N.W.2d at 352.

Kjesbo itself shows the limit. The defendants there used a technically compliant conduit deed to route farmland to a financier through a family member, defeating the plaintiff’s purchase contract. The court held that even assuming their asserted intention, “the use of the conduit deed to Randy Ricks as the strawman 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.” Technical compliance with a statute is not justification when the arrangement defeats the statute’s purpose.

Can a defendant justify interference by relying on a lawyer who turned out to be wrong?

Yes — and this is Sysdyne’s holding.

Xigent hired Rousslang, a Sysdyne employee subject to a noncompete. Before doing so, Xigent’s president sent the offer letter and employment agreement to outside counsel, who advised that the agreement was overbroad and unenforceable. That advice was wrong: the trial court later held the noncompete enforceable except as to Rousslang’s pre-existing clients, and entered a $158,240 breach-of-contract judgment against Rousslang.

The supreme court nonetheless affirmed judgment for Xigent on the interference claim:

[W]e conclude that, under Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998), the justification defense to tortious interference with contract may encompass reasonable reliance on advice of counsel.

Sysdyne, 860 N.W.2d at 354.

What the record actually consisted of is the part practitioners should internalize. Xigent produced an email exchange with counsel; billing records showing “0.4 hours for review of the letter and agreement and 0.3 hours for a telephone conference … regarding ‘noncompete issues’”; and testimony from its president that he viewed the lawyer as a noncompete expert who had reviewed such agreements for the company for ten to twelve years. Xigent did not describe Sysdyne’s business to counsel. Nothing in the record documented the substance or the legal basis of the advice.

The court held that was enough, and rejected the argument that more is required:

[A] defendant is not required to establish the legal analysis underlying an attorney’s advice in order to prove justification.

Sysdyne, 860 N.W.2d at 354. And: “the fact that legal advice was verbal and undocumented may be relevant to the reasonableness of the defendant’s reliance on the advice, but does not necessarily preclude the possibility that the facts of a particular case may establish justification.”

Where is the line? Kallok is the other half of the rule.

Sysdyne is not a rule that consulting a lawyer immunizes interference. The court said so in a footnote: “Kallok does not imply that reliance on advice of counsel per se justifies tortious interference with contract; the consultation with counsel cannot be ‘infirm,’ as it was in Kallok.”

In Kallok, Angeion also consulted outside counsel before hiring a Medtronic executive subject to noncompetes. It lost anyway:

Even though Angeion consulted with its outside counsel about Kallok’s noncompete agreements, Angeion did not fully inform its outside counsel about Kallok’s background at Medtronic or the intricacies of his noncompete agreements. … Angeion may not rely upon an infirm consultation with counsel and the resulting advice as a justification for its action. We conclude Angeion did not utilize a reasonable inquiry in ascertaining whether Kallok’s noncompete agreements with Medtronic prevented him from being employed by Angeion.

Kallok, 573 N.W.2d at 362 (emphasis added).

Sysdyne distinguished Kallok on the record: in Kallok, the defendant “not only failed to provide relevant information to counsel regarding the employee’s position and access to confidential information, but actually provided incorrect information,” and outside counsel “was not provided with copies of the relevant noncompete agreements.” 860 N.W.2d at 353.

So the line is disclosure, not diligence. Xigent gave its lawyer the actual contract and an accurate description of the work; it spent forty-two minutes and won. Angeion gave its lawyer bad information and no contracts; it spent more and lost. The defense is about what you told counsel, not how much you paid.

For anyone advising the hiring side of one of these deals: send the actual agreement, describe the actual job, describe the actual access to confidential information, and keep the email. That file is the defense.

Can you be liable for interfering with your own contract?

No — and this matters most in the employment cases.

The general rule is that a party cannot interfere with its own contract.

Nordling v. Northern States Power Co., 478 N.W.2d 498, 505 (Minn. 1991) (Nos. C7-90-1499, CX-90-1500), citing Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 900–01 (Minn. 1982).

The corollary — and the fight — concerns the company’s own officers and managers. Nordling explains why a general rule is needed: “If a corporation’s officer or agent acting pursuant to his company duties terminates or causes to be terminated an employee, the actions are those of the corporation; the employee’s dispute is with the company employer for breach of contract, not the agent individually for a tort. To allow the officer or agent to be sued and to be personally liable would chill corporate personnel from performing their duties and would be contrary to the limited liability accorded incorporation.”

Then it states the privilege, and the way to lose it:

[A] company officer, agent or employee is privileged to interfere with or cause a breach of another employee’s employment contract with the company, if that person acts in good faith, whether competently or not, believing that his actions are in furtherance of the company’s business. This privilege may be lost, however, if the defendant’s actions are predominantly motivated by malice and bad faith, that is, by personal ill-will, spite, hostility, or a deliberate intent to harm the plaintiff employee.

Nordling, 478 N.W.2d at 507 (emphasis added).

Three details that decide these cases:

• “[W]hether competently or not.” Incompetence by a manager is not a route around the privilege. Only motive is.
• The malice must be actual malice — not the older, looser definition. Nordling expressly departed from the general rule that “malice” in interference cases means only wrongful conduct without justification: “we conclude, when motive or malice becomes relevant on the issue of improper interference, that this malice be actual malice.”
• The plaintiff bears that burden. “The burden of proving actual malice is on the plaintiff.” Nordling, 478 N.W.2d at 507. Note the flip: on the contract tort generally the defendant carries justification, but where the defendant is a co-employee asserting the Nordling privilege, the plaintiff must prove actual malice.

Nordling also declined to decide “[w]hether a tortious interference claim against a co-employee — i.e., an employee without any supervisory role over plaintiff — might ever lie.” That question remains open.

What is the claim actually worth?

Here is the part that changes case selection.

Minnesota follows the American rule, which “prevents a party from shifting its attorney fees to its adversary without a specific contract or statutory authorization.” But Kallok applied the third-party litigation exception:

[T]he third-party litigation exception to the American rule permits a court to award attorney fees as damages if the defendant’s tortious act thrusts or projects the plaintiff into litigation with a third party.

Kallok, 573 N.W.2d at 363.

Applied to interference, the logic is direct. Angeion’s interference forced Medtronic into litigation against its own former employee to enforce the noncompete. So the fees of that suit became the damages in the interference claim:

It is undeniable that but for Angeion’s tortious actions, Medtronic would not have had to enforce its valid noncompete agreements with Kallok. … We hold that the district court properly applied the third-party exception to the American rule and correctly allowed Medtronic to recover from Angeion the attorney fees and other expenses it incurred in enforcing its noncompete agreements with Kallok.

Kallok, 573 N.W.2d at 363.

The court was careful about the accounting. The trial court had found total fees and expenses of $111,221.30, reduced by 10 percent for the portion attributable to the interference claim itself (which is not recoverable — that is ordinary first-party litigation), and reduced again by $6,246.25 for fees incurred before the employee began work at Angeion. The recoverable figure was $93,852.92.

Three drafting and proof consequences:

1. Segregate the time. Fees spent litigating the interference claim against the interferer are not recoverable; fees spent litigating against the third party are. Bills that do not separate them will be cut, as they were in Kallok.
2. Causation is temporal. Fees incurred before the interference occurred are not caused by it.
3. The claim can be worth more than the contract claim. In Kallok the recoverable fees exceeded what most noncompete breaches produce in provable lost profits. The court also noted it “has always been exceedingly cautious when awarding attorney fees as damages” — the exception is real, but it is not casual.

Kallok also settled the underlying question that had divided the lower courts: “if a noncompete agreement 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.” 573 N.W.2d at 362.

Does any of the noncompete case law still apply after Minnesota banned noncompetes?

Partly — and this is where practitioners are most likely to reason from a stale premise.

Minn. Stat. § 181.988, subd. 2(a), provides: “Any covenant not to compete contained in a contract or agreement is void and unenforceable.” The statute was enacted by Laws 2023, ch. 53, art. 6, § 1, whose effective-date clause reads: “This section is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date.”

So the classic Kallok/Sysdyne fact pattern — competitor hires away an employee subject to a noncompete, employer sues the competitor for interference — is unavailable as to any noncompete signed on or after July 1, 2023. There is no valid contract to interfere with, and element one fails. Our guide to the Minnesota noncompete ban covers the statute’s scope and its two exceptions (sale of a business; anticipation of dissolution) in detail.

But note carefully what § 181.988, subd. 1(a), excludes from the definition of “covenant not to compete”:

A covenant not to compete does not include a nondisclosure agreement, or agreement designed to protect trade secrets or confidential information. 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.

Those agreements remain enforceable, which means they remain contracts a third party can tortiously interfere with. The tort did not lose its employment application; it lost one species of underlying contract. What is left — nondisclosure, nonsolicitation, confidentiality, and customer-list restrictions — is the subject of our piece on alternatives to the noncompete.

And on the prospective-advantage side, § 181.988 arguably expands the field for element three of Gieseke, since conduct that violates a state statute satisfies the wrongfulness requirement on its face.

Practice notes

For a plaintiff:

• Plead the two torts separately with separate elements. A combined count invites a motion aimed at the weaker one.
• On a prospective-advantage claim, name the third parties in the complaint if you can and in discovery if you cannot. Gieseke is a merits rule, not just a pleading rule — a jury verdict was vacated for the failure.
• Identify the independent wrong for element three explicitly. Do not rely on the interference itself.
• If the interference forced you into a lawsuit against someone else, plead the Kallok measure of damages from the outset and instruct your billing accordingly.
• Where the defendant is an officer or manager of your own employer, expect the Nordling privilege and plan the actual-malice proof — personal ill-will, spite, hostility, or deliberate intent to harm — before filing.

For a defendant:

• Justification is your burden. Build the record for it contemporaneously, not in discovery.
• If you are hiring around a restrictive covenant, send counsel the actual agreement and an accurate description of the job and the employee’s access to confidential information. Sysdyne shows the consultation need not be elaborate. Kallok shows it must be candid.
• Keep the email and the billing entry. In Sysdyne those two documents were most of the defense.
• On a prospective-advantage claim, move early on element one. If the plaintiff cannot name a third party, the claim fails as a matter of law.

Madgett Law, LLC

Madgett Law, LLC handles Minnesota business tort litigation, including tortious interference with contract and with prospective economic advantage — for companies whose contracts or customer relationships have been raided, and for businesses and executives defending interference claims arising out of competitive hiring. We assess these claims on the elements that actually decide them: identifiable third parties, independently wrongful conduct, and the justification record. Call 612-470-6529 or send us a message.

Sources: Furlev Sales & Associates, Inc. v. North American Automotive Warehouse, Inc., 325 N.W.2d 20, 25 (Minn. 1982) (Nos. 81-1025, 81-1050) (five elements of interference with contract). Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994) (Nos. C9-93-160, C5-93-365) (elements; justification ordinarily a fact question; “the test is what is reasonable conduct under the circumstances”; burden of proving justification on the defendant, citing Royal Realty Co. v. Levin, 244 Minn. 288, 295 (1955) (No. 36,416); Restatement (Second) of Torts § 773 good-faith legally protected interest; and holding at 589 that a conduit deed technically complying with Minn. Stat. § 500.24 did not justify interference). Gieseke ex rel. Diversified Water Diversion, Inc. v. IDCA, Inc., 844 N.W.2d 210, 217–22 (Minn. 2014) (No. A12-0713) (at 217, reaffirming the claim’s viability; at 218, the interests protected by the two torts and the requirement that the interference be independently tortious or in violation of a state or federal statute or regulation “rather than merely unfair”; at 219, the five elements; at 221, the requirement that the plaintiff specifically identify a third party and the insufficiency of projections from unidentified customers; at 222, the insufficiency of general reputational damage). Kallok v. Medtronic, Inc., 573 N.W.2d 356, 360–63 (Minn. 1998) (No. C2-96-1598) (at 360, the damages computation of $111,221.30 less 10 percent less $6,246.25 = $93,852.92; at 362, interference with a valid noncompete is a tort for which damages are recoverable, and “Angeion may not rely upon an infirm consultation with counsel”; at 363, the third-party litigation exception to the American rule and its application). Sysdyne Corp. v. Rousslang, 860 N.W.2d 347, 350–54 (Minn. 2015) (No. A13-0898) (at 350, the 0.4 and 0.3 hours of attorney time in the record; at 351, the five elements and the defendant’s burden on justification; at 352, that justification is not limited to the Restatement § 773 category; at 353, distinguishing Kallok on disclosure; at 354, that the justification defense may encompass reasonable reliance on advice of counsel, that a defendant need not establish the legal analysis underlying the advice, and that verbal and undocumented advice is not automatically disqualifying; footnote 3, that the consultation cannot be “infirm”). Nordling v. Northern States Power Co., 478 N.W.2d 498, 505–07 (Minn. 1991) (Nos. C7-90-1499, CX-90-1500) (a party cannot interfere with its own contract, citing Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 900–01 (Minn. 1982); company officer/agent privilege where acting in good faith “whether competently or not”; loss of privilege on predominant motivation by malice and bad faith; actual-malice standard; plaintiff’s burden; question of a nonsupervisory co-employee left open). Minn. Stat. § 181.988, subd. 1(a) (definition of “covenant not to compete” and its exclusions for nondisclosure, trade secret, confidential information, nonsolicitation, and client-list agreements) and subd. 2(a) (covenants not to compete void and unenforceable), enacted by Laws 2023, ch. 53, art. 6, § 1 (“This section is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date”). Minnesota cases verified in the Caselaw Access Project archive (static.case.law); statutes and session laws verified at the Minnesota Office of the Revisor of Statutes.

This article is general legal information about Minnesota law. It is not legal advice, it does not create an attorney–client relationship, and it does not promise or imply any particular outcome. Whether a particular course of conduct is justified, and what a particular interference claim is worth, depends entirely on the facts. Case law develops; verify current authority before relying on any proposition here.