$2.4 Million Jury Verdict on Breach of Employment Contract and Tortious Interference Claims

On March 28, 2016, the Illinois Appellate Court, First District, affirmed a $2.4 Million jury verdict in a lawsuit for breach of an employment agreement and tortious interference with the employment contract. Koehler v. The Packer Group, et al., 2016 IL App (1st) 142767 (3/28/2016). The plaintiff, who was employed as a CEO, alleged that he was demoted and then discharged after revealing financial improprieties to the company's board. He sued the company for breach of his employment contract and also sued certain individuals for tortious interference with contract, claiming that they induced the company to breach its employment agreement with him. After a three-week trial, the jury returned a large verdict for the plaintiff.

The plaintiff's employment contract provided him with a guaranteed initial term of employment of four years, after which his employment would become "at-will." The employment agreement also contained a severance provision, which entitled the plaintiff to a severance payment of one year of salary and benefits, plus one year of targeted incentive compensation, in the event that his employment was terminated by the company without cause or due to a change of control in the company. In his lawsuit, the plaintiff sought the full amount of his unpaid salary and benefits for the two-and-a-half year balance remaining on his employment agreement, plus one year of severance pay, the value of his stock, the amounts due to him under the company's incentive compensation plan, and punitive damages. On his breach of contract claim against the company, the jury awarded the plaintiff damages in the amount of $100,000, representing the contractual severance payment. On his tortious interference with contract claims against the individual defendants, the jury awarded him $720,000 in compensatory damages and $1.2 million in punitive damages against one of the individual defendants, and $205,000 in compensatory damages and $150,000 in punitive damages against the other individual defendant. The defendants appealed on various grounds.

In order to state a claim for tortious interference with contract under Illinois law, a plaintiff must establish: (1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant's awareness of this contractual relationship; (3) the defendant's intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other caused by the defendant's wrongful conduct; and (5) damages. The term malicious, for purposes of a tortious interference claim, simply means that the interference must have been intentional and without justification. It does not connote ill will, hostility, or an intent to injure. The appellate court affirmed the jury verdict, rejecting the defendants' arguments that the verdict was against the manifest weight of the evidence and that the trial court improperly instructed the jury.

The defendants also appealed the amount of damages that the jury awarded. The defendants contended that the plaintiff's damages should have been limited to those available for breach of contract; the award of salary for the remainder of the four-year term of the contract was improper; the plaintiff was entitled to the stock, but not to be paid the value of the stock; and the plaintiff was not entitled to an additional year of severance pay. However, the appellate court ruled that the jury's award of salary for the remainder of the four-year term of employment was proper. The appellate court also held that on the tortious interference claim, the jury could award the plaintiff damages in excess of the severance amount, not instead of the severance amount. The interference with contract claim is a common law tort claim under Illinois law, under which a plaintiff may recover all damages that were proximately caused by the tortious conduct. On the breach of contract claim, however, the one-year contractual severance was the proper remedy for the termination of the employment contract without cause.