James Nation v. American Capital, L
682 F.3d 648
7th Cir.2012Background
- Nation served as Spring Air's CEO from 1990 to 2007 and signed a severance agreement worth $1.2 million conditioned on him not working for competitors through Dec. 31, 2008.
- Spring Air faced liquidity problems; in Aug. 2008, it suspended Nation's severance payments along with others to preserve cash during ongoing financial distress.
- American Capital acquired a majority stake in Spring Air and controlled four of seven board seats, giving it significant influence over corporate actions.
- Nation sued American Capital in district court for tortious interference with contract, alleging interference with the severance agreement.
- The district court granted summary judgment for American Capital, relying on the conditional privilege arising from its status as Spring Air's majority shareholder; Nation appealed.
- This court affirms, holding that American Capital plausibly possessed a conditional privilege to interfere with contracts for the benefit of Spring Air, and Nation failed to present evidence of improper motive.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether American Capital had a conditional privilege to interfere | Nation asserts privilege did not extend to corporate interference harms. | American Capital acted to protect Spring Air's interests as majority shareholder. | Yes; privilege exists and applies here. |
| Whether Nation can overcome the privilege with evidence of improper motive | Nation must show induced breach was for personal injury or self-interest contrary to corporation. | No improper motive shown; actions aligned with corporate interests. | No; Nation failed to overcome privilege. |
| Whether American Capital's status as creditor adds justification for interference | Creditor status could provide additional privilege to prioritize payments. | Creditor status supports privilege but is not the sole basis; board control suffices. | Not needed; board control alone supports privilege. |
Key Cases Cited
- HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672 (Ill. 1989) (confirms conditional privilege to interfere with contracts when protecting corporate interests)
- Swager v. Couri, 395 N.E.2d 921 (Ill. 1979) (recognizes privilege for corporate officers/directors acting on behalf of the corporation)
- IOS Capital, Inc. v. Phoenix Printing, Inc., 808 N.E.2d 606 (Ill. App. Ct. 2004) (business-judgment rule supports non-liability of corporate actors)
- Langer v. Becker, 531 N.E.2d 830 (Ill. App. Ct. 1988) (stockholders may influence directors' actions within corporate bounds)
- Douglas Theater Corp. v. Chi. Title & Trust Co., 681 N.E.2d 564 (Ill. App. Ct. 1997) (tortious-interference limitation when party is effectively a contract party)