Shapiro Arato Bach Obtains Dismissal Of Tortious Interference Claim On Behalf Of Univision In Suit Over Purchase Of The Onion

On August 1, 2019, Shapiro Arato Bach obtained the dismissal of a tortious interference claim that an investment advisor brought against the firm’s client, Univision Communications Inc., in connection with a transaction involving the satirical website The Onion.

The plaintiff in the case is GCA Advisors LLC.  GCA alleged that Onion, Inc. hired GCA to help sell Onion and agreed to pay GCA a transaction fee if a sale occurred under specified circumstances. GCA alleged that Onion terminated its agreement with GCA in April 2015, and that Univision purchased an interest in Onion in January 2016. Although GCA did not allege that it provided any services to Onion in connection with the transaction, GCA nevertheless sued Onion and Univision, asserting that Onion breached its agreement with GCA by not paying GCA any fee for the sale and that Univision purportedly caused Onion not to pay.

Shapiro Arato Bach filed a motion to dismiss on behalf of Univision arguing that GCA’s tortious interference claim failed under New York’s “economic interest” defense, and the court granted Univision’s motion. The court held that Univision was entitled to the “economic interest” defense because GCA had alleged in its complaint that Univision held a substantial financial stake in Onion. The court further held that, under this defense, GCA could not sue Univision for tortious interference unless GCA alleged that Univision acted with “malice” or employed “fraudulent or illegal means.” The court found that GCA failed to allege either requisite element. The court noted that it was far from clear that Onion’s failure to pay the transaction fee constituted a breach of contract at all. Accordingly, “even if Univision directed the Onion not to pay the fee, that conduct alone does not amount to malicious or fraudulent conduct, particularly because the contracting parties have reasonably interpreted the contract terms differently.” The court dismissed the claims against Univision.

The case is GCA Advisors, LLC v. The Onion, Inc., and Univision Communications Inc., N.Y. Sup. Ct., 653989/2018.

The Motion to Dismiss and Reply papers filed by Shapiro Arato Bach can be read here and here.

The court’s Decision and Order on the motion can be read here.