                United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 17-2412
                        ___________________________

 Qwest Communications Company, LLC, a Delaware limited liability company,
                   doing business as CenturyLink QCC

                        lllllllllllllllllllllPlaintiff - Appellee

                                           v.

                 Free Conferencing Corp., a Nevada corporation

                      lllllllllllllllllllllDefendant - Appellant

Audiocom, LLC, a Nevada limited liability company; Global Conference Partners,
 a California corporation; Basement Ventures, LLC, a California limited liability
  company; Vast Communications, LLC, a California limited liability company

                            lllllllllllllllllllllDefendants
                                    ____________

                    Appeal from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                            Submitted: May 17, 2018
                            Filed: September 25, 2018
                                  ____________

Before SHEPHERD, KELLY, and GRASZ, Circuit Judges.
                           ____________

KELLY, Circuit Judge.
       This tort action involves land-line telephone services. In the district court,1
long-distance carrier2 Qwest Communications Company LLC (Qwest) succeeded in
showing that a free conference call provider, Free Conferencing Corporation (FC),
intentionally interfered with its contract with a local carrier3 called Tekstar. On
appeal, FC claims that it is not liable for tortious interference with Qwest’s
contractual relationship with Tekstar, and that the district court erred in calculating
damages.

                                             I.

                                            A.

       Qwest is a long-distance land-line telephone service carrier. When a person
places a long-distance phone call, their long-distance carrier connects the call (also
called “traffic”) to the local carrier where the dialed number is located. The customer
pays their long-distance carrier for the call, and the receiving local carrier in turn bills
the long-distance carrier. The rate, terms, and conditions required to impose these
charges on long-distance carriers are generally governed by tariffs filed with the
Federal Communications Commission (FCC). Here, we refer to the contract between
Qwest and Tekstar as a tariff. See generally 47 U.S.C. § 203(a).

      Generally, tariffs authorize long-distance carriers like Qwest to route their
customers’ traffic through other long-distance carriers when doing so would be less

       1
      The Honorable Michael J. Davis, United States District Judge for the District
of Minnesota.
      2
      In the telecommunications industry, this is called an “interexchange carrier”
or IXC. For simplicity, we use the phrase “long-distance carrier.”
       3
      In the telecommunications industry, this is called a “local exchange carrier”
or LEC. For simplicity, we call these “local carriers.”

                                            -2-
expensive than transmitting the traffic through their own networks. This practice is
called “least cost routing.” Whenever least cost routing occurs, the long-distance
carrier through which the traffic is routed is entitled to reimbursement from the
routing long-distance carrier. For instance, when Qwest least cost routes its traffic
through AT&T, AT&T charges Qwest for transmitting that traffic.

       One of Qwest’s tariffs was with a local carrier called Tekstar. Tekstar services
certain rural parts of Minnesota and North Dakota.                    In rural areas,
telecommunications infrastructure has to cover expansive territory despite fewer
paying customers. Therefore, rural local carriers often charge long-distance carriers
higher rates to complete calls.

       Several years before this case began, a new type of company sought to leverage
the relationship between long-distance and local carriers: free conferencing
companies, of which FC is one. Free conferencing companies sought to increase
long-distance traffic to rural local carriers (with their higher tariff rates), thereby
making money for the local carriers and themselves. To do this, free conferencing
companies would offer conference-calling services to the public—users would sign
up (at no charge to the user) to host a conference call on the service. The free
conferencing company would then provide the conference-call organizer a number
hosted by a rural local carrier. When participants called the free conferencing
number, their long-distance carrier would transmit each participant’s call to the rural
local carrier. The local carrier would then bill the long-distance carrier for all of the
conference call traffic, ostensibly pursuant to its tariff. And, pursuant to its contract
with the free conferencing company, it would pay the company a fee. Local carriers
did not charge the free conferencing companies to place their numbers on their
exchange. Tekstar signed its first contract with a free conferencing company (not
FC) in 2005. FC began contracting with rural local carriers (not Tekstar) in 2004.




                                          -3-
         The telecommunications industry is regulated by the FCC; the FCC approves
and interprets the terms of tariffs between local and long distance carriers. See
generally All Am. Tel. Co., Inc. v. FCC, 867 F.3d 81, 84 (D.C. Cir. 2017). Many
tariffs, including the one between Qwest and Tekstar, only allowed the local carrier
to bill the long-distance carrier for calls delivered to “end users.”4 After both Tekstar
and FC became involved in the free conferencing industry, long-distance carriers
began to challenge the legality of the free conferencing business model. The basis
for the challenge was this: If the free conferencing companies were not “end users,”
local carriers could not charge long-distance carriers tariff rates for the free
conferencing traffic. See 47 U.S.C. § 203(c); Qwest Commc’ns Corp. v. Free
Conferencing Corp., 837 F.3d 889, 893 (8th Cir. 2016). The legal question was,
therefore, whether free conferencing companies like FC were “end users.” The FCC
answered this question twice: first it said yes, then it said no.

       In October 2007, the FCC held, in a case we call Farmers I, that free
conferencing companies were end users under a tariff with Qwest. See Qwest
Commc’ns Corp. v. Farmers & Merchs. Mut. Tel. Co., 22 F.C.C. Rcd. 17973,
17987–88 (2007). That conclusion was based in substantial part on the free
conferencing companies’ assertions that they “were billed the federal subscriber line
charge as well as for local telephone service and rental of floor space in [the local
carriers’] central office[s].” Farmers & Merchs. Mut. Tel. Co. v. FCC, 668 F.3d 714,
717 (D.C. Cir. 2011).

       In the course of the Farmers I FCC proceeding, a Farmers I litigant asked FC
to assist in falsifying documents that would show it was paying fees to the local
carriers it worked with. FC declined to do so, but was aware that other free


      4
       “[T]ariffs define ‘end users’ as ‘[u]sers of local telecommunications carriers
services who are not carriers.’” In the Matter of AT&T Corp., 28 F.C.C. Rcd. 3477,
3494 (2013).

                                          -4-
conferencing companies had agreed to provide falsified billing records. FC was also
aware that, in January 2008, the FCC granted in part a motion to reconsider Farmers
I, citing allegations “that [the local carriers’] invoices to, and agreements with, the
conference calling companies were backdated.” Qwest Commc’ns Corp. v. Farmers
& Merchs. Mut. Tel. Co., 23 F.C.C. Rcd. 1615, 1618 (2008).

       By early 2008, most long-distance carriers, including Qwest, were refusing to
pay for free conferencing traffic. Some long-distance carriers, however, entered
settlements5 with local carriers, whereby the long-distance carrier agreed to pay for
free conferencing traffic, but at lower, below-tariff rates. Tekstar settled with AT&T.

       In April 2008, FC and Tekstar entered a contract. The contract provided that
FC would pay nothing to Tekstar, and that Tekstar would pay FC a “per minute” fee
for hosting conference calls on its exchange. When it entered into the contract, FC
knew that Qwest was refusing to pay Tekstar for its free conferencing traffic, and that
Tekstar’s settlement with AT&T meant that most or all of its free conferencing traffic
would be least cost routed through AT&T or another long-distance carrier that had
settled at below-tariff rates.

       Qwest sent Tekstar a Notice of Dispute, expressing the view that the
terminating access charges Tekstar was billing it for free conference companies’
traffic were invalid under the tariff. Qwest suspected that Tekstar had entered an
impermissible agreement with FC (and other companies) for conferencing services.
In response, Qwest implemented a new least cost routing protocol for Tekstar’s
traffic. Instead of least cost routing Tekstar’s free conferencing traffic any time it was
cheaper than transmitting through its own lines, Qwest only least cost routed the
traffic when it was at least 50% cheaper to use another long-distance provider’s
network. Thus, Qwest continued to transmit some of Tekstar’s free conferencing


      5
          Some of these settlements were later determined to be illegal.

                                           -5-
traffic (including FC’s traffic) on its own network, but continued to refuse to pay
Tekstar for it. This is what the parties call the 50 Percent Rule.

       Afer reconsideration, in November 2009, the FCC reversed course in an
opinion we will call Farmers II. See Qwest Commc’ns Corp. v. Farmers & Merchs.
Mut. Tel. Co., 24 F.C.C. Rcd. 14801, 14806 (2009). The FCC found that free
conferencing companies were not end users based on “new evidence . . . previously
withheld [that] contradict[ed]” the claim that local carriers and free conferencing
companies enjoyed “a carrier/customer relationship under the terms of the tariff.” Id.6
Thus, “[t]oday, it is well-settled that a[ local carrier] cannot bill a[ long-distance
carrier] under its tariff for calls ‘terminated’ at a conference call [number] when the
conference calling company does not pay a fee for the [local carrier’s] services.”
Qwest, 837 F.3d at 894.

                                          B.

       Following Farmers II, Qwest initiated lawsuits against several local carriers
and free conferencing companies. This is one of those suits. As relevant here, Qwest
sued FC under Minnesota law for tortiously interfering with its contract (tariff) with
Tekstar. After a bench trial, the district court found FC liable and awarded Qwest
damages. In particular, the court determined that (1) FC knew of the existence of the
Tekstar–Qwest tariff, (2) FC knew its free conferencing business model breached the
Tekstar–Qwest tariff, (3) FC induced Tekstar to breach its tariff by pursuing the
business relationship and negotiating terms that required Tekstar to bill Qwest for
impermissible access charges, and (4) FC’s interference was not justified.


      6
       In a later decision, the FCC denied a petition for reconsideration and
reaffirmed its determination that free conferencing companies were not end users.
See Qwest Commc’ns Corp. v. Farmers & Merchs. Mut. Tel. Co., 25 F.C.C. Rcd.
3422, 3426–27 (2010), petition for review denied, 668 F.3d 714 (D.C. Cir. 2011).

                                         -6-
      The district court awarded Qwest only “consequential” damages. The court
reasoned that direct damages were unavailable because, by the time FC contracted
with Tekstar, Qwest was already refusing to pay for free conferencing traffic that
Qwest itself delivered. The court did, however, award Qwest close to $1 million in
damages, which it said represented the costs that Qwest incurred in least cost routing
FC calls to other long-distance carriers. The court concluded that these costs were
foreseeable. The court also awarded Qwest attorneys’ fees. FC appeals.

                                           II.

       On appeal, FC challenges both the district court’s liability finding and award
of attorneys’ fees. We address each in turn.

       The parties agree that Minnesota law governs this case. In Minnesota, “[a]
cause of action for tortious interference with contract has five elements: (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.”
Sysdyne Corp. v. Rousslang, 860 N.W.2d 347, 351 (Minn. 2015) (quoting Furlev
Sales & Assocs., Inc., v. N. Am. Auto. Warehouse, Inc., 325 N.W.2d 20, 25 (Minn.
1982)). FC argues that it is not liable for tortious interference because it did not
induce or procure Tekstar’s breach, and even if it had, Tekstar’s breach was not
material. FC also argues that its agreement with Tekstar was not motivated by an
improper purpose, and that Qwest has not proven damages.

      Following a bench trial, we review the district court’s legal conclusions de
novo and its findings of fact for clear error. Meecorp Capital Mks., LLC v. PSC of
Two Harbors, LLC, 776 F.3d 557, 562 (8th Cir. 2015). Sitting in diversity, we are
bound by the decisions of the Minnesota Supreme Court. See St. Paul Fire & Marine
Ins. Co. v. Schrum, 149 F.3d 878, 880 (8th Cir. 1998). When the Minnesota Supreme
Court has not yet decided an issue, “it is our responsibility to predict, as best we can,

                                          -7-
how that court would decide the issue.” Brandenburg v. Allstate Ins. Co., 23 F.3d
1438, 1440 (8th Cir. 1994).

                                          A.

       FC argues first that it did not induce or procure Tekstar’s breach.7 Under
Minnesota law, “inducement” is used interchangeably with “procurement.” Cf.
Gieseke ex rel. Diversified Water Diversion, Inc. v. IDCA, Inc., 844 N.W.2d 210,
214-15 & n.2 (Minn. 2014). Phrased in more generic tort law terms, this means the
plaintiff must prove that the defendant caused the breaching party to breach its
contract. Compare id., and Kallok v. Medtronic, Inc., 573 N.W.2d 356, 362 (Minn.
1998) (finding causation when officials of the defendant company met with the
breaching employee “and procured the breach of his noncompete agreements by
offering him the vice president position that he eventually accepted”), with Furlev,
325 N.W.2d at 27 (finding no causation where the plaintiff was a “willing
participant[]” in the breach).

        FC contends that, as a matter of law, it could not have caused Tekstar to breach
its tariff with Qwest because Tekstar was already breaching the tariff by the time FC
and Tekstar contracted in 2008. In FC’s view, these earlier breaches mean that no
liability can attach to any subsequent breach of the same or a similar kind. But
whether or not Tekstar had already breached the tariff with regard to other free
conferencing companies does not answer whether FC’s interference caused Tekstar
to breach its tariff by billing Qwest tariff rates for FC’s non-tariff services. FC’s
approach would create perverse incentives whereby an initial act of tortious
interference would absolve from liability anyone who induces a similar breach later
in time. We see no support in Minnesota law for FC’s position.


      7
        FC makes no affirmative argument regarding the intent portion of this element:
intentional inducement or procurement.

                                          -8-
       The district court did not err in finding that FC caused Tekstar to breach its
tariff with Qwest. The court held that, “[a]lthough [FC] was not the first [free
conferencing company] to pursue its business model with Tekstar, in this litigation
Qwest only seeks liability and compensation for the breaches by Tekstar with relation
to the minutes . . . for [FC’s] traffic.” The district court correctly applied the law to
the facts; FC caused the breaches for which Qwest seeks compensation.8

                                             B.

        Next, FC contends that it cannot be liable because Tekstar’s breach was not
material. FC says that, under Minnesota law, only breaches that amount to
non-performance of contractual obligations are material, and it characterizes this case
as a relatively straightforward billing dispute. But under Minnesota law, a breach is
material if it goes to “one of the primary purposes” of the contract. BOB Acres, LLC
v. Schumacher Farms, LLC, 797 N.W.2d 723, 728 (Minn. Ct. App. 2011) (“A
material breach ‘goes to the root or essence of the contract.’”). The Qwest–Tekstar
tariff obliged Tekstar to bill Qwest tariff rates for traffic that qualified under the tariff.
The district court did not err in finding that accurate, tariff-authorized billing was one
of the primary purposes of the tariff. And FC does not dispute that Tekstar violated
the terms of the tariff when it billed Qwest tariff rates for FC’s traffic. Nor does it
point to any facts from which we might infer that Qwest did not reasonably expect to

       8
        In the dissent’s view, Tekstar was nothing but a “willing participant” in the
breach. Respectfully, we disagree with the dissent’s interpretation of Minnesota law
and its application to this case. See Kallok, 573 N.W.2d at 362 (finding that plaintiff
“easily established” the procurement element where breaching employee was first to
approach defendant about a job, and nothing in the record indicated defendant
pressured employee to accept it); Furlev, 325 N.W.2d at 27 (holding that the
breaching party–as a “willing participant[]”–may not sue another for tortious
interference with the contract the breaching party voluntarily breached). Morever,
FC did not make this argument on appeal and, as a result, neither party briefed the
issue.

                                             -9-
be billed only for tariff-qualifying traffic. Thus, even if Minnesota law requires a
showing of the type of materiality FC urges, we see no basis for reversal.

                                           C.

       FC argues that it cannot be liable for tortious interference because its actions
were justified. This is an affirmative defense to tortious interference liability; FC
bears the burden of proving justification. Kallok, 573 N.W.2d at 362. Justification
exists when a defendant’s legal interest “is equal or superior to that of [the plaintiff]
and where [the defendant’s] invasion is made with the honest purpose of fairly
bettering [its] own business, trade, or employment, and not for the primary object of
destroying another’s employment or business.” Bennett v. Storz Broad. Co., 134
N.W.2d 892, 897 (Minn. 1965); see also Kjesbo v. Ricks, 517 N.W.2d 585, 588
(Minn. 1994) (“There is no wrongful interference with a contract where one asserts
in good faith a legally protected interest of his own . . . .” (cleaned up)). “Ordinarily,
whether interference is justified is an issue of fact, and the test is what is reasonable
conduct under the circumstances.” Kjesbo, 517 N.W.2d at 588.

       The district court did not clearly err in finding that FC lacked justification. The
district court found that FC entered its contract with Tekstar in April 2008, after being
asked to submit false evidence in the Farmers I proceedings, after learning that the
FCC relied on falsified records in determining that free conferencing companies were
end users, and after the FCC had granted partial reconsideration of Farmers I in light
of the falsified evidence. Based on these facts, it was not clear error for the district
court to conclude that, prior to contracting with Tekstar, FC was on notice that it was
not an end user and that Tekstar would violate its tariff by charging Qwest tariff rates
for FC’s traffic. We agree with the district court that these facts defeat FC’s
justification defense.




                                          -10-
        FC counters that this conclusion is precluded by collateral estoppel. It cites to
a similar case from South Dakota in which the district court found that Qwest had
failed to show that FC knew its business model was illegal in 2005. See Qwest
Commc’ns Corp. v. Free Conferencing Corp., No. CIV. 07-4147-KES, 2014 WL
5782543, at *9–10 (D.S.D. Nov. 6, 2014). FC also points to this court’s opinion
affirming the district court in that case, where we said: “It was not until the FCC’s
Farmers II decision in 2009—after this lawsuit began—that it appeared that FC’s
business model violated [the local carrier’s] tariff.” Qwest, 837 F.3d at 896.
According to FC, collateral estoppel precluded the district court from reconsidering
whether FC reasonably relied on Farmers I until Farmers II was decided in 2009.
This case and the South Dakota case are undoubtedly similar, but we conclude that
collateral estoppel did not bar the district court from reaching a different conclusion
on this issue. This case involves different facts, different timing, and different state
law. See Ripplin Shoals Land Co. v. U.S. Army Corps of Engineers, 440 F.3d 1038,
1044 (8th Cir. 2006) (noting that collateral estoppel is only appropriate when “the
issue sought to be precluded is identical to the issue previously decided”). In the
South Dakota case, FC’s contract with the local carrier, Sancom, predated Farmers
I, and there was no allegation that fraud on the FCC had alerted FC to the probability
that its business model was illegal. See Qwest, 837 F.3d at 894. Here, the district
court expressly acknowledged our reasoning in Qwest, and carefully distinguished
it. We agree with the district court that our previous opinion did not preclude it from
concluding that FC was aware of the illegality of its business model when it
contracted with Tekstar in April 2008.

                                           D.

      FC claims that Qwest has suffered no damages. First, it asserts that Qwest
cannot recover because the 50 Percent Rule was neither a mitigation strategy nor
routine least cost routing, and was therefore unforeseeable. The district court found
that FC “knew, during the relevant time period, that it was possible that Qwest was

                                          -11-
least cost routing [its] calls” because “Tekstar would be billing Qwest tariff rates and
other [long-distance carriers] less than tariff rates.” On appeal, FC claims this
determination was clearly erroneous because “the only damage ‘arising naturally from
[Tekstar’s] breach would be Qwest’s payment of some or all of Tekstar’s inflated
bills”—bills that Qwest did not pay. We disagree. “[C]onsequential damages flow
naturally from the breach” and are recoverable if they were “reasonably foreseeable
to the parties at the time of the breach.” DeRosier v. Util. Sys. of Am., Inc., 780
N.W.2d 1, 4–5 (Minn. Ct. App. 2010). In finding that Qwest’s least cost routing costs
were foreseeable, the district court reasoned that least cost routing was a common
industry practice, and that FC suspected Qwest was least cost routing FC’s calls to
other long-distance carriers. The district court also found that FC knew Tekstar
would be billing Qwest at tariff rates while charging other long-distance carriers
below-tariff rates, and that FC’s contract with Tekstar would likely cause Qwest to
least cost route FC’s free conferencing traffic to other carriers at below-tariff rates.
The district court did not clearly err in determining that Qwest’s damages arose
naturally from the breach that FC induced.

      FC next argues that Qwest has no damages because the nearly $1 million that
Qwest paid other long-distance carriers to transmit FC’s traffic is equal to the amount
Qwest would have had to pay Tekstar for the same traffic, i.e. the “just and
reasonable” rate. See Farmers II, 24 F.C.C. Rcd. at 14812 & n.96 (clarifying that just
because the local carrier breached the tariff does not mean that the local carrier “is
precluded from receiving any compensation at all for the services it has provided to
Qwest”). But see All Am. Tel. Co. v. AT&T Corp., 26 F.C.C. Rcd. 723, 731 (2011)
(noting that Farmers II “does not hold that a carrier is always entitled to some
compensation for a service rendered, even if the service is not specified in its tariff”).
But, as the district court explained:

      Tekstar’s below-tariff agreements with other [long-distance carriers]
      contributed to Qwest routing calls to those [carriers] through [least cost

                                          -12-
      routing], which, in turn caused Qwest to pay for [FC’s] calls through
      [least cost routing] when Qwest should not have been required to pay for
      the calls at all. However, the breach that proximately caused the [least
      cost routing] damages in the first place was that Tekstar billed Qwest
      anything at all for the calls to [free conferencing companies] when the
      tariffs established that the rate should have been zero.

       The district court found that FC’s “interference with Tekstar’s tariffs caused
Qwest to [least cost route] traffic that, if Tekstar had not breached its tariffs, Qwest
would have delivered directly to Tekstar with no payment to Tekstar.”9 We see no
clear error in the district court’s finding that the nearly $1 million Qwest paid to
AT&T and other long-distance carriers to route FC’s traffic flowed directly from FC’s
tortious interference.

                                          III.

        Finally, FC contests the district court’s award of attorneys’ fees to Qwest.
Minnesota follows the American rule,10 but provides a “third-party litigation
exception.” Kallok, 573 N.W.2d at 363. The exception applies “where the natural
and proximate consequence of a person’s tortious act projects another into litigation
with a third person.” Id. (quoting Prior Lake State Bank v. Groth, 108 N.W.2d 619,
622 (Minn. 1961)). The district court determined that, by inducing Tekstar to breach
its tariff, FC projected Qwest into litigation against Tekstar to enforce the tariff. The
court then apportioned attorneys’ fees based on the proportion of free conferencing
traffic attributable to FC. We see no error in that determination.


      9
       This is because Qwest’s refusal to pay Tekstar for free conferencing traffic
was ultimately vindicated in Farmers II.
      10
        “The American rule prevents a party from shifting its attorney fees to its
adversary without a specific contract or statutory authorization.” Kallok, 573 N.W.2d
at 363.
                                          -13-
                                           IV.

      The judgment of the district court is affirmed.

SHEPHERD, Circuit Judge, dissenting.

      “‘[A]s a federal court, our role in diversity cases is to interpret state law,
      not to fashion it.’ When dealing with an issue of state law we are bound
      by rulings on that issue from the state’s highest court . . . regardless of
      whether we think it wise or in accordance with the supposed national
      trend. If the [state] Supreme Court or legislature wants to change state
      law, then they can do so - we cannot.”

Simmons Foods, Inc. v. Indus. Risk Insurers, 863 F.3d 792, 798 (8th Cir. 2017)
(citations omitted) (quoting Wivell v. Wells Fargo Bank, N.A., 723 F.3d 887, 896
(8th Cir. 2014)).

       The district court and the majority depart from this bedrock precept and,
contrary to Minnesota law and with minimal explanation, find tortious interference
by Free Conferencing Corp. (“Free Conferencing”) where it did not induce the breach
by Tekstar of its contract with Qwest Communications Company, LLC (“Qwest”) and
where Tekstar willingly participated in the breach, even preparing the contract and
amended contract with Free Conferencing which Qwest now cites as constituting this
tortious interference. For this reason, and taking the district court’s factual findings
as true, Qwest’s claim for tortious interference with contractual relations fails, I
respectfully dissent.

       Under Minnesota law, a tortious interference claim requires five elements: “(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.”


                                          -14-
Sysdyne Corp. v. Rousslang, 860 N.W.2d 347, 351 (Minn. 2015) (internal quotation
marks omitted). Free Conferencing raises challenges across these elements. But I
address only one. I conclude that the district court’s decision did not properly address
the third element: an intentional procurement of the purported breach in this case.
Instead, the district court, sanctioned by the majority, collapses the unique contours
of Minnesota law into more general tort law principles, effectively fashioning
Minnesota law instead of applying it.

       In reviewing a bench trial judgment on interference claims, courts “review the
district court’s factual findings and credibility determinations for clear error, and its
legal conclusions de novo.” See Qwest Commc’ns Corp. v. Free Conferencing Corp.,
837 F.3d 889, 895 (8th Cir. 2016).

       The Minnesota Supreme Court has often used the words “procure” and
“induce” interchangeably. See, e.g., Jensen v. Lundorff, 103 N.W.2d 877, 890 (Minn.
1960). Historically, tortious interference in Minnesota (and elsewhere) was meant
to guard against scheming and opprobrious commercial conduct. As the Minnesota
Supreme Court explained in an early opinion, “[f]raud, misrepresentation,
intimidation, coercion, obstruction, molestation, or the willful and intentional
procurement of violation of contractual relations are practices which competition does
not authorize.” Sorenson v. Chevrolet Motor Co., 214 N.W. 754, 756 (Minn. 1927).
And so the tort was meant to protect “[f]ull, fair and free competition . . . necessary
to the economic life of a community” by ensuring that “unlawful means” were not
used to “prevent another from obtaining the fruits of his labor.” Johnson v.
Gustafson, 277 N.W. 252, 254-55 (Minn. 1938).

     In more recent years, the Minnesota Supreme Court has expanded the range of
conduct covered by tortious interference. See, e.g., Nordling v. N. States Power Co.,
478 N.W.2d 498, 506 (Minn. 1991) (noting “bad motive or malice may not be an
element of the tort of tortious interference”). Even as recent cases have led to a more

                                          -15-
fluid inquiry, Minnesota still maintains that a defendant must induce the breach of
contract. See E-Shops Corp. v. U.S. Bank Nat’l Ass’n, 678 F.3d 659, 664-65 (8th
Cir. 2012) (noting Minnesota law “expressly” demands “procurement of a breach of
contract” for “a tortious interference claim”). Indeed, to require anything less would
not only unmoor tortious interference from its historical anchors, but also infringe on
the “[l]iberty of contract . . . assured by both [Minnesota] and federal Constitutions.”
Minn. Wheat Growers’ Co-op. Mktg. Ass’n v. Radke, 204 N.W. 314, 315 (Minn.
1925).

       Underscoring how vital inducement is, Minnesota does not recognize tortious
interference where the breaching party was a “willing participant[]” in the breach.11
Furlev Sales & Assocs., Inc. v. N. Am. Auto. Warehouse, Inc., 325 N.W.2d 20, 27
(Minn. 1982). Willing participants voluntarily breach their contract with the plaintiff
without any inducement by the defendant. See United Wild Rice, Inc. v. Nelson, 313
N.W.2d 628, 632 (Minn. 1982) (rejecting tortious interference claim where “there has
been no showing that [defendant] induced [breaching party] to break with
[plaintiff]”); Salon 2000, Inc. v. Dauwalter, No. A06-1227, 2007 WL 1599223, at *5
(Minn. Ct. App. June 5, 2007) (no tortious interference where defendant “did nothing
to induce [breaching party] to breach her agreement with [plaintiff]”).

       This Court recently addressed an analogous dispute between Qwest and Free
Conferencing under South Dakota law. Qwest, 837 F.3d at 896. Writing for the
panel, Judge Bright stressed that, for Free Conferencing’s actions to be unlawful, it
must have wrongfully induced a breach of contract “by act[ing] with an improper
purpose.” Id. But where, as here, Free Conferencing merely “take[s] advantage” of

      11
         Contrary to the majority’s contention, the argument that Tekstar was a
“willing participant” in the breach is fairly included in Free Conferencing’s appeal.
In its briefing, Free Conferencing included an argument section asserting that “FC
Did Not Induce, Procure, Or Otherwise Cause Tekstar to Materially Breach Its
Tariff.” Br. of Appellant, p. 26.
                                         -16-
a regulatory system through a voluntary business relationship, it cannot be said to be
“knowingly interfer[ing] with the contract” such that liability for an intentional tort
is proper. Id. at 896-97.

        The district court held that “Tekstar materially breached its tariffs” by billing
Qwest for Free Conferencing’s traffic. D. Ct. Op. at 66. And Free Conferencing
“intentionally induced” this breach, according to the district court, by “enter[ing] into
the contract [with Tekstar], direct[ing] its traffic to Tekstar, and requir[ing] that [Free
Conferencing] receive telecommunications services from Tekstar for free.” D. Ct.
Op. at 72-73. At base, the district court reasoned that the breach of the Tekstar-Qwest
tariff was caused by the initial Tekstar-Free Conferencing contract. Assuming that
is true, the district court still needed to show how Free Conferencing induced Tekstar
to enter into their contract.

       In its conclusions of law, the district court did not do so. In discussing
inducement, it leaned heavily on the fact that Free Conferencing knew about
Tekstar’s interexchange carrier (“IXC”) contracts, including with Qwest, and
settlements. But “mere knowledge of [an] earlier contract” has never been “held to
be the equivalent of inducement or persuasion or (still less) of fraudulent conduct.”
Radke, 204 N.W. at 315 (internal quotation marks omitted); see also Royal Realty Co.
v. Levin, 69 N.W.2d 667, 672 (Minn. 1955) (“It is not enough that the defendants
merely knew of the contractual relationship and obtained its benefits for
themselves.”).12 The district court also noted that Free Conferencing “proposed that


      12
        The district court, citing the Restatement, found that “intent is also
established if ‘the actor does not act for the purpose of interfering with the contract
or desire it but knows that the interference is certain or substantially certain to occur
as a result of his action.’” D. Ct. Op. at 71 (quoting Restatement (Second) of Torts
§ 766 cmt. j (1979)). But, for this to be true, the Restatement requires some
malevolent inducement: “[i]f the actor is not acting criminally nor with fraud or
violence or other means wrongful in themselves but is endeavoring to advance some
                                           -17-
the two companies do business together.” However, the recruiting of Free
Conferencing by Tekstar was, by then, clearly in keeping with Tekstar’s business
plan.

       Tekstar first started dealing with free conferencing service companies in 2005
and by 2008, Tekstar was fully immersed in the revenue stream they provided.
According to the district court, Tekstar had experience with no less than eight free
call service companies (“FCSC”) by this time.13 In fact, it had a form contract it
routinely used with its FCSC partners. And it was hungry for more. Like many
searching for greater fortune, Tekstar sent a representative, David Schornack, to Las
Vegas. But, it believed he had better odds than most who visit: Schornack was there
to attend a conference for FCSCs. As the district court explained, Schornack
“attend[ed], in part, to network with new conference calling companies.” It was at
this conference in 2008 that Tekstar was introduced to Free Conferencing.

       Fortuitous seating led to the meeting. In a break between panels, Schornack
and Free Conferencing’s David Erickson, seated next to each other, struck up a
conversation. During that conversation, Schornack “outlined . . . the benefits of
doing business with Tekstar.” Tr. 582-83. Erickson was also eager to do business,
as the district court notes. Pretty quickly after that conversation, Free Conferencing
became the latest in Tekstar’s stable of FCSC partners. In April 2008, Free
Conferencing signed Tekstar’s form contract with a per-minute rate owed on Free
Conferencing traffic, along with contact information, simply written in.


interest of his own, the fact that he is aware that he will cause interference” is not
sufficient for intent. Restatement (Second) of Torts § 766 cmt. j (1979). Regardless,
the Restatement is not binding on us; the Minnesota Supreme Court is. See Hazen
v. Pasley, 768 F.2d 226, 228 (8th Cir. 1985) (emphasizing that a federal court in
diversity is bound to apply the “legal mind” of the state’s highest court, even if it
means reversing the district court).
      13
           Free Conferencing suggests the number is as high as 20.
                                         -18-
       In December 2008, however, at Tekstar’s behest, Free Conferencing signed an
amended contract (also prepared by Tekstar). The amended contract was in response
to the settlements Tekstar had reached with IXCs who had become wise to the FCSC
model. The amended contract set a differentiated payment schedule based on these
settlements. In addition, it ensured Tekstar was only obliged to pay Free
Conferencing after it collected from the IXCs.

      These facts show that Tekstar was a willing participant in the breach. Start
with Schornack’s testimony. Recall he was the Tekstar representative who first
engaged and negotiated with Free Conferencing. When asked specifically if “Free
Conferencing [did] anything to induce, persuade, or encourage Tekstar to do business
with Free Conferencing,” he replied: “No.” Tr. 585. And when asked if Free
Conferencing did anything “more than passively provide Tekstar with information
about Free Conferencing’s business,” he, again, replied: “No, I don’t think they did
anything other than that.” Tr. 585.

       Critically, nothing in the district court’s findings of fact contradicts this
testimony. As the district court recounts, the genesis of the Tekstar-Free
Conferencing relationship was Tekstar’s decision to seek out more FCSC
relationships in Las Vegas. The FCSC model had already proven quite lucrative for
Tekstar for approximately three years at that point. And when Free Conferencing was
ultimately added to Tekstar’s roster of FCSCs, as a sign of Tekstar’s familiarity with
the practice, it was Tekstar’s form contract—which, as a standard term, provided that
Tekstar would not charge for telecom services—that was signed.14 Further, when the
business dynamics changed—when IXCs began demanding below-tariff
settlements—Tekstar modified the terms of the contract with Free Conferencing to
be more favorable to Tekstar. Given Schornack’s testimony and the findings of the


      14
        As the district court notes, Free Conferencing also had its own form contract,
but that was not used.
                                        -19-
district court, we cannot escape the conclusion that Tekstar was, at the least, a
“willing participant[]” in its breach of the Qwest tariffs with Free Conferencing.
Furlev, 325 N.W.2d at 27.

      In sum, the record is devoid of legally sufficient evidence that Free
Conferencing induced Tekstar to enter into their initial contract. Qwest’s claim,
therefore, fails under Minnesota law.

       Often, in diversity cases, federal courts are tasked with interpreting and
applying state law in areas in which there is little instructive state case law to draw
from. But that is not the case here. Minnesota’s highest court has spoken about what
Minnesota requires for an intentional procurement of a breach necessary to sustain
a tortious interference claim. We are duty-bound to follow the Minnesota Supreme
Court.

       Mindful of the duty of a federal court sitting in diversity to apply the law of the
state as it is, not as the court may wish it to be, I would reverse the district court’s
judgment against Free Conferencing.
                          ______________________________




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