11.2 Conspiracy

• Library: Employment Law in Virginia (Virginia CLE) (2020 Ed.)

11.2 CONSPIRACY

11.201 Common Law Conspiracy. Under Virginia's common law, a civil conspiracy is a combination of two or more persons, by some concerted action, to accomplish a criminal or unlawful purpose or to use criminal or unlawful means to accomplish some purpose, not in itself criminal or unlawful. ¹ Although there can be no conspiracy to commit an act that the law

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allows, the Virginia Supreme Court has identified noncriminal unlawful acts, such as breach of contract and torts, that can form the basis for a claim for common law civil conspiracy. ² The court, however, has emphasized that the "gist of the civil action of conspiracy is the damage caused by the acts committed in pursuance of the formed conspiracy and not the mere combination of two or more persons to accomplish an unlawful purpose or use unlawful means." ³ Importantly, "[a]ll parties to a conspiracy are liable for all overt acts illegally done in pursuance thereof whether active participants or not." ⁴ In fact, "[t]he object of a civil conspiracy claim is to spread liability to persons other than the primary tortfeasor." ⁵ However, "an action for civil conspiracy will not lie unless the predicate unlawful act independently imposes liability upon the primary wrongdoer." ⁶

11.202 Statutory Conspiracy.

A. In General. The Virginia statutory cause of action for conspiracy to injure another in trade, business, or profession, ⁷ although often invoked, is seldom successful in employment cases. The statute is a potentially formidable weapon for employees because this statutory claim, like certain federal statutes, holds out the promise of treble damages as well as attorney fees to prevailing plaintiffs.

Section 18.2-500 of the Virginia Code, although a part of the criminal code, expressly creates a private civil cause of action in favor of any person

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who has been injured by a violation of section 18.2-499. Under section 18.2-499, it is a Class 1 misdemeanor to "combine, associate, agree, mutually undertake or concert together for the purpose of . . . willfully and maliciously injuring another in his reputation, trade, business or profession by any means whatever." ⁸ Section 18.2-499(B) makes it independently unlawful to attempt such a conspiracy.

Although the plain terms of the statute appear to cover injury to business and professional reputation, which would logically seem to include injury to an employee's employment interests, the federal courts in the commonwealth have consistently held that the statutory conspiracy provisions do not create a cause of action for injury to an individual's employment interests. ⁹ The Fourth Circuit Court of Appeals writes of an "unbroken line of federal district cases," beginning in 1976, holding that the statute cannot be applied to recover damages for injury to employment interests. ¹⁰ Pertinent federal cases supporting this view include Shirvinski v. United States Coast Guard, ¹¹ Rogers v. Deane, ¹² Byrge v. Virginia State University Board of Visitors, ¹³ Conyers v. Virginia Housing Development Authority, ¹⁴ Baylor v. Comprehensive Pain Management Centers, ¹⁵ Jordan v. Hudson, ¹⁶ Campbell v. Board of Supervisors, ¹⁷ and Moore v. Allied Chemical Corp. ¹⁸

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The District Court for the Western District of Virginia has held that only two classes of plaintiffs are entitled to assert claims under the statutory conspiracy provisions: (i) corporations and (ii) individuals who own and operate a business. ¹⁹

The Virginia Supreme Court appears to agree with the federal courts. In Andrews v. Ring, ²⁰ the defendants argued that "the scope of the conspiracy statute is limited to injury to business interests and does not extend to injury to personal reputation even in the context of employment." ²¹ Noting that "the conspiracy statute was once codified as part of the antitrust laws of the Commonwealth," the court concluded that "the origin of Code [sections] 18.2-499 and B500 establishes that they apply to business and property interests, not to personal or employment interests." ²² At issue in this case was the word "reputation." The court stated that "[w]ithin the statute, its association with 'trade, business or profession' requires the exclusion of personal reputation and interest in employment from the scope of the statute's coverage." ²³

The question of whether it may be unlawful under the statute to entice an employee of a competitor to change jobs is more open. "A conspiracy merely to breach a contract that does not involve an independent duty arising outside the contract is insufficient to establish a civil claim under Code

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[section] 18.2-500." ²⁴ Clearly, if the employee is employed at will and no wrongful means are shown, the conduct is not actionable. ²⁵ However, while the non-performance of a contract does not qualify as an unlawful act for purposes of a conspiracy claim, the Virginia Supreme Court has found that "tortious interference with contract and tortious interference with business expectancy each constitute the requisite 'unlawful act' to proceed on a business conspiracy claim under Code §§ 18.2-499 and -500." ²⁶

B. Elements of Conspiracy. To recover in an action for conspiracy under this statute, a plaintiff must prove (i) there were a combination of two or more persons; (ii) who acted together for the purpose of injuring plaintiff's business; (iii) willfully and maliciously; and (iv) damage resulted. ²⁷ More specifically, "[t]o prove a violation of this statute, a plaintiff must show that the conspirators acted with malice, meaning that 'the defendant acted intentionally, purposefully, and without justification.'" ²⁸ Moreover, "Code

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§ 18.2-500 requires a finding of some compensatory damages as an element of determining liability under the statute." ²⁹

C. Standard of Proof. Proof of civil conspiracy must be shown by clear and convincing evidence. ³⁰

D. Intra-Corporate Conspiracies. Most "conspiracies" asserted by terminated employees allege that one or more co-employees of the employing corporation conspired against the plaintiff. In these circumstances, the doctrine that a corporation may not conspire with itself may afford a complete defense.

The general rule is that a corporation is not legally capable of conspiring with itself or with its own agents or employees. The Virginia Supreme Court has held, in a case arising under this conspiracy statute, that employees acting within the scope of their employment do not constitute persons separate from their employer. ³¹ Accordingly, it is legally impossible for that employee to conspire with his or her employer. ³² Employers seeking to defend on this ground carry the burden of proving the agency relationship. ³³

An exception to the general rule does exist. If the managers, directors, or officers of a corporation are shown to have been acting from an

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independent and personal motive, they may be treated as entities separate and distinct from the corporate employer. ³⁴ "The point of the exception is that there can be no unity of purpose between a corporation and its agents if the agents have a personal stake independent of the interests of the corporation." ³⁵ Under these circumstances, the employees are legally capable of conspiring with the employer. ³⁶ In practice, this "personal stake exception" to the intra-corporate conspiracy doctrine is seldom applied, and some courts suggest that such an exception is not recognized in Virginia. ³⁷

A parent corporation and its wholly owned subsidiary are also legally incapable of conspiring to violate this statute. ³⁸

E. Malice Requirement. A conspiracy is actionable under the statute only to the extent that there is some appreciable intent to injure the plaintiff "willfully and maliciously." Sections 18.2-499 and 18.2-500 of the Virginia Code do not require that the plaintiff show that a conspirator's primary and overriding purpose was to injure another in his trade or business. ³⁹ Instead, the statutes require proof of legal malice, that is, proof that the

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defendant acted intentionally, purposefully, and without lawful justification. ⁴⁰ Actual malice is not required. ⁴¹

F. Unlawful Means or Unlawful Purpose. The object of the conspiracy must be unlawful because it is impossible to conspire to do that which the law allows. ⁴² Indeed, "[b]ecause 'the basis of the [Conspiracy Act] action is the wrong which is done under the conspiracy,' . . . [a plaintiff] must point to a violation of a legally protected interest in order to succeed in its suit.'" ⁴³ Specifically, an allegation of conspiracy must include either an unlawful act or unlawful purpose. ⁴⁴

G. Damages.

1. Treble Damages. A plaintiff "may sue therefor and recover three-fold the damages by him sustained." ⁴⁵ This treble damages provision tracks similar provisions under the federal antitrust and RICO statutes. The

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Virginia Supreme Court has confirmed that treble damages may be awarded in an equity proceeding in addition to injunctive relief ⁴⁶ and that the treble damages awarded in a statutory conspiracy case are not subject to the $350,000 limitation on punitive damages found in section 8.01-38.1 of the Virginia Code. ⁴⁷

2. Attorney Fees. A successful plaintiff may recover the costs of suit, "including a reasonable fee to plaintiff's counsel." ⁴⁸

The fact that attorney fees are recoverable as part of "costs" rather than as an element of damages is important when claims are brought in federal court, since the "cost-shifting" provisions of the offer of judgment rule ⁴⁹ apply to attorney fees "as part of costs" under the Virginia conspiracy statute. ⁵⁰ Unlike many federal attorney fee statutes, the Virginia civil conspiracy statute does not...