Conspiracy (civil)
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A civil conspiracy is a form of
conspiracy A conspiracy, also known as a plot, is a secret plan or agreement between persons (called conspirers or conspirators) for an unlawful or harmful purpose, such as murder or treason, especially with political motivation, while keeping their agree ...
involving an agreement between two or more parties to deprive a third party of legal rights or deceive a third party to obtain an illegal objective.Encarta: Conspiracy
. 2009-10-31.
A form of
collusion Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to att ...
, a conspiracy may also refer to a group of people who make an agreement to form a partnership in which each member becomes the agent or partner of every other member and engage in planning or agreeing to commit some act. It is not necessary that the conspirators be involved in all stages of planning or be aware of all details. Any voluntary agreement and some
overt act In criminal law, an overt act is the one that can be clearly proved by evidence and from which criminal intent can be inferred, as opposed to a mere intention in the mind to commit a crime. Such an act, even if innocent ''per se'', can potentiall ...
by one conspirator in furtherance of the plan are the main elements necessary to prove a conspiracy. A conspiracy may exist whether legal means are used to accomplish illegal results, or illegal means used to accomplish something legal.Conspiracy Law & Legal Definition
/ref> "Even when no crime is involved, a civil action for conspiracy may be brought by the persons who were damaged." In
tort law A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
the legal elements necessary to establish a civil conspiracy are substantially the same as for establishing a
criminal conspiracy In criminal law, a conspiracy is an agreement between two or more persons to commit a crime at some time in the future. Criminal law in some countries or for some conspiracies may require that at least one overt act be undertaken in furtherance ...
, i.e. there is an agreement between two or more
natural person In jurisprudence, a natural person (also physical person in some Commonwealth countries, or natural entity) is a person (in legal meaning, i.e., one who has its own legal personality) that is an individual human being, distinguished from the bro ...
s to break the law at some time in the future or to achieve a lawful aim by unlawful means. The criminal law often requires one of the conspirators to take an overt step to accomplish the illegal act to demonstrate the reality of their intention to break the law, whereas in a civil conspiracy, an overt act towards accomplishing the wrongful goal may not be required. Etymologically, the term comes from
Latin Latin (, or , ) is a classical language belonging to the Italic branch of the Indo-European languages. Latin was originally a dialect spoken in the lower Tiber area (then known as Latium) around present-day Rome, but through the power of the ...
''con-'' "with, together", and ''spirare'' "to breathe".


In United States business litigation

Business litigation often involves the use of conspiracy
lawsuit - A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to a civil actio ...
s against two or more
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
s. Often joined in the lawsuit as
defendant In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case. Terminology varies from one jurisdic ...
s are the officers of the
companies A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared go ...
and outside
accountant An accountant is a practitioner of accounting or accountancy. Accountants who have demonstrated competency through their professional associations' certification exams are certified to use titles such as Chartered Accountant, Chartered Certifi ...
s, attorneys, and similar fiduciaries. In many states, officers and directors of a corporation cannot engage in a conspiracy with the corporation unless acting for their private benefit independent of any benefit to the corporation. Civil conspiracy law often takes the form of
antitrust Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
lawsuits, usually litigated in federal court, where, for example, a
plaintiff A plaintiff ( Π in legal shorthand) is the party who initiates a lawsuit (also known as an ''action'') before a court. By doing so, the plaintiff seeks a legal remedy. If this search is successful, the court will issue judgment in favor of the p ...
may seek treble
damages At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at ...
for overpayments caused by
price-fixing Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
above a market rate. The federal
Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. ...
provides both civil and criminal penalties. Other agreements among businesses and their agents for
group boycott In competition law, a group boycott is a type of secondary boycott in which two or more competitors in a relevant market refuse to conduct business with a firm unless the firm agrees to cease doing business with an actual or potential competitor ...
s, to
monopolize In United States antitrust law, monopolization is illegal monopoly behavior. The main categories of prohibited behavior include exclusive dealing, price discrimination, refusing to supply an essential facility, product tying and predatory pricing. ...
, and to set predatory prices with intent to drive a small competitor out of business, would be actionable. Conspiracies in violation of the federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934 form another area where intense civil and criminal lawsuits occur over the existence or non-existence of an alleged conspiracy. Both the
Securities Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC) and the
Department of Justice A justice ministry, ministry of justice, or department of justice is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...
bring legal actions for conspiracies to violate the securities laws. For example, a regional bank called PNC Financial Services Group Inc. through a subsidiary agreed, in June 2003, to pay $115 million in civil fines and restitution to settle the SEC's allegations of securities fraud. The subsidiary was accused of conspiracy to violate securities laws by transferring $762 million in troubled loans and investments to off-balance-sheet entities in 2001. In that case, the Justice Department deferred prosecution of PNC, citing its cooperation in a related investigation. Similarly, the civil litigation against the tobacco companies to recover health care costs, alleges a conspiracy under the
Medical Care Recovery Act Medicine is the science and Praxis (process), practice of caring for a patient, managing the diagnosis, prognosis, Preventive medicine, prevention, therapy, treatment, Palliative care, palliation of their injury or disease, and Health promotion ...
, , et seq. (Count One), the Medicare Secondary Payer provisions of Subchapter 18 of the Social Security Act, (b)(2)(B)(ii) & (iii) (Count Two), and the civil provisions of the
Racketeer Influenced and Corrupt Organizations The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was en ...
("RICO") , to deceive the American public about the health effects of
smoking Smoking is a practice in which a substance is burned and the resulting smoke is typically breathed in to be tasted and absorbed into the bloodstream. Most commonly, the substance used is the dried leaves of the tobacco plant, which have bee ...
.


"Plain Language" jury instructions

Often the modern civil law of conspiracy is described in "plain language" jury instructions. The standard
California California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
jury instruction Jury instructions, directions to the jury, or judge's charge are legal rules that jurors should follow when deciding a case. They are a type of jury control procedure to support a fair trial. Description Jury instructions are the set of legal ...
for conspiracy is governed by Rule 2.1050 of the California Rules of Court, The new California jury instructions are designated as the “official instructions for use in the state of California.” It is not mandatory for the California judges to use them; but it is strongly encouraged. An example of some of the "plain language" California civil instructions on the essential factual elements of conspiracy reads as follows (with fictional names placed in the blanks in the jury instruction form):
A conspiracy is an agreement between two or more persons to commit a wrongful act.
Such an agreement may be made orally or in writing or implied by the conduct of the parties.
Plaintiff Smith, Inc., claims that it was harmed by Defendant Jones Corp. for refusing to sell widgets to Plaintiff Smith, Inc. with intent to unreasonably injure competition and that Defendant Brown & Associates is also liable for the harm because it was part of the conspiracy with Jones Corp. to unreasonably injure competition under the California antitrust laws.
The facts of each case can vary widely as to exact nature of the underlying scheme. In the above example, a common
fact pattern A fact pattern or fact situation is a summary of the key facts of a particular legal case, presented without any associated discussion of their legal consequences. For example, at common law, "Murder is the killing of another human being with malic ...
could be that widgets are necessary for Smith, Inc. to manufacture its product, and Brown & Associates is a competitor of Smith, Inc. How the conspirators entice one another into the scheme also varies. In the above example Brown & Associates could promise Jones, Corp. kickbacks from the additional profits it hopes to make if Smith, Inc is forced out of business because it lacks the necessary widgets, or Jones Corp could entice Brown into a conspiracy with the prospect of increased profits, to be shared with Jones for withholding widgets from Smith.


In English law

The
tort A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
of conspiracy requires there to be knowledge of the relevant circumstances and of the agreement made. Thus, as a precondition to
corporate liability Corporate liability, also referred to as liability of legal persons, determines the extent to which a company as a legal person can be held liable for the acts and omissions of the natural persons it employs and, in some legal systems, for those o ...
, it must be possible to
attribute Attribute may refer to: * Attribute (philosophy), an extrinsic property of an object * Attribute (research), a characteristic of an object * Grammatical modifier, in natural languages * Attribute (computing), a specification that defines a prope ...
the relevant employee's or agent's knowledge to the corporation. There are two possible legal approaches: *as a matter of
agency law The law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and non-contractual fiduciary relationships that involve a person, called the agent, that is authorized to act on behalf of another (called the ...
, the acts and omissions constituting the alleged conspiracy must have been carried out within the actual or ostensible authority of the agent; or *as a matter of
vicarious liability Vicarious liability is a form of a strict, secondary liability that arises under the common law doctrine of agency, ''respondeat superior'', the responsibility of the superior for the acts of their subordinate or, in a broader sense, the res ...
the acts and omissions must have been carried out in and during the course of the employment. There is little difficulty when the claim is that the company either conspired with a second company or with at least two natural persons. The requisite knowledge can be attributed under either head as appropriate. But there is a problem under the first heading when
fraud In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compens ...
is involved because there is a clash of authority. '' Lloyd v Grace, Smith & Co'' 912AC 716 held that a Principal may be liable where the Agent commits a fraud within actual or apparent authority, whereas in '' In re Hampshire Land Company''
896 __NOTOC__ Year 896 ( DCCCXCVI) was a leap year starting on Thursday (link will display the full calendar) of the Julian calendar. Events By place Europe * February – King Arnulf of Carinthia invades Italy at the head of an East ...
2 Ch 743, it was held that the knowledge and, sometimes, the conduct of an Agent acting fraudulently so as to cause loss to the Principal will not be imputed to the Principal. In theory, vicarious liability may be of more assistance in that it is attributing the wrong done by one (natural) person to another (fictitious) but, in '' Belmont Finance Corporation v Williams Furniture Ltd''
979 Year 979 ( CMLXXIX) was a common year starting on Wednesday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * March 24 – Second Battle of Pankaleia: An Ibero-Byzantine expeditionary ...
Ch 250, the ''Hampshire Land'' agency line of authority was preferred. Belmont, a company in liquidation, sued a number of defendants, including the majority of its own directors, for conspiracy to procure Belmont to buy shares in another company at a gross overvalue. The purpose of this plan was to fund the acquisition of shares in Belmont itself by some of the defendants. Foster J. struck out the claim on the basis that Belmont was itself a party to the conspiracy. On
appeal In law, an appeal is the process in which cases are reviewed by a higher authority, where parties request a formal change to an official decision. Appeals function both as a process for error correction as well as a process of clarifying and ...
, Buckley LJ. said: :But in my view knowledge should not be imputed to the company, for the essence of the arrangements was to deprive the company improperly of a large part of its assets. As I have said, the company was a victim of the conspiracy. I think it would be irrational to treat the directors, who were allegedly parties to the conspiracy, notionally as having transmitted this knowledge to the company. Because Belmont could only be a party to the conspiracy if knowledge was imputed, the Court of Appeal insulated it from the knowledge of its directors even though those directors, with that knowledge, made relevant decisions at board meetings and attached the company seal to the relevant documents. To that extent, liability in conspiracy is different from the standard vicarious liability situations in which, say, a company will be deemed to know that vehicles or machinery have not been properly maintained or that a service has been negligently delivered.


See also

* Conspiracy (crime) *
Conspiracy (disambiguation) A conspiracy is a secret act to obtain some goal, usually understood with negative connotations. Conspiracy may also refer to: Music * Conspiracy (band), a progressive rock band founded by Billy Sherwood and Chris Squire * ''Conspiracy'' (Junio ...
*
Hub-and-spoke conspiracy A hub-and-spoke conspiracy (or hub-and-spokes conspiracy) is a legal construct or doctrine of United States antitrust and criminal law. In such a conspiracy, several parties ("spokes") enter into an unlawful agreement with a leading party ("hub"). ...


References

* Department of Trade & Industry
"Company Law Review: Attribution of Liability"
*
U.S. Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...

"Antitrust Enforcement and the Consumer"
{{DEFAULTSORT:Conspiracy (Civil) Tort law