8.3 STATUTORY BUSINESS CONSPIRACY
8.301 Statutory Language—Civil Conspiracy. Historically, at common law, "[a] conspiracy or combination to injure a person in his trade or occupation [was] indictable." 28 The General Assembly later enacted a conspiracy statute, today known as statutory or business conspiracy. 29 Found in title 18.2 of the Virginia Code, the statute makes it 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." 30
Although part of the criminal code, section 18.2-500 expressly creates a private civil cause of action in favor of any person who has been injured by a violation of section 18.2-499. This provision has made the business conspiracy statute a favorite claim in business litigation because it allows the recovery of treble damages and the costs of the suit including attorney fees. 31 The statute also permits injunctive relief. 32
8.302 Statutory Language—Attempted Conspiracy. Section 18.2-499(B) provides that
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[a]ny person who attempts to procure the participation, cooperation, agreement or other assistance of any one or more persons to enter into any combination, association, agreement, mutual understanding or concert prohibited in subsection A of this section shall be guilty of a violation of this section and subject to the same penalties set out in subsection A. 33
The courts have held that this provision of the statute makes it unlawful to attempt a conspiracy for the purpose of willfully and maliciously injuring another in their trade, business, or profession. 34 An attempt action is viable even where a conspiracy claim under section 18.2-499(A) fails due to a lack of a multiplicity of actors. 35 For this reason, one pleading a business conspiracy claim should carefully consider pleading an attempt claim in the alternative.
8.303 Scope of Conspiracy Statute.
A. Applicable to Business and Property Interests. In Andrews v. Ring, 36 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." 37 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 -500 establishes that they apply to business and property interests, not to personal or employment interests." The court also held that the statutory construction maxim of noscitur a sociis also supported this conclusion. "Here the word 'reputation' is at issue. Within the statute, its association
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with 'trade, business or profession' requires the exclusion of personal reputation and interest in employment from the scope of the statute's coverage." 38
The court noted that Virginia's federal courts have reached similar holdings. 39 The Fourth Circuit Court of Appeals has noted that there is an "unbroken line of federal district cases" beginning in 1976 holding that "the federal district courts in Virginia have consistently held that a right of action is "afforded [under these statutes] only when malicious conduct is directed at one's business, not one's person," and that the statute "focuses upon conduct directed at property, i.e., one's business" and applies only to "conspiracies resulting in business-related damages." 40
B. Standing. The United States 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. 41 The Eastern District has noted that the statute's protection extends to any business entity, even sole proprietorships. 42
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C. Breach of Contract. Further, a statutory business conspiracy claim cannot be based on breach of contract. According to the Supreme Court of Virginia, "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 § 18.2-500." 43 In its decision, the court explained that "[n]on-performance of a contractual promise does not, without more, create a basis for recovery in tort. Likewise, we do not believe it can rise to the level of an 'unlawful act' under Code § 18.2-500 for a similar reason: the duty of performance under the contract springs solely from the agreement; the duty is not imposed extrinsically by statute, whether criminal or civil, or independently by common law. Thus, nonperformance, without more, is not an 'unlawful act.'" 44
8.304 Pleading a Claim for Conspiracy. "[T]o survive demurrer, an allegation of conspiracy, whether criminal or civil, must at least allege an unlawful act or an unlawful purpose." 45 To survive a motion to dismiss, a plaintiff must allege the existence of the elements of the claim in more than "mere conclusory language." 46 For example, in Mutual Funding, Inc. v. Collins, 47 the court dismissed as insufficient an employer's civil conspiracy claim which alleged that several former employees had written a solicitation letter to one of its clients as an "example of activities" underlying the claim without specifying any of the other acts allegedly taken by the employees to disrupt the business of their former employer. The court held that an allegation
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of conspiracy is "inadequate unless it sets forth some core facts to support the claim." 48
In Stone Castle Financial, Inc. v. Friedman, Billings, Ramsey & Co., 49 the court dismissed Stone Castle's common law conspiracy claim alleging that Friedman, Billings, Ramsey & Co. (FBR), which it had hired to assist in financing the purchase of a software company, conspired to assist a competitor in purchasing the company first. Stone Castle alleged that FBR had done so "maliciously and intentionally, for the purpose of interfering with and injuring Stone Castle's business." The court found that these conclusory allegations did not state a valid claim for common law conspiracy because they did not show "how, when or where the alleged conspiracy was formed or accomplished." 50
The allegation of some facts that support the elements of the claim is sufficient in the eyes of the Fourth Circuit, 51 although some district courts have held that "[c]laims of statutory business conspiracy impose a heightened pleading standard." 52
8.305 Elements of a Conspiracy Claim. To recover under the business conspiracy statute, a plaintiff must prove that there was (i) a combination of two or more persons; (ii) for the purpose of willfully or
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maliciously injuring a plaintiff in reputation, trade, business, or profession; (iii) resulting in damage to the plaintiff. 53
A. Combination of Two or More Persons. A civil conspiracy is "an unlawful combination of two or more persons to do that which is contrary to law, or to do that which is wrongful and harmful towards another per-son." 54 An actual combination, namely, a concerted action, is required under both the common law and section 18.2-499(A) of Virginia's conspiracy stat-ute. 55 "There is no cause of action under [section 18.2-499(A)] for independent action taken by two parties." 56
As a general rule, a single entity cannot conspire with itself. 57 Thus, a corporation, like an individual, cannot conspire with itself through its own agents or employees unless the employees were acting outside the scope of their employment. 58 Similarly, a corporation cannot conspire with its wholly owned subsidiary, 59 and partners acting within the scope of partner
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ship affairs cannot conspire since only one entity exists. 60 This rule of law is based on the intracorporate immunity doctrine, which is discussed in more detail as a defense in paragraph 8.402 of this chapter.
B. The Malice Requirement—"Willfully or Maliciously Injuring Plaintiff in His Business." The evolution of the malice standard from an actual malice standard to a legal malice standard through a trilogy of cases since 1986 has been key to the rise in popularity of claims for statutory conspiracy. The first case addressing the issue was Greenspan v. Osheroff, 61 in which the Virginia Supreme Court articulated the standard as one of actual malice. Osheroff, a nephrologist, sued Greenspan, a doctor employed by him, for attempting to conspire with Osheroff's staff and others to destroy his practice. The evidence showed that Greenspan (i) was a fiduciary during a period when Osheroff suffered from depression and was out of work; (ii) abused the fiduciary relationship to facilitate the opening of his own practice; (iii) had Osheroff removed as medical director; (iv) colluded with Osheroff's staff, who refused to work with him on his return; (v) caused Osheroff's privileges to be suspended by claiming that he was unfit to practice medicine; and (vi) set up a competing practice and asked Osheroff's patients to sign a document stating that they wanted Greenspan as their doctor while they were taking dialysis. Not surprisingly, a verdict was returned in Osheroff's favor for $554,412 in treble damages.
Greenspan claimed on appeal that there could be no finding of actual malice where he had the legitimate motive of wanting to help his patients and promote his own practice, namely, where the defendant acted on mixed motives. The Virginia Supreme Court disagreed, holding that mixed motives is no defense, and adopted a "primary overriding purpose" standard:
[W]hen the factfinder is satisfied from the evidence that the defendant's primary and overriding purpose is to injure his victim in his reputation, trade, business or profession, motivated by hatred, spite, or ill-will, the element of malice required by 18.2-499 is established, notwithstanding any additional motives entertained by
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