Conducting business in Virginia can be a cutthroat affair. Our capitalist system demands that firms compete with each other in price, quality, and technology, and the most innovative company will often win the largest number of lucrative government contracts. Unfortunately, some contractors utilize unfair, unethical, or illegal methods in the name of competition. Virginia is one of several states that have enacted “business conspiracy” statutes designed to discourage and punish some of these practices. The statute is very popular with Virginia lawyers, due in no small part to its provisions allowing recovery of both treble damages and attorneys fees.
In Turbomin AB v. Base-X, Inc., a case pending in the federal court sitting in Lynchburg, the plaintiff (Turbomin) had a contract to perform services for Base-X, a government contractor located near Lexington. In winning this contract, Turbomin beat out another defendant in the case, Lindstrand Technologies Ltd. Eventually, however, Base-X terminated its contract with Turbomin and refused to pay the balance allegedly owed to Turbomin. Turbomin’s officers suspected that disgruntled Lindstrand employees convinced Base-X employees to breach the contract. Invoking Virginia’s business conspiracy statute, Turbomin alleges that Base-X and Lindstrand “conspired to interfere with a business reputation”.
Judge Norman Moon, in granting the plaintiff’s motion to add a business conspiracy count to its complaint, clarified the requirements of this Virginia law. In order to win this type of conspiracy claim, a plaintiff must prove three things: that the defendants (1) engaged in a concerted action, (2) with legal malice, (3) resulting in damages. Judge Moon explained that a “concerted action” is any association or agreement among the defendants to engage in the conduct that caused the plaintiff injury. Legal malice, the court held, requires showing “that the defendant acted intentionally, purposefully, and without lawful justification” to injure the plaintiff. Judge Moon also observed that while a plaintiff need not prove that the defendant’s “primary and overriding purpose” in forming the conspiracy was to injure the plaintiff’s reputation, trade, or business, such must be at least one of the purposes of the conspiracy.