Articles Posted in Torts

One of your top executives puts in his notice that he is leaving to join your fiercest competitor. Fortunately, he signed a noncompete that restricts him from doing just that. Your lawyer sends him a letter reminding him of his contractual obligations to your company, of course, but also recommends that you put the new employer on notice of the noncompete and threaten a tortious interference action against the company should it proceed to hire your employee. After all, he advises, the company has deeper pockets than the executive, and if the competitor hires him with knowledge of his contractual obligations to his existing employer, they are automatically on the hook for tortious interference. Right? Wrong, says the Fourth Circuit.

Similar facts were presented in Discovery Communications, LLC v. Computer Sciences Corporation. Discovery had an employment agreement with its chief accounting officer, Thomas Colan, which required Colan to remain with Discovery for a specific term. Discovery alleged that Colan breached his agreement by quitting his job prior to the expiration of the term to go work for CSC. Discovery alleged that it put CSC on notice of the employment agreement after CSC offered Colan employment but before the effective date of Colan’s resignation. Discovery argued that CSC tortiously interfered with the contract by hiring Colan after being put on notice of the employment agreement. The district court held that was not enough, and the Fourth Circuit agreed, affirming the dismissal of the case.
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Due Process is satisfied when a non-resident has sufficient minimum contacts with a state such that exercise of jurisdiction over him does not offend traditional notions of fair play and substantial justice. The minimum contacts analysis focuses on the relationship between the defendant, the forum and the litigation, and the defendant’s conduct must create a substantial connection with the forum state. The relationship must arise out of contacts that defendant himself creates with the forum state, and the contact must be with the forum state itself rather than merely with persons who reside there. The United States Supreme Court recently addressed these concepts in Walden v. Fiore.

Anthony Walden was working as a DEA agent at the Atlanta airport when, after using a drug-sniffing dog to perform a sniff test, he seized almost $97,000 in cash that Nevada residents Gina Fiore and Keith Gipson claimed to have won gambling in San Juan. Walden later helped draft an affidavit to establish probable cause. Fiore and Gipson sued Walden in Nevada alleging violation of their Fourth Amendment rights. Specifically, they asserted that Walden violated their rights by (1) seizing the cash without probable cause; (2) keeping the money after concluding it did not come from drug-related activity; (3) drafting and forwarding a probable cause affidavit to support a forfeiture action while knowing the affidavit contained false statements; (4) willfully seeking forfeiture while withholding exculpatory information; and (5) withholding that exculpatory information from the United States Attorney’s Office.
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Last September, I noted the case of Dunlap v. Cottman Transmissions Systems, LLC, in which the Fourth Circuit certified two questions to the Virginia Supreme Court seeking clarification with respect to Virginia’s business conspiracy statute and the applicable statute of limitations for tortious interference claims. The Virginia Supreme Court has now answered those questions, holding that causes of action for tortious interference with contract and tortious interference business expectancy qualify as the requisite “unlawful act” to proceed on a business conspiracy claim under Va. Code §§ 18.2-499 and -500 because both claims are predicated on an independent common law duty arising outside of contract. The court also held that claims for tortious interference are governed by § 8.01-243(B)’s five-year statute of limitations because such claims involve injury to property rights.

James Dunlap sued Cottman Transmission Systems, LLC, and Todd Leff for tortious interference with contract, tortious interference with business expectancy, and business conspiracy in violation of Virginia Code § 18.2-499 and § 18.2-500. The claims arose from Dunlap’s franchise agreements with AAMCO Transmissions, Inc. When a new owner of AAMCO (who already owned a controlling interest in Cottman) sought to convert Cottman Franchises into AAMCO franchises, Dunlap’s franchises were closed, and Dunlap claimed that the closings were due to a conspiracy between Cottman and others.
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Readers may remember Tareq and Michaele Salahi from the national attention they gained in November 2009 when they crashed a White House state dinner in honor of India’s Prime Minister Manmohan Singh or from their run on the reality show “The Real Housewives of D.C.” The Salahis are no stranger to litigation, having gone through a messy divorce in 2012. Most recently, the Supreme Court of Virginia heard Mr. Salahi’s appeal from a decision of the Circuit Court of Warren County regarding claims against the couple’s former agent, DD Entertainment, LLC.

According to Mr. Salahi, he and his then wife had a verbal agreement to appear on reality T.V. shows, talk programs and other media outlets to promote their entertainment partnership, “The Salahis,” and they were to use the profits from the partnership for their mutual benefit. DD Entertainment acted as the Salahis’ agent and procured additional projects for them. Mr. Salahi alleged that DD Entertainment was aware of the couple’s business partnership and used improper means to interfere with the partnership by encouraging Mrs. Salahi to leave the enterprise and become the adulterous mistress of Journey guitarist Neal Schon in violation of Virginia’s adultery statute, Virginia Code § 18.2-365.
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Virginia recognizes a cause of action for “intentional infliction of emotional distress,” but the claim is not favored and is difficult to maintain. A plaintiff alleging a claim for intentional infliction of emotional distress in Virginia must allege in his complaint all facts necessary to establish the cause of action in order to withstand challenge on a motion to dismiss or demurrer. The elements of a prima facie case are (1) intentional or reckless conduct; (2) outrageous and intolerable conduct; (3) a causal connection between the alleged wrongful conduct and the emotional distress; and (4) severe distress.

For conduct to satisfy the “outrageous and intolerable” element, the alleged conduct must be “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” Russo v. White, 241 Va. 23, 27 (1991). In other words, to state a claim, the conduct at issue must violate generally accepted standards of decency and morality; mere bad manners are not enough.

The latest example of an unsuccessful attempt to pursue a claim for IIED is the case of Melaney Dao v. Paul M. Faustin, a case involving allegations of a hostile work environment. According to the allegations of the complaint, the plaintiffs were former employees of Infused Solutions, LLC, where defendant Paul Faustin was the Chief Financial Officer. Dao claimed that on one occasion in the beginning of 2017, Faustin grabbed her hand while they were riding in a car together. She shook her hand away and told him not to touch her, but he persisted in a course of conduct involving near-daily unwanted hugs. A second plaintiff also complained of unwanted hugs. The court found that the alleged behavior was certainly “offensive, unacceptable, and wrongful,” but held that the conduct was not sufficiently “extreme or outrageous” to support a claim for IIED.

Res judicata” is Latin for “the thing has been judged.” It basically means that once you sue someone and obtain a result–win or lose–the matter is over and you can’t sue the same person again for the same harm. It’s like the civil equivalent of double jeopardy. The doctrine is designed to conserve judicial resources, deter multiple lawsuits, and promote reliance on judicial decisions. A party claiming that a suit is barred by res judicata must establish: (1) a previous final judgment on the merits; (2) an identity of the cause of action in both suits; and (3) an identity of parties or their privies in the two suits.

A recent example is provided by Nathan v. Takeda, in which the United States Court of Appeals for the Fourth Circuit affirmed the district court’s dismissal of a defamation claim based on res judicata grounds.

In an earlier case, Noah Nathan sued his employer, Takeda Pharmaceuticals America, for discrimination and retaliation under Title VII. After proceeding to judgment in that case, he filed a second suit, this time including several Takeda employees as defendants and changing his legal theory to defamation, conspiracy, and negligent supervision and retention. Nathan admitted the existence of a prior final judgment on the merits, but argued that his second case should have been allowed to proceed because the causes of action were different and different parties were involved.

Sometimes a court must decide a matter that turns on the law of another jurisdiction. If the other jurisdiction’s law is unclear, the deciding court can make a formal request to its sister court asking that court to clarify an issue. The Fourth Circuit recently invoked this procedure and certified two questions to the Virginia Supreme Court: one involving application of Virginia’s business conspiracy statute and another regarding the statute of limitations applicable to tortious interference claims.

James Dunlap operated two AAMCO Transmission franchises for over thirty years. When an asset-management company that owned a large share of AAMCO competitor Cottman Transmission Systems purchased AAMCO, Dunlap found his franchises on the chopping block as part of a plan to eliminate overlap among the businesses by converting Cottman franchises to AAMCOs and closing some franchises. Dunlap claimed that AAMCO attempted to terminate his franchises for minor violations as a pretext to force him out of business. Dunlap settled his dispute with AAMCO and was allowed to continue operations. Dunlap then brought an action against Cottman and new AAMCO principal Todd Leff alleging a conspiracy to force him out of business. The complaint, filed in Chesapeake Circuit Court and later removed to federal court, raised claims for violation of Virginia’s business conspiracy statute, tortious interference with contract, and tortious interference with business expectancy.

At one time, established case law indicated that conspiring to procure a breach of contract was actionable under Virginia’s business conspiracy statute. However, the Virginia Supreme Court shifted away from that approach in Station #2 v. Lynch, 280 Va. 166 (2010) where it held that an independent duty arising outside the contract is required to establish a conspiracy claim. question.jpgRelying on Station #2, the district court dismissed Dunlap’s conspiracy claim because he did not allege a valid “unlawful act” as a predicate for the conspiracy. Rather, all of the allegedly breached duties and damages involved arose out of contractual obligations.

Earlier this month, Judge Hilton of the Eastern District of Virginia tossed claims against Tysons Law Group, Vienna Law Group, and affiliated attorneys for “vicarious liability” and “negligent hiring, retention and supervision.” Virginia does not recognize an independent cause of action for vicarious liability or negligent supervision. While it does recognize negligent hiring and negligent retention as actionable torts, a plaintiff cannot pursue such claims without alleging a physical injury. The plaintiff in this particular case failed to do that, so the claims were dismissed.

The plaintiff hired Vienna Law Group for immigration related services. Michael Oveysi worked for Vienna Law Group, supervised by Ronald Coleman. According to the plaintiff’s contentions, Oveysi advised him to transfer investment funds and legal fees totaling $566,000 to a bank account that Oveysi controlled. Oveysi, he claims, then made off with the money. The complaint alleges that Oveysi was not subjected to a background investigation prior to his employment and that a background check would have revealed Oveysi’s financial problems. That plaintiff argued that it was negligent to allow Oveysi to work with clients and their money under these circumstances. The defendants moved to dismiss.

In Virginia, vicarious liability is a theory of liability rather than a separate cause of action. The court noted that the purpose of pleading is to facilitate a proper decision on the merits rather than to multiply the causes of action. Here, the theory of vicarious liability was addressed in another claim. Accordingly, the court found the separate claim for vicarious liability was improper and dismissed it.

AWP, Inc. is engaged in the business of traffic control solutions for road construction sites and emergency situations. AWP alleges that Shawn Watkins, a former employee, began his own traffic control business, Traffic Control Solutions, LLC (TCS) while still working at AWP, and that he misappropriated information he obtained from his position at AWP such as the identity, needs and issues of customers, pricing, and protocols and methodologies for traffic control. AWP deems this information protected trade secrets. Watkins also allegedly solicited four AWP employees to join him at TCS. AWP prepared to sue Watkins but settled prior to litigation, with Watkins agreeing to cease TCS operations, never work with an AWP competitor, and turn over all AWP property. Watkins also signed an affidavit stating that he was instrumental in creating TCS and had access to AWP’s trade secrets which he used without permission to underbid AWP on jobs and misappropriate AWP customers.

Instead, AWP sued its competitor Commonwealth Excavating, Inc. and its president, Ira Biggs. AWP claimed that Watkins approached Biggs and offered to sell AWP’s trade secrets and equipment for $45,000. Commonwealth allegedly offered to hire the four AWP employees who left for TCS, and it offered Watkins an $85,000 salary which Watkins refused for fear of violating his non-compete agreement. AWP believes that Watkins and Biggs plotted to have Commonwealth take over at least four of AWP’s customers, but the complaint does not state whether any of the customers accepted the offer. The complaint contains counts for common law conspiracy, statutory business conspiracy, misappropriation of trade secrets under the Virginia Uniform Trade Secrets Act (VUTSA), tortious interference with contract or business relationships and unjust enrichment. The defendants moved to dismiss.

Under Federal Rule of Civil Procedure 12(b)(6), a plaintiff must show more than a mere possibility that a defendant has acted unlawfully. Rather, a plaintiff must demonstrate enough factual matter which, if accepted as true, states a plausible claim for relief. In ruling on a 12(b)(6) motion, a court will accept factual allegations as true and construe them in the light most favorable to the plaintiff, but threadbare recitations of the elements of a cause of action are not sufficient and must be supported by sufficient facts.

Bettina Jordan works for the United States Postal Service. In 2012, she filed two separate actions against the Postmaster General, Patrick Donahoe, alleging discrimination under Title VII and the Rehabilitation Act. In February of 2012, Jordan suffered a physical injury on the job and accepted a limited duty assignment. She has collected workers’ compensation benefits since the injury. She did not appreciate, however, the manner in which the USPS handled her workers’ compensation reimbursement, so she filed a third lawsuit, alleging retaliation, defamation, and intentional infliction of emotional distress. All three cases were filed in the Richmond Division of the Eastern District of Virginia.

USPS employees seeking workers’ compensation must submit periodic documentation to the Office of Workers’ Compensation Programs (“OWCP”) showing their continued eligibility for benefits. Jordan was entitled to compensation based on a four-hour work day due to her limited duty assignment, but because of an administrative error, USPS had been compensating her for an eight-hour work day through July 2012. In August of 2012, an OWCP claims manager changed Jordan’s claim forms to accurately reflect the number of work hours and, upon finding backdated and inconsistent medical notes Jordan had submitted, undertook a reevaluation of Jordan’s claim in September 2012. The claims manager wrote to Jordan questioning her submissions and asking for clarification. She also sent the letter to a Department of Labor Claims Examiner and the USPS Manager of Health and Resource Management.

Jordan did not appreciate being asked these questions. She sued, claiming that the way in which USPS handled her workers’ compensation reimbursement was in retaliation for her discrimination claims. She also contended that the claim manager’s letters defamed her and that they intentionally inflicted emotional distress. The USPS, through Mr. Donahoe, moved for summary judgment. The court granted the motion.

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