The Independent Personal Stake Exception to Intra-Corporate Immunity

A conspiracy to harm another’s business may be actionable under Virginia’s business-conspiracy statute, which provides for a cause of action where two or more people “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.” (See Va. Code §§ 18.2-499, 18.2-500). To prevail in a lawsuit for business conspiracy in Virginia, a plaintiff must prove (1) a combination of two or more people or entities for the purpose of willfully and maliciously injuring the plaintiff in his business; and (2) damage that resulted from the combination. A combination exists where there is concerted action designed to “effect a preconceived plan and unity of design and purpose.” (Schlegel v. Bank of America, 505 F. Supp. 2d 321, 326 (W.D. Va. 2007)). When the people being sued for conspiracy work for the same company, a question arises as to whether the first element–the requirement of “two of more people”–can be satisfied. The intra-corporate immunity doctrine holds that employees working for the same company are generally immune from conspiracy claims when acting on behalf of their employer. This is because a corporation acts through its employees, so the the employees’ actions are really the corporation’s actions and a corporation cannot conspire with itself. In other words, a business-conspiracy claim requires concerted action of at least two legally distinct persons or entities. A corporation can’t conspire with its employees, and its employees can’t conspire with each other if they are acting within the scope of their employment. As with most areas of the law, however, there are exceptions.

Some courts recognize an exception to the intracorporate immunity doctrine where the employee has an “independent personal stake” in achieving the goals of the conspiracy. Although the Virginia Supreme Court has not recognized any such exception, federal courts sitting in Virginia and applying Virginia law have applied it on several occasions. (See, for example, Greenville Publishing Company v. Daily Reflector, Inc., 496 F.2d 391 (4th Cir. 1974) (observing that an exception to the intracorporate immunity doctrine “may be justified when the officer has an independent personal stake in achieving the corporation’s illegal objective.”); Cvent, Inc. v. Eventbrite, Inc., 739 F. Supp. 2d 927 (E.D. Va. 2010)). Even if you’re in a court that does recognize a personal-stake exception, it will apply only to those cases in which the conspirator gained an independent personal benefit from the conspiracy. This benefit must be separate and distinct from the corporate benefit enjoyed by the employer.

To illustrate, let’s take a quick look at the recent opinion issued in TechINT Solutions Group, LLC v. Brandon Sasnett. The basic facts, according to the opinion, are as follows. Mr. Sasnett worked for TechINT as an Intelligence Analyst working with unmanned aircraft systems. He eventually left TechINT to take a job with Red Six Solutions, a government contractor and one of TechINT’s customers. The day before he quit TechINT, he shield-300x300texted Red Six’s CEO, Scott Crino, and asked hypothetically whether Red Six would consider hiring someone “with [Sasnett’s] exact experience and background” if he “suddenly became available on the market.” A week later, Sasnett was working for Red Six. TechINT sued both Sasnett and Crino for conspiracy to harm its business, along with a host of other torts.

Crino moved for summary judgment, pointing out that to the extent the conspiracy claim was based on conduct allegedly taken after Sasnett had joined Red Six, the claim was barred by the intracorporate immunity doctrine as both Crino and Sasnett were agents of the same principal. The court agreed, but then proceeded to discuss two possible exceptions.

First, the doctrine does not apply where a company’s agents act outside the scope of their employment. Here, however, both Crino and Sasnett were acting within the scope of their employment as they were pursuing opportunities to grow Red Dix’s client base and increase revenue.

The court then turned its attention to the independent personal stake exception, noting that the intracorporate immunity doctrine does not apply “where one of the conspirators has an independent personal stake in achieving the corporation’s illegal objective.” The court was cognizant that Virginia state courts have not recognized the personal-stake exception, but went on to consider it anyway as other Virginia federal courts have done. Citing Fourth Circuit precedent, the court held that the personal-stake exception is limited to situations “where a co-conspirator possesses a personal stake independent of his relationship to the corporation.”

That test wasn’t met in this case, so the personal-stake exception did not apply and the conspiracy claim was therefore barred by the intracorporate immunity doctrine. TechINT’s main argument was that as a result of the alleged conspiracy, Red Six and Crino would see an increase in profits. The court found that the defendants’ interest in higher profits was not sufficiently personal in nature to satisfy the requirement of having an independent personal stake. Crino would certainly gain financially as a result of a conspiracy to take TechINT’s business, but that benefit “stems directly from Crino’s relationship to Red Six,” so the interest was not sufficiently personal. The court proceeded to grant partial summary judgment with respect to the conspiracy claim.

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