Virginia Federal District Court Rejects Independent Personal Stake Exception to Intracorporate Immunity Doctrine for Civil Conspiracy Claims
An essential element for a claim for civil or statutory business conspiracy is the combination of two separate actors who formed the alleged conspiracy. The “two or more persons” requirement, however, is not satisfied by proof that a principal conspired with one of its agents that acted within the scope of his agency. Under these circumstances, a civil conspiracy is a legal impossibility because a principal and an agent are not separate persons. This rule is commonly referred to as the intracorporate immunity doctrine.
Some courts have adopted an exception – the independent personal stake exception – to the intracorporate immunity doctrine when an officer or director has an independent stake in achieving the illegal objective. While several federal decisions have adopted the independent personal stake exception, the Supreme Court of Virginia never has adopted this exception to the intracorporate immunity doctrine. On April 16, 2011, a federal decision rejected the possible application of the independent personal stake exception.
In Baylor v. Comprehensive Pain Management Ctrs., Inc., Civil Action No. 7:09cv00472, 2011 U.S. Dist. LEXIS 37699 (W.D. Va. Apr. 6, 2011) (Urbanski, M.J.), a physician claimed that a pain management center breached its contract with him and that the owner, business manager and another center doctor had committed several business torts against him, including statutory civil conspiracy, defamation and tortious interference. In response to a motion for summary judgment, the Court held that “[u]nder the intracorporate immunity doctrine, acts of corporate agents are acts of the corporation itself, and corporate employees cannot conspire with each other or with the corporation.” Id. at *40. The Court ruled that the independent personal stake exception to the intracorporate immunity doctrine – if recognized in Virginia for a statutory business conspiracy claim – was not applicable given the facts involved in this case. Id. at *40-46. In part, the Court concluded the personal stakes of all of the individual defendants were dependent on (and not independent of) the interest and success of the pain management center. Id at *45-46. To the contrary, the Court held that the opposite was present as the individual defendants’ personal stake was dependent on that of the pain management center. Id. at *45. The Court also noted that no case had applied the exception to a statutory business conspiracy claim under Va. Code § 18.2-499 and -500. Id.
Troutman Sanders regularly represents corporate clients in business litigation in federal and state courts, including with respect to business torts, such as civil and statutory conspiracy claims. Troutman Sanders will continue to monitor this evolving line of authority, both in Virginia and nationwide.