Civil conspiracy is when two or more individuals or entities collude to commit an unlawful act, resulting in an unjust end. Legal action can be taken if third parties are directly affected. Lawsuits are common in commercial litigation, such as class action lawsuits against tobacco, equipment, or pharmaceutical companies. Corporate liability is assumed when officers participate in a civil conspiracy.
In law, a civil conspiracy refers to the collusion between two or more individuals or entities who share a common plan to commit an unlawful or wrongful act leading to an unlawful or unjust end result. In many cases involving a civil conspiracy, the common goal of the conspiracy is to deceive, cheat, or defraud a third party. The legal elements necessary to take legal action include not only the collective agreement of the conspirators to commit the crime, but also the damage to third parties directly as a result of the action taken. In the event of a lawsuit by the injured party, the principle of civil association assumes the liability of all the conspirators involved in the plan, regardless of whether or not each of them has to do with the actual commission of the crime. In other words, all participants in the conspiracy are equally guilty and responsible for the actions of any of the conspirators acting according to the common plan.
Plaintiffs cannot properly claim a civil conspiracy unless the accused parties take an unlawful or wrongful action. The conspiracy itself cannot harm a third person, unless one or more of the participants take obvious steps under the plan. In some cases, the plaintiff must prove that the conspirators knew or should have known the immediate and proximal impact the actions would have on others. In addition, the plaintiff must establish that one or more of the conspirators owed the plaintiff a duty recognized by law, which the unlawful conduct violated.
These types of lawsuits are prevalent in various forms of commercial litigation. For example, several class action lawsuits against tobacco, equipment, or pharmaceutical companies allege civil conspiracy to mislead the public about health effects, risks, side effects, and other unfavorable information related to their products. Additionally, the United States Department of Justice (DOJ) and the Securities Exchange Commission (SEC) frequently take legal action when companies, such as banks, violate securities laws or engage in securities fraud. Federal courts, in accordance with the US Sherman Antitrust Act, are the site of many cases of price fixing, monopoly, gang boycott and predatory pricing.
In many states, plaintiffs are barred from joining company directors and officers as defendants in a case unless the officials received a personal benefit from the conspiracy distinct from that obtained by the company. Other states allow these officials, as well as outside attorneys, accountants, and other agents to be implicated in a conspiracy lawsuit. Most courts assume corporate liability when officers participate in a civil conspiracy. However, if the officers acted in a way that harmed the interests of the company, the courts cannot hold the company liable for the actions of the officers, who are directly sued as individuals.
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