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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Chancery Addresses Civil Conspiracy Elements
This action arose out of corporate infighting among certain directors and investors at a nutrient-infused water company. The plaintiff, the company’s founder, brought tort and contracts claims against certain former directors and current stockholders, accusing them of wrongfully attempting to seize control of the company. The parties settled several claims, but some defendants and claims remained. In this motion to dismiss decision, the Court of Chancery addresses, inter alia, the elements of a claim for civil conspiracy and, relatedly, the conspiracy theory of jurisdiction.
As the decision explains, a claim for civil conspiracy requires a plaintiff to plead the existence of a conspiracy, an unlawful act done in furtherance of the conspiracy, and resulting harm to the plaintiff. Here, the complaint failed on the most basic element—sufficient allegations that a conspiracy existed. The plaintiff advanced as evidence of a conspiracy various communications among the defendants critical of the plaintiff. But the Court declined to find that these communications supported a reasonable inference of a conspiracy. Rather, according to the Court, the only reasonable inference the communications supported was that the defendants, as fiduciaries and stockholders, had discussed managerial concerns involving perceived misconduct by the plaintiff.