Legally, a “conspiracy” is some sort of agreement — express or implied — reached between two or more persons or entities to commit a crime or a wrongful act. Conspiracies are punished under both criminal and civil law. In criminal law, the agreement is the gist of the claim and intent that a crime be committed is enough. That is, under criminal law, there need not be any follow through; generally “intent to commit” is punishable.

By contrast, agreement is not sufficient for proof of civil conspiracy. Wrongful actions must be taken and harm must be inflicted upon some third party. In Michigan, for example, the essential elements of a civil conspiracy are:

• At least one concerted action
• By a combination of two or more persons or entities
• To accomplish an unlawful purpose or a lawful purpose by unlawful means and
• Injury or damages resulting from wrongful act

As noted, “talk” is not enough; there must be some action. See Fenestra Inc. v. Gulf Amer. Land Corp., 141 NW 2d 36 (Mich. Supreme Court 1966).

Civil conspiracy claims are important litigation tools in business disputes, although there are important limitations. Generally, civil conspiracy claims are not “stand alone” claims. That is, generally, it is not possible to file a business lawsuit alleging only a civil conspiracy. Some other legal claim of wrongful action — a tort claim — must be filed and, then, a civil conspiracy count can be added to the lawsuit. In this manner, civil conspiracy claims can multiply causes of action. This can help maximize the potential recovery of money damages.

Similarly, in business litigation, adding a civil conspiracy claim can multiply the number of defendants. As discussed above, civil conspiracy requires at least two persons/entities to engage in concerted action. Thus, at least two persons/entities can be sued. Adding defendants to a lawsuit is useful since multiple defendants can help maximize the recovery of money damages since separate and distinct judgments can be imposed against each defendant and additional insurance policies may be triggered. However, there is an important legal limitation here. Legally, principles and agents cannot conspire with themselves. This means that there can be no conspiracy between a corporation and its CEO, an employer and its employee or a client and the client’s attorney. See Tropf v. Holzman & Holzman, Case No. 257019 (Mich. Court. Appeals 2006).

Filing and winning claims of civil conspiracy can also help satisfaction of any resulting judgment. Generally, each member of the conspiracy is jointly and severally liable. This means that each co-conspirators is wholly liable for the entire judgment regardless of whether other co-conspirators have available assets to pay the judgment. In this manner, filing claims of civil conspiracy allows a successful plaintiff to reach a “deep pocket” and to avoid the disappointment of vindicating a wrong but facing a judgment-proof defendant. For more information or if you need proven business litigation services, contact the business lawyers at Revision Legal at 231-714-0100

Elements of a Civil Conspiracy Claim

Civil conspiracy is a tort theory that imposes joint and several liability on all members of a conspiracy for the tortious acts of any co-conspirator committed in furtherance of the scheme. While the specific formulation varies by state, the elements are generally: (1) an agreement between two or more persons; (2) to commit an unlawful act or a lawful act by unlawful means; (3) an overt act in furtherance of the conspiracy; and (4) damages to the plaintiff as a proximate result. Civil conspiracy is not an independent cause of action in most states—it requires an underlying tortious act, such as fraud, tortious interference, conversion, or breach of fiduciary duty.

The Agreement Element: Express vs. Implied

Unlike criminal conspiracy, civil conspiracy does not require a formal or explicit agreement. Courts routinely allow the agreement element to be proven through circumstantial evidence of coordinated conduct. As the Restatement (Second) of Torts § 876 frames it, a defendant is liable for the harm done by another if the defendant acts in concert with another pursuant to a common design or gives substantial assistance knowing the other’s conduct constitutes a breach of duty.

This means that a defendant who provides substantial assistance to a primary tortfeasor—even without a formal agreement—may be held liable under a civil conspiracy or aiding and abetting theory. The distinction between conspiracy (requiring agreement) and aiding and abetting (requiring knowing assistance) is sometimes blurred in practice, but both theories accomplish the goal of holding facilitators liable for the full scope of harm caused by the scheme.

Business Applications: Common Scenarios

Civil conspiracy claims arise frequently in business litigation in several contexts:

• Employee/competitor poaching schemes: A departing executive and a new employer conspire to misappropriate trade secrets or violate non-compete agreements
• Fraudulent transfer schemes: Corporate officers and related entities conspire to transfer assets out of reach of creditors
• Market manipulation: Competitors conspire to fix prices, allocate customers, or exclude a rival from the market
• Tortious interference conspiracies: A group of defendants conspires to induce breach of a plaintiff’s contracts with third parties
• Breach of fiduciary duty schemes: Corporate insiders conspire to divert corporate opportunities or loot the company

Joint and Several Liability: The Strategic Value

The primary strategic value of pleading civil conspiracy is joint and several liability. Under this doctrine, each co-conspirator is liable for the entire amount of damages caused by the conspiracy, regardless of that individual defendant’s level of participation or the extent to which that defendant individually benefited. A plaintiff with a judgment against a conspiracy can collect the full amount from any one defendant who has assets sufficient to satisfy it.

This transforms the litigation landscape. A scheme may involve a financially insolvent primary wrongdoer and a deep-pocketed financial backer or professional advisor who played a facilitative role. Without conspiracy liability, the plaintiff recovers nothing from the wrongdoer and little from the facilitator. With conspiracy liability, the facilitator is on the hook for the full damages amount.

RICO as a Federal Conspiracy Theory

In federal court, the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962, provides a powerful tool for conspiracy-based business litigation. Civil RICO under 18 U.S.C. § 1964(c) provides treble damages and attorneys’ fees for plaintiffs who prove a pattern of racketeering activity (two or more predicate acts such as wire fraud, mail fraud, or money laundering) conducted through an enterprise. RICO conspiracy under § 1962(d) extends liability to those who agree to participate in the violation even without directly committing the predicate acts.

RICO is a high-bar theory—courts have been cautious about extending it beyond organized crime contexts—but in complex fraud, Ponzi scheme, and financial misconduct cases, it can dramatically expand recovery and access to federal court.

Contact the business litigation attorneys at Revision Legal at 231-714-0100 to evaluate civil conspiracy and related claims for your matter.