A business conspiracy claim may allow a plaintiff to rope in additional defendants who may not have done every unlawful act themselves, but due to that defendant conspiring with others, he may be held accountable for actions taken by the other defendants.  A recent case, however, shows that this is not always the case, especially when there are insufficient facts to connect the defendant to the start of a conspiracy.  In Alliance Technology Group, LLC v. Achieve 1, LLC, crucial facts relating that defendant to the beginning of the conspiracy were either not known initially or were left out of the complaint by the plaintiff.  Either way, without these facts, the defendant was able to slip himself free from the litigation by filing a motion to dismiss the claims against him.  This case shows that in some circumstances, it may be a better strategy to initially exclude naming some of the people doing the bad acts as defendants in the complaint at least in certain courts, and add them as defendants later once more facts pertinent to them are uncovered during the discovery phase.  This reduces the chance of the court kicking out defendants due to lack of facts connecting them in the beginning.

This case also reinforces the importance of telling the whole story by providing all crucial facts known to connect each defendant to each claim made in the complaint, or else some claims may not make it to trial.  Stating a generally summary of facts in the complaint that apply only to certain defendants and not others may be insufficient, causing certain claims to be kicked out by a motion to dismiss, as was the case here.

In deciding the motion to dismiss, the U.S. District Court for the Eastern District of Virginia determined that some claims against Defendant William Ralston did not survive because there were not enough facts to tie Ralston to those claims.  In general, Plaintiff’s attempt to attribute the actions to the multiple “Defendants” generally was frowned upon by the court, especially since many of the allegations that Plaintiff described in the complaint occurred before Ralston was in the picture.

Ralston worked for Alliance for one month, before a coworker named Michael Thomas quit Alliance and began working at his own competing company, Achieve 1.  Ralston eventually left Alliance to work at Achieve 1.  Plaintiff Alliance sued Ralston, Michael Thomas, Achieve 1, and others who left Alliance to work at Achieve 1.  Alliance failed to state in the complaint the date of Ralston’s resignation, and provided only two connecting facts relating to Ralston: He was hired by Alliance weeks before Michael Thomas’s resignation and he now works for Achieve 1.

Plaintiff attempted to rope in additional defendants, such as Ralston, by using facts pertaining only to other particular defendants, but this approach was not entirely successful.  Ralston filed a motion to dismiss the claims against him.  While the complaint provided sufficient background facts relating to most of the Defendants, facts specific to Ralston were missing.  The temporal gap between most of the facts stated in the complaint and Ralston’s involvement, including his becoming an employee at Alliance, was the main reason Ralston was successful on his motion to dismiss many of the claims.

Specifically, the breach of fiduciary duty and misappropriation of trade secrets claims were found to be sufficiently pled, because Plaintiff provided these facts: Ralston had a duty to Plaintiff as an employee, Plaintiff lost business (showing damage), and Ralston’s new employer was using confidential information and trade secrets learned at Alliance.  Although there was no claim of breach specific to Ralston, the court decided that “it can be reasonably inferred that he now uses the same confidential information and trade secrets learned at Alliance. . . .”  Op. at 9.   “His knowledge of the trade secrets,” which Ralston acknowledged his access to during his employment with Alliance, “coupled with his alleged use of them (or even knowledge of others use) at Achieve 1, is sufficient to raise a reasonable inference of misappropriation . . . ,” and aiding and abetting breach of fiduciary duty, the court found.  Id.

However, as to the conversion claim, the court held that too much time had passed between the hiring of Ralston at Alliance, and the beginning of the alleged conspiracy five months earlier.  Therefore, the court found that it was implausible that Ralston was engaged in the conversion, because “the property in question was converted to Achieve 1’s use before Ralston appeared on the scene . . .”  Op. at 14.  “The temporal gap highlights the fact that Ralston was not so similarly situated to his co-workers that it is reasonable to include him in a broad definition of ‘Former Employee Defendants’ with respect to this claim – thereby sweeping him into a series of tortious activities that occurred before he was even involved.”  Op. at 14-15.  Importantly, there were no specific facts alleged on this count that applied directly to Ralston, only facts that were stated to apply to the multiple defendants.

Additionally, Alliance tried to allege that Ralston interfered with another defendant, Pierce’s, employment contract.  But no facts were provided showing that Ralston was at all familiar with Peirce’s employment contract.  It was not alleged that Ralston committed any intentional act designed to interfere with this contract.  Just because Ralston was employed by Alliance and then Achieve 1, it does not automatically follow that Ralston would know the terms in Peirce’s employment contract, the court noted.  Facts must be provided to show this to be true.  “While knowledge and intent may be alleged generally, it must still be accompanied by allegations of fact giving rise to a reasonable inference of knowledge or intent.”  Op. at 16 (citing Ashcroft v. Iqbal, 556 U.S. 662, 686 (2009)).  However, the court found that it was reasonable to infer that Ralston had knowledge of Alliance’s customer contracts, even though he may not have known about Pierce’s employment contract.  Therefore, the tortious inference claim as to prospective business relationships survived against Ralston, due to his position as an “Account Executive” with Alliance.

The court found the common law conspiracy claim against Ralston failed as well because the complaint stated that the Defendants acted in concert around five months before Ralston joined Alliance.  “While it may be ‘conceivable’ that Ralston joined the already-formed conspiracy when he was hired in March 2012, there are no facts alleged to raise such an inference ‘above the speculative level.’”  Op. at 18 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).