Tag: conspiracy

Aiding and Abetting, Conspiracy, and The Picture of Dorian Gray

It isn’t every day that the Law Court addresses claims of civil conspiracy or aiding and abetting breaches of fiduciary duty, but that is exactly what the court did in Meridian Medical Systems, LLC v. Epix Therapeutics, Inc. – with a bit of literary allusion thrown in.

In Meridian, the Court clearly stated for the first time that

“civil liability can attach for aiding and abetting another’s tortious conduct.”

Meridian involved a business relationship gone bad.  Ken Carr, in his capacity as assignee of the claims of Meridian, sued corporate defendants which had a relationship with Meridian as a result of a licensing agreement.  The complaint asserted that the value of Meridian’s technology was not maximized due to the conduct of Ken Carr’s co-managers at Meridian, which allegedly was encouraged by the defendants.  The complaint included counts for “conspiracy” and “aiding and abetting breaches of fiduciary duty.”

Reviewing the order granting the defendants’ motion to dismiss, the Court emphasized that it must carefully “parse” a complaint to determine whether “its allegations meet the elements of a viable claim.”  Rhetoric and the sheer size of a complaint cannot alone carry the day.  Citing The Picture of Dorian Gray, Oscar Wilde’s famous story of the price of moral corruption, Justice Connors noted that terms such as “corrupt” may “own literary value, [but] it adds no substance to a legal cause of action.”

Meridian stands for two propositions of particular note – there is no tort for “conspiracy” under Maine law, but there can be a claim for “aiding and abetting” in the civil context.  The first was already settled under Maine law, but the second was not.  Until Meridian Medical Systems, the status of the aiding and abetting doctrine has been “uncertain in the civil context.”

The Court ended that uncertainty, stating flatly that a party can be civilly liable for aiding and abetting tortious conduct.  Unlike conspiracy, aiding and abetting focuses not on agreement but on “assistance in committing the underlying tort.” Proof of aiding and abetting in the civil context requires

  1. knowledge that the other’s conduct constitutes a breach of duty, and
  2. substantial assistance or encouragement to the other to so conduct himself.

Thus, “the party whom the defendant aids must perform a wrongful act that causes an injury,” and the defendant must “be generally aware of his role as part of . . . tortious activity at the time that he provides the assistance” and “must knowingly and substantially assist the principal violation.”

The Court, however, provided two important caveats.  “First, the aider and abettor must have actual – and not merely constructive – knowledge that the principal tortfeasor is engaged in tortious conduct.”  This provides an important limit on the scope of civil liability.  “Second the defendant must commit acts constituting substantial assistance in the commission of the underlying tort.”  Substantiality depends on a variety of factors, including the amount of assistance and the defendant’s state of mind.

The Law Court ultimately held that the plaintiff failed to allege knowing, substantial assistance in any breach of fiduciary duty.  Nevertheless, after Meridian, it is clear that while there may be no liability for conspiracy – or even corruption on the scale of The Picture of Dorian Gray – a party may be liable for aiding and abetting tortious conduct.

©2021 Pierce Atwood LLP. All rights reserved.
For more articles on civil conspiracy, visit the NLR Litigation / Trial Practice section.

Auto Insurers Again Seek Dismissal of In RE Auto Body Shop Antitrust Litigation

In early March, the auto insurer defendants in the In re Auto Body Shop Antitrust Litigation renewed their motions seeking the dismissal of plaintiffs’ action, this time directed at plaintiffs’ Second Amended Complaint. The insurer defendants urged the Court to dismiss the action with prejudice, maintaining that, despite three attempts, the plaintiff auto body shops have still failed to include sufficient facts to make their claim of conspiracy plausible.

The action, commenced well over a year ago as A&E Auto Body v. 21st Century Centennial Insurance Co. and subsequently transformed into a multidistrict litigation proceeding (In re Auto Body Shop Antitrust Litigation, MDL 2557) after similar cases were filed in a multitude of states, centers upon a claim that many of the leading auto insurers in the country conspired to reduce rates for the repair of damaged vehicles and to steer insureds away from auto repair shops that refused to accept lower reimbursement rates for their services. The cases were consolidated before Judge Gregory Presnell (M.D. Fla.) in late 2014, and in early 2015 Judge Presnell dismissed plaintiffs’ First Amended Complaint, finding that the plaintiffs had failed to plead an antitrust conspiracy with the degree of specificity required under Bell Atlantic v. Twombly, 550 U.S. 544 (2007).

In February, plaintiffs filed their Second Amended Complaint, seeking to cure the deficiencies in the complaint identified in Judge Presnell’s prior rulings. In March, the defendants filed several new motions to dismiss the action. One group of defendants (including State Farm, Allstate, Progressive and 21st Century) maintained that the plaintiffs’ allegations still failed to include sufficient factual support to plead an actionable antitrust conspiracy, which they described as the “crucial question” in the case. Claiming that the plaintiffs’ allegations demonstrated nothing more than “parallel conduct” towards the plaintiffs, not agreement, these defendants renewed their request to have the action dismissed as to them. Another group of defendants (which includes Hartford, Nationwide and Zurich American) went a step further, arguing that the plaintiffs had failed to allege any material facts specifically about them, despite Judge Presnell’s express instruction in his prior dismissal order in January (without prejudice, on that occasion) that plaintiffs provide detailed allegations about each defendant’s involvement in the alleged conspiracy. Finally, one defendant (Old Republic) filed a separate motion not only seeking dismissal, but sanctions as well, based on the claim that the plaintiffs had been put on notice by the Court that particularized allegations as to each defendant’s alleged conduct was required, and that plaintiffs’ failure to include any additional factual support for their claims against Old Republic was sanctionable conduct.

In late March, the plaintiffs filed an “omnibus” response to all of the defendants’ motions, arguing that dismissal of the case at this juncture was not warranted. Asserting that “the Second Amended Complaint complies in every respect with the Court’s [January] Order,” the plaintiffs urged the Court to permit them to proceed into discovery. Specifically, the plaintiffs maintained that the parallel conduct alleged in the Second Amended Complaint constitutes “circumstantial evidence of conspiracy” and that the Supreme Court has never expressly held how many “plus factors” supporting a claim of conspiracy are required to satisfy a plaintiff’s pleading obligations. Plaintiffs contended, therefore, that they are not required to “set out specific facts establishing the time, place or persons involved in the conspiracy” nor are they required to allege an “express agreement.” Instead, they maintained, their allegations of parallel conduct, coupled with their allegations about the defendants’ collective market share, motive to conspire and opportunity to do so are more than sufficient to meet their pleading obligations.

In early April, the auto insurers filed reply briefs responding to the plaintiffs’ contentions. Perhaps most significantly, those defendants that had argued that the Second Amended Complaint still failed to contain any significant allegations about their specific conduct noted that the plaintiffs’ response had failed to refute that assertion in any meaningful way (“Rather than simply admit that they failed to allege anything against the moving defendants under the Sherman Act…plaintiffs point to allegations against the other defendants….” emphasis in original).

The entire set of motions are now before Judge Presnell for consideration, with the defendants urging the Court to take a “three strikes, you’re out” approach to the plaintiffs’ case. Whether Judge Presnell will adopt defendants’ baseball analogy and dismiss the case, with prejudice, as to all or some of the defendants remains to be seen. What is certain is that this matter will continue to be a significant focus of attention for the entire auto insurance industry over the coming months. Stay tuned.

Authored by James M. Burns of Dickinson Wright PLLC

© Copyright 2015 Dickinson Wright PLLC