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• Unfair Business Practices

Unfair Business Practices

A competitor’s unfair business practices can cause tremendous damage to any business and, in worst-case scenarios, can imperil a business’ very survival. Our team has experience helping businesses that face unfair business practices, typically from competitors or former officers, directors or employees. We also defend companies who have been accused of unfair business practices. Our experience in both prosecuting and defending these claims provides us with a foundation of knowledge that will aid you in developing a specific offensive or defensive case strategy for these disputes. Several of our concluded matters constituted bet-the-company litigation.

Examples of unfair business practices that we have handled include: corporate raiding, common law and statutory business conspiracies, violations of the Virginia Computer Crimes Act, misappropriation of trade secrets, tortious interference with contract or business expectancy, breaches of fiduciary duties, investors’ efforts to oust a company’s founders, collusion, fraud and other forms of unfair competition.

In addition to our case experience, we continually work to expand our knowledge and track the development of unfair business practices cases, and the best ways to investigate them. James B. Kinsel has blogged extensively about these issues in his blog http://unfairbusinesspractices.blogspot.com. He helped establish and was the former co-leader of a major law firm’s (Williams Mullen) unfair business practices team prior to co-founding Protorae Law. Joined by Brian F. Chandler, our firm’s team has extensive experience in litigating unfair business practices cases.

Helping Your Company Prevent Unfair Business Practices:

Experience Matters: When faced with unfair competition, it is crucial to implement a quick and effective strategy to try to stop the unfair business practice and recover damages. We have advised many companies on differing strategies to combat unfair business practices. Many, but not all, of those strategies have involved filing petitions asking courts for temporary and permanent injunctive relief to immediately stop the unlawful conduct. And, when defending a company in these cases, our familiarity with the underlying laws and the required pleading requirements help us develop a comprehensive legal defense early in the case.

Flexible Fee Structures: Litigating an unfair business practices case is usually an expensive undertaking. That is why we discuss with our clients the projected litigation costs and potential ways to control those costs at the outset of every case. We also discuss our standard fee structure, and whether any alternative fee structures may be more appropriate for a particular case. Although the hourly rate structure is sometimes the best option, we have experience developing different alternative fee structures such as risk sharing combining reduced rates with a success fee, and flat fees set to various litigation stages.

Typical Cases:

Corporate Raiding: Corporate raiding occurs when a competitor or former executive induces a large group of business’ employees to resign en masse, usually with the employees taking proprietary information, trade secrets or other intellectual property with them.

Unlawful Interference with Business: The law imposes some limits on what a company can do to compete for new work, particularly when another company already has a contract to perform that work. This claim can take on various forms, such as tortious interference with contract or business expectancy.

Business Conspiracy: Some states have common law civil conspiracy laws that prohibit conspiracies to injure a business when two or more people have a criminal or unlawful purpose or use criminal or unlawful means. Virginia has a statutory business conspiracy statute, Virginia Code § 18.2-499, that makes it unlawful for: “Any two or more persons [to] combine, associate, agree, mutually undertake or concert together for the purpose of (i) willfully and maliciously injuring another in his reputation, trade, business or profession by any means whatever...” An injured business that successfully sues under Virginia’s business conspiracy statute is entitled to recover three times its actual damages plus its attorneys’ fees.

Intra-Corporate Disputes: Many types of disputes arise between business co-owners or partners. When those disputes become irreconcilable, legal intervention may become necessary to jump-start the negotiations or even file suit to protect one party’s interests. These disputes often involve one party breaching his or her fiduciary duties to the other co-owners or partners.

Representative Cases:

• Represented the plaintiff, a direct-mail mortgage company, in a Virginia statutory business conspiracy action against the company’s former employees and a start-up competitor. The plaintiff’s claims also included breach of fiduciary duty and tortious interference with its contracts and business expectancy. The plaintiff received $10.5 million in settlement and breakup fees as part of a negotiated Letter of Intent that provided for one of the corporate defendants the option of purchasing the plaintiff’s parent company’s assets for $52.5 million or paying the plaintiff $10.5 million.

• Represented the plaintiff corporation, a privately owned university, in a corporate control and ownership dispute against some of the University’s former managers, officers and shareholders. Claims brought against the defendants included Virginia’s statutory business conspiracy, breach of fiduciary duty, tortious interference with business relations and violation of the Virginia Computer Crimes Act.

• Represented the principal owner of a business sued by a former employee and alleged stockholder for breach of fiduciary duty. The liability against the principal was significantly reduced after attacking the breach of fiduciary duty allegations on legal grounds. The case was eventually settled on favorable terms to the client.

• Represented the plaintiff corporation, a government contractor, in a law suit alleging tortious interference with business.

• Represented a former business owner in a case whereby the purchaser of the business alleged fraud in the inducement and breaches of fiduciary duty. At the time of this alleged fraud and fiduciary breaches, the former owner was still owed a significant amount for the sale of his business. After significant motions practice limiting the client’s liability, the client was able to settle the case and thereby obtain a substantial amount of the payout owed due to the sale of business.

• Represented a company that purchased a radio station in an action seeking an injunction preventing the prior owner from using a substantially similar radio format on any radio station heard in the local radio market. As a condition of the sale, the prior owner agreed not to operate a local radio station utilizing a substantially similar programming format as the sold station had used. The court temporarily and permanently enjoined the prior owner from operating a radio station using a substantially similar format after the court found that the prior owner “blatantly violated the agreement.”

• Represented the plaintiff in follow-on suit to enforce arbitration award arising out of dispute between founding members of a government contracting firm.

• Represented plaintiff, an individual partner, in a partnership break-up litigation matter against her partner.