Opinion ID: 1982295
Heading Depth: 1
Heading Rank: 5

Heading: Civil Conspiracy as a Continuous Wrongful Act

Text: The trial court found that a civil conspiracy is not continuous for the purpose of imposing per diem penalties. Relying on cases holding that the gravamen of civil conspiracy is the underlying wrong that, absent conspiracy, would create a cause of action, e.g., Lopez v. Swyer, 62 N.J. 267 (1973), the trial court held that penalties should be imposed based on defendants' attempt to fix prices, not upon the duration of the conspiracy. The court believed that the conspirators should be liable only for their actual wrongful acts, i.e., for their bid-rigging, but not for the period of time during which the conspiracy existed. We are not persuaded by the trial court's analysis. The issue in the principal case relied upon by the court, Lopez v. Swyer, supra, 62 N.J. 267, was limited to whether the fact that defendants had conspired to conceal medical negligence should increase damages against them where they had already been held liable for the underlying wrong, i.e., the negligent act. In this case, however, the conspiracy is itself the underlying wrong. See State v. New Jersey Trade Waste Ass'n, 96 N.J. 8, 19 (1984) (No overt act need be charged in an antitrust indictment nor need any such acts be proved at trial.). The penalties imposed under the Act are designed to prevent not only wrongful acts committed pursuant to a conspiracy, but the conspiracy itself. See N.J.S.A. 56:9-3 (Every ... conspiracy in restraint of trade ... shall be unlawful.). The trial court's approach fails to recognize that an agreement to fix prices can affect the marketplace for many years and that per diem penalties are particularly well suited to deterring violations. As one court has said: [e]ffective deterrence requires daily penalties for this type of violation, for without them potential violators might regard the statutory penalty `as nothing more than an acceptable cost of the violation.' United States v. Phelps Dodge Indus. Inc., supra, 589 F. Supp. at 1361 (quoting United States v. ITT Continental Baking Co., supra, 420 U.S. at 231, 95 S.Ct. at 932, 43 L.Ed. 2d at 158). Our analysis is consistent with federal court decisions holding that conspiracies to fix prices are continuing violations under the Federal Trade Commission Act. In United States v. ITT Continental Baking Co., supra, 420 U.S. at 231-32, 95 S.Ct. at 932, 43 L.Ed. 2d at 158-59, the Supreme Court relied on the deterrent effect of daily penalties in holding that such penalties should be imposed on such continuing violations of a FTC order. The ITT holding has been followed by lower federal courts. See United States v. Phelps Dodge Indus., Inc., supra, 589 F. Supp. at 1361 (a conspiracy to maintain prices at an artificially inflated level is by its very nature an ongoing enterprise that is subject to daily penalties); Federal Trade Comm'n v. Consolidated Foods Corp., 396 F. Supp. 1353, 1356 (S.D.N.Y. 1975) (conspiracies to fix prices necessarily continue on a day-to-day basis until a specific act is taken in abatement.).