Legal Definitions - bathtub conspiracy

The term bathtub conspiracy is a colloquial expression for an intra-enterprise conspiracy. This legal concept addresses the complex question of whether a single company, through the coordinated actions of its own employees or departments, can be considered to have "conspired" with itself.

Generally, the law views a corporation as a single legal entity, meaning it cannot conspire with itself any more than an individual person can. However, courts have recognized exceptions to this general rule. These exceptions typically arise when employees or agents of the same company:

• Act outside the scope of their legitimate employment duties.
• Engage in illegal activities for their own personal benefit.
• Conspire to harm third parties or the company itself through unlawful means.

In such specific circumstances, the coordinated actions of these individuals *within* the enterprise might be treated as a conspiracy, allowing for legal action against them or the company.

Examples:

• Scenario 1 (Antitrust Violation): Two senior sales directors, one from the North American division and another from the European division of "Global Electronics Corp.," secretly agree to coordinate their pricing strategies for a specific product line with a competing company. This agreement is made without the knowledge or approval of Global Electronics' executive leadership and is explicitly against the company's internal antitrust policies.

  Explanation: Even though both directors work for the same corporation, their agreement to fix prices with an outside competitor, acting beyond their authorized roles and in violation of company rules, could be considered an intra-enterprise conspiracy. Their coordinated illegal actions, even within the same corporate structure, are treated as a conspiracy because they are acting against the company's legitimate interests and engaging in an illegal act that harms the market and consumers.

• Scenario 2 (Financial Fraud): The Chief Financial Officer (CFO) and the Head of Investor Relations at "BioGen Pharmaceuticals" collaborate to intentionally misrepresent the company's clinical trial results in public statements and financial reports. Their motive is to inflate the company's stock price, allowing them to sell their personal stock options at a significantly higher profit before the truth is revealed.

  Explanation: Here, two high-ranking employees of the same company are working together to commit financial fraud. Their actions are not part of their legitimate duties but rather a coordinated effort for personal gain, deceiving investors and the public. This scenario could be classified as an intra-enterprise conspiracy because their joint illegal conduct, even within the same corporate entity, constitutes a conspiracy against external stakeholders (investors) and potentially the company itself.

• Scenario 3 (Whistleblower Retaliation): A human resources manager and a department supervisor at "Industrial Solutions Inc." decide to fabricate performance issues and disciplinary actions against an employee who recently filed a formal complaint about unsafe working conditions. Their goal is to create a pretext to terminate the employee, thereby retaliating for the safety complaint in violation of whistleblower protection laws.

  Explanation: In this situation, two employees of Industrial Solutions are conspiring to commit an illegal act of retaliation. Their coordinated effort to create false grounds for termination, even though they work for the same employer, could be seen as an intra-enterprise conspiracy. Their actions are outside the scope of legitimate HR and supervisory duties and are aimed at violating the employee's rights, making their joint conduct conspiratorial.