SLG Protects Your Company from Unfair Competition and Business Torts
Nobody starts a company or negotiates a merger hoping that the transaction will end up in court. However, business is inherently competitive, and aggressive tactics are all a part of the game. But there is a clear line between aggressive competition and illicit business activities. When a competitor, vendor, partner, or former member crosses that line, they commit a business tort.
At Shlansky Law Group (SLG), our attorneys have extensive experience settling and litigating Delaware business tort disputes on behalf of our clients. Our team sees the fallout of these actions every day. For example, a stolen client list or a coordinated smear campaign can ruin your business almost instantly, even if you have spent years building it.
If your company is suffering because your business rivals have decided the rulebook does not apply to them, you need an experienced legal team to help you fight back and enforce your legal rights. Call the SLG Delaware business tort disputes team today at 347.378.6990.
What Exactly Is a Business Tort?
A business tort is a civil wrong that causes financial harm to a business. It violates duties imposed by law, such as the duty not to infringe on another company’s intellectual property. Importantly, a business tort does not require a contract for a party to be bound by these duties, distinguishing business torts from contract disputes.
While there are many recognized business torts in Delaware, our attorneys most frequently litigate the following:
Fraud and Misrepresentation
Fraud is a serious accusation and one of the most serious Delaware business tort disputes. Delaware courts do not take it lightly, and the pleading standards are intentionally strict. To prove fraud, you cannot simply show that the other side was wrong or that a deal went sour.
You have to prove that they made a false representation of a material fact. You must show they knew it was false (or were recklessly indifferent to the truth) and intended for you to act on it. Crucially, you have to prove that your company reasonably relied on that lie and lost money because of it.
Tortious Interference
This tort occurs when a third party intentionally disrupts your business relationships. In Delaware, this usually splits into two categories: interference with an existing contract and interference with a prospective economic advantage.
Interference with a contract is relatively straightforward. You have a signed agreement with a supplier. A competitor approaches that supplier and threatens to pull all their business unless the supplier breaches their contract with you. If the supplier caves, the competitor has committed tortious interference.
Interference with a prospective economic advantage is harder to prove but just as damaging. There is no signed contract yet. Maybe you are in the final stages of closing a massive real estate deal. A third party steps in and uses unlawful means such as blackmail or defamation to entice the other party to end negotiations early.
Trade Libel and Commercial Defamation
Your company’s reputation is an asset. When someone publishes false statements that damage their reputation, they can be held liable.
There is a major difference between a bad review and trade libel. If a customer says, “I think their software is clunky and overpriced,” that is an opinion. The law protects opinions. But if a competitor publishes a fake report stating, “Their software installs Russian malware on your servers,” that is a verifiable, damaging lie. If you lose clients over it, you have a claim for trade libel.
How Business Torts Usually Occur
Business torts rarely happen in a vacuum. They typically emerge when relationships turn toxic or when the financial stakes push people to abandon basic ethics.
We often litigate cases involving departing employees. A high-level executive decides to leave and start a competing firm. Instead of starting from scratch, they download your proprietary customer database, your pricing algorithms, and your strategic roadmaps on their way out the door. They use that information to undercut your bids.
We also see disputes arising from supplier panic. When a specific market tightens, companies panic about supply chains. A dominant player in the industry might use its market weight to coerce vendors into boycotting smaller competitors, effectively freezing them out of the market entirely.
Responsibilities and Steps Your Business Must Take
If you discover your company is the victim of a business tort, your initial reaction will likely be anger. You need to pivot immediately to strategy. Delaware law expects plaintiffs to act responsibly, even when they have been wronged.
- Implement a litigation hold immediately. The moment you suspect litigation is necessary, you have a legal duty to preserve all relevant evidence. You must stop routine document destruction policies. If your IT department automatically deletes emails older than 90 days, you have to turn that off. If key evidence disappears because you failed to implement a hold, the court can issue sanctions against you, potentially destroying your own case.
- Mitigate your damages. You cannot sit back, watch your business burn to the ground, and expect the court to force the defendant to pay for all of it. Delaware law requires you to take reasonable steps to limit your losses. If a vendor breaches a contract due to tortious interference and stops delivering raw materials, you must seek a replacement vendor. You can sue for the price difference and the disruption, but you must attempt to keep your business running.
- Conduct a quiet, thorough internal investigation. Before you file a lawsuit, you need to know exactly what happened. Secure laptops, review access logs, and conduct interviews with key employees. Do this under the guidance of legal counsel to ensure the findings remain protected by the attorney-client privilege. Filing a baseless tort claim in Delaware can result in you paying the other side’s legal fees.
The Importance of a Legal Team Experienced in Delaware Law
Choosing the right venue and legal team dictates how these cases resolve. This is because Delaware’s judicial system uniquely involves multiple courts with different powers.
If your business requires an immediate court order, such as to stop a former employer from selling your trade secrets, our team can quickly file your case in the Delaware Court of Chancery. This is a court of equity, which means it decides legal issues without a jury. This allows it to quickly issue orders that could take months elsewhere.
However, if you decide that you only want monetary damages, your case might be better filed in the Delaware Superior Court’s Complex Commercial Litigation Division (CCLD).
No matter the jurisdiction, Delaware’s courts expect business dispute attorneys to know the law inside and out. They have zero tolerance for gamesmanship or procedural delay tactics common among inexperienced attorneys. That is why so many businesses turn to SLG, because our team has the skills and experience needed to operate efficiently in Delaware’s judicial environment.
Frequently Asked Questions
Can a company be held liable for the torts of its employees?
Yes. Under the legal doctrine of respondeat superior, an employer can be held vicariously liable for the actions of its employees. To prove this, you generally have to show that the employee was acting within the scope of their employment when they committed the tort. If a salesperson lies about a product’s capabilities to hit their quota, the company is likely liable. If that same salesperson gets into a bar fight on the weekend, the company is not.
What kind of damages can my business recover?
The primary legal remedy in Delaware is compensatory damages. The goal is to “make your business whole again” by calculating the financial loss resulting from the tort. The parties responsible will then have to compensate your company for that amount.
In cases involving extreme or malicious conduct, Delaware courts occasionally also award punitive damages. Punitive damages serve to punish the wrongdoer and to warn others who are considering similar conduct.
Where are business tort cases typically heard?
It depends on what you are asking the court to do. If you need equitable relief (e.g., a court order to stop someone from interfering with your business), the case will likely be heard in the Delaware Court of Chancery. If you are only asking for money damages, the case will generally go to the Delaware Superior Court. In some scenarios involving parties from different states and very high damage amounts, the case could be heard in federal court.
Protect Your Business Today and Get Justice with the SLG Team
Business torts are much more than “playing tough.” They are legally punishable acts that can significantly damage you and your company’s reputation overnight. In these cases, evidence has a habit of “conveniently” disappearing overnight. Furthermore, Delaware has a three-year statute of limitations that runs from the time the illicit act occurs (rather than when it is discovered). This means that if you believe you have suffered a business tort, you need to act fast to preserve your rights and protect your company.
To enforce your legal rights, the SLG team leverages its many years of experience litigating and settling Delaware business tort disputes. Our team protects your company from further damage and can get compensation for damage suffered. Call us today at 347.378.6990.
