What is the scope of the tort of appropriation of corporate opportunity?

The tort of appropriation of corporate opportunity in Maryland is a form of unfair competition law. This legal doctrine holds that when a corporation has a legitimate opportunity to pursue certain business activities, it is unlawful for an employee or agent of the company to take the opportunity for their own gain. For example, if a person employed by the company discovers a potential investment or business opportunity, it would be illegal for the employee to pursue that opportunity without informing the company. Generally, the tort of appropriation of corporate opportunity applies to any business activity that could have been legally undertaken by a corporation. This includes activities like starting a new company, entering into a joint venture, or investing in a project. The courts often use an “arm’s length test” to judge whether a corporate opportunity has been taken. To determine whether a company or individual has misappropriated an opportunity, the courts ask whether the company had enough time to evaluate the opportunity to determine whether it was of sufficient value, and whether a reasonable person would consider the company’s decision to pass on the opportunity to be a reasonable business decision. The tort of appropriation of corporate opportunity does not protect a company from competition. Rather, it serves to protect businesses from dishonest employees or agents who are taking advantage of an opportunity that should legally belong to the company.

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