This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Tuesday, July 28, 2015
Basic Principle of Parent/Subsidiary Separation Applied to Strike Claims Under Alien Tort Claims Act
Basic Principle of Parent/Subsidiary
Separation Applied to Strike Claims Under Alien Tort
Earlier this week the Second
Circuit Court of Appeals handed down a decision to the effect that the U.S.
parent corporations of foreign subsidiaries who were alleged to have
facilitated apartheid in South Africa could not be sued under the Alien Tort
Claims Act.Balintulo v. Ford Motor Co., 2015 BL 238790 (2nd Cir.
July 27, 2015).
The plaintiffs sought to hold
Ford and IBM responsible for having, through their foreign subsidiaries,
facilitated apartheid.Pursuing the
claims and the jurisdictional requirements of the ATCA, it was found that they
were deficient.While, in the case of
Ford, a South African subsidiary may have done so via the assembly of vehicles
and by the S.A. Defense Forces, it was not Ford which did so.
[H]olding Ford to be directly
responsible for the actions of its South African subsidiary, as plaintiffs
would have us do, would ignore well-settled principles of corporate law, which
treats parent corporations and their subsidiaries as legally distinct entities.
The Court of Appeals continued
with a discussion of piercing the veil, noting it is done only in
“extraordinary circumstances” and that the plaintiff had not plead any basis
for doing so.