Cite as: 524 U. S. 51 (1998)
Opinion of the Court
III
It is a general principle of corporate law deeply "ingrained in our economic and legal systems" that a parent corporation (so-called because of control through ownership of another corporation's stock) is not liable for the acts of its subsidiaries. Douglas & Shanks, Insulation from Liability Through Subsidiary Corporations, 39 Yale L. J. 193 (1929) (hereinafter Douglas); see also, e. g., Buechner v. Farbenfabriken Bayer Aktiengesellschaft, 38 Del. Ch. 490, 494, 154 A. 2d 684, 687 (1959); Berkey v. Third Ave. R. Co., 244 N. Y. 84, 85, 155 N. E. 58 (1926) (Cardozo, J.); 1 W. Fletcher, Cyclopedia of Law of Private Corporations § 33, p. 568 (rev. ed. 1990) ("Neither does the mere fact that there exists a parent-subsidiary relationship between two corporations make the one liable for the torts of its affiliate"); Horton, Liability of Corporation for Torts of Subsidiary, 7 A. L. R. 3d 1343, 1349 (1966) ("Ordinarily, a corporation which chooses to facilitate the operation of its business by employment of another corporation as a subsidiary will not be penalized by a judicial determination of liability for the legal obligations of the subsidiary"); cf. Anderson v. Abbott, 321 U. S. 349, 362 (1944) ("Limited liability is the rule, not the exception"); Burnet v. Clark, 287 U. S. 410, 415 (1932) ("A corporation and its stockholders are generally to be treated as separate entities"). Thus it is horn-book law that "the exercise of the 'control' which stock ownership gives to the stockholders . . . will not create liability
(CA1 1990) (parent actively involved in the affairs of its subsidiary may be held directly liable as an operator of the facility, regardless of whether the corporate veil can be pierced), cert. denied, 498 U. S. 1084 (1991), Schiavone v. Pearce, 79 F. 3d 248, 254-255 (CA2 1996) (same), LansfordCoaldale Joint Water Auth. v. Tonolli Corp., 4 F. 3d 1209, 1220-1225 (CA3 1993) (same), Jacksonville Elec. Auth. v. Bernuth Corp., 996 F. 2d 1107, 1110 (CA11 1993) (same), and Nurad, Inc. v. William E. Hooper & Sons Co., 966 F. 2d 837, 842 (CA4) (parent having authority to control subsidiary is liable as an operator, even if it did not exercise that authority), cert. denied, 506 U. S. 940 (1992).
61
Page: Index Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 NextLast modified: October 4, 2007