In re Silicone Gel Breast Implants Products Liability Litigation
case brief summary
887 F.Supp. 1447 (1995)
CASE FACTS
Defendant parent corporation filed a motion for summary judgment in plaintiff victims' multidistrict silicone gel breast implant products liability litigation. It asserted that the evidence was inadequate for plaintiffs to support any of their claims against it, whether based on piercing the corporate veil or on a theory of direct liability.
DISCUSSION
CONCLUSION
The district court denied defendant parent corporation's motion for summary judgment in plaintiff victims' silicone gel breast implant product liability action. Substantial evidence supported piercing the corporate veil and finding that defendant's subsidiary, the manufacturer of the breast implants, was the alter ego of defendant. There was also ample evidence to support a direct liability theory of negligent undertaking against defendant.
NOTES
This is an example of lifting the veil in a tort case.
Used two-prong test. Injustice prong handled by fact of the tort. Unity prong is focus
of the case.
Factors in whether a parent should have liability for the torts of a subsidiary:
o Mixing of parent & subsidiary’s business departments
o Whether the subsidiary is grossly inadequately capitalized
o Whether parent pays subsidiary’s salaries and expenses
o Whether parent uses subsidiary’s property as its own
Note that Delaware courts do not require a showing of fraud or injustice if the
corporation is just an instrumentality of its sole shareholder.
Akin to Berkey v. Third Ave Ry Co – a favorite of Siegel’s.
887 F.Supp. 1447 (1995)
CASE SYNOPSIS
Defendant parent corporation moved for
summary judgment in plaintiff victims' multidistrict silicone gel
breast implant products liability action. Defendant alleged that
there was insufficient evidence to support plaintiffs' claims through
piercing the corporate veil or under a theory of direct liability.CASE FACTS
Defendant parent corporation filed a motion for summary judgment in plaintiff victims' multidistrict silicone gel breast implant products liability litigation. It asserted that the evidence was inadequate for plaintiffs to support any of their claims against it, whether based on piercing the corporate veil or on a theory of direct liability.
DISCUSSION
- The district court, considering the law of the transferor states, denied the motion.
- It held that under the corporate control theory, there was ample evidence from which a jury could find that defendant's subsidiary, the manufacturer of the breast implants was defendant's alter ego.
- This included evidence that they shared directors; that the manufacturer was part of defendant's health care group and used its legal, auditing, and communications departments; that they filed consolidated federal tax returns; and that defendant prepared consolidated financial reports.
- As for the direct liability claims, by allowing its name to be placed on breast implant packages and product inserts, defendant held itself out as supporting the product, and thus could not deny its potential liability on a theory of negligent undertaking.
CONCLUSION
The district court denied defendant parent corporation's motion for summary judgment in plaintiff victims' silicone gel breast implant product liability action. Substantial evidence supported piercing the corporate veil and finding that defendant's subsidiary, the manufacturer of the breast implants, was the alter ego of defendant. There was also ample evidence to support a direct liability theory of negligent undertaking against defendant.
NOTES
This is an example of lifting the veil in a tort case.
Used two-prong test. Injustice prong handled by fact of the tort. Unity prong is focus
of the case.
Factors in whether a parent should have liability for the torts of a subsidiary:
o Mixing of parent & subsidiary’s business departments
o Whether the subsidiary is grossly inadequately capitalized
o Whether parent pays subsidiary’s salaries and expenses
o Whether parent uses subsidiary’s property as its own
Note that Delaware courts do not require a showing of fraud or injustice if the
corporation is just an instrumentality of its sole shareholder.
Akin to Berkey v. Third Ave Ry Co – a favorite of Siegel’s.
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