Sunday, November 24, 2013

Craig v. Lake Asbestos case brief

Craig v. Lake Asbestos case brief summary
843 F.2d 145 (1988)


CASE SYNOPSIS
Appellant holding company, which was impleaded as a third-party defendant in a personal injury action, challenged the decision of the United States District Court for the Eastern District of Pennsylvania, which found it liable for the tort obligations of its subsidiary for injuries to appellees, employee and his wife, that resulted from exposure to asbestos fiber.

CASE FACTS
Appellees, employee and his wife, brought a personal injury action in Pennsylvania state court against asbestos manufacturers and suppliers for injuries suffered as a result of exposure to asbestos fibers. A defendant impleaded appellant holding company and its subsidiaries as third-party defendants upon removal to federal court. All original defendants settled with appellees and a district court found that appellant was liable for the tort obligations of its subsidiary based on a piercing the corporate veil theory.

DISCUSSION

  • On appeal, the court reversed and remanded, holding that appellant was not involved in the affairs of the subsidiary on a constant or day-to-day basis necessary to rise to the high degree of domination required by New Jersey state law to pierce the corporate veil. 
  • The court found that appellant and its subsidiary maintained separate financial and managerial operations and affairs. 
  • The court concluded that merely the potential for control was insufficient, especially if appellant's actual amount of control was not enough.

CONCLUSION
The court reversed and remanded district court's decision that appellant holding company was liable for the tort obligations of its subsidiary to appellees, employee and his wife, for injuries they incurred as a result of exposure to asbestos fibers, because appellant did not exercise such dominance and control over subsidiary to justify piercing of the corporate veil under New Jersey state law.


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