New York Court of Appeals Overturns Decision Expanding Corporate Liability of Parent Companies with International Subsidiaries
The U.S. Chamber urged the New York Court of Appeals to overturn a decision holding that, even in the absence of any basis for corporate veil-piercing, a parent company can be held liable for torts allegedly committed by its subsidiary on the theory that the parent is “in the best position to exert pressure to improved safety products.” The decision, which also emphasized that liability was appropriate because the parent is the global “guardian” of the brand, has already garnered attention by the media and by the plaintiffs’ bar, which has characterized it as a new way to pursue U.S. parent companies for the actions of subsidiaries abroad.
The Chamber’s amicus brief argued that the lower court’s decision is contrary to well-settled New York law on corporate separateness and to basic principles of corporate law uniformly recognized by courts across the country.
Previously, U.S. Chamber filed a brief urging the Appellate Division of the New York Supreme Court, First Judicial Department, to grant Ford Motor Company’s motion for leave to appeal, which was granted.
The New York Court of Appeals reaffirmed that products liability only extends to manufacturers, distributors, and sellers of allegedly defective products and rejected the "global guardian" theory of corporate veil-piercing.