Enterprise Liability: Reviewing and Revitalizing Liability for Corporate Groups

02 Feb 2009 02:32pm Meredith Dearborn 

This Comment explores enterprise liability as it applies to corporate groups. It argues that the doctrine of limited liability, which shields a corporation’s shareholders from the corporation’s debts, is problematic from both a normative and an efficiency perspective when applied to the parent/subsidiary context, and in particular to preventing parent liability for a subsidiary’s mass torts, human rights disasters, and environmental harms. Enterprise liability in this limited context provides one possible solution to the shortcomings of limited liability, as a parent corporation would be liable to outside creditors for a subsidiary’s torts if it is part of the same economic enterprise. The Comment then explores areas where enterprise liability, in many different iterations, has gained explicit or implicit support from legislators and judges. The Comment reviews both international jurisdictions and enclaves of United States law where enterprise principles have either become part of an established canon, or survive in the shadows of entity law. It draws on the lessons of these jurisdictions in order to enumerate some of the various features that might characterize a preferable system.

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